Investor confidence in the future economic development in the euro area improved surprisingly in November for the first time since July, despite the continuing deterioration of the current situation, but with expectations jumping in the future, according to a recent study by market research company Sentix.
Sentix’s investor sentiment index, determined by a survey of 1095 investors (258 of which are institutional) conducted between 4 and 6 of November 2021, rose to 18,3 points after reaching a 6-month low in October of 16,9 points and with expectations for a decrease to 15,5 points.
At the same time, the index measuring the current economic situation in the euro area fell in November to 23,5 from 26,3 points a month earlier, reaching its lowest level since June 2021.
However, the Sentix index of future investor sentiment rose to 13,3 points from 8,0 points in October, when it reached its lowest level since May 2020.
Problems in supply chains and rising inflation continue to have a negative impact on the current economic situation. However, investors expect that these negative effects will be only temporary and therefore look more confident for the next 6 months.
The surprising improvement in the leading Sentix index seems to suggest that the threat of a more lasting and serious economic turnaround disappears.
However, the Sentix index for Germany continues to weaken, reaching a level of 19,7 points in November compared to 20,0 points in October - its lowest level since March 2021 and a decline in the index for the fourth consecutive month.
The index, which measures the current economic situation in the leading European economy, fell sharply to 24,8 points (the lowest level since May 2021) compared to 31,0 points a month earlier, but the Sentix component for investor expectations rose sharply to 14,8 out of 9,5 points.
Problems with the supply of electronic chips to the German automotive industry continue to have a significant negative impact.
Overall, the study shows that the global economy has found itself in a moderate downward cycle, which is likely to end, with the corresponding Sentix indices already rising in many places, especially in the US and Asia.
