BERLIN — Germany defied expectations yet again Tuesday, with a survey showing a record improvement in the economic outlook, despite the persistent threat posed by Europe’s sovereign debt crisis.
The Center for European Economic Research in Mannheim, a private research institute known by its German acronym ZEW, reported that its survey of economic sentiment among investors jumped 32.2 points in January from the previous month, to its highest level since July. It was the largest monthly gain in records going back to 1991, but still left the index at minus 21.6 points — deep in negative territory and well below the index’s historical average of 24.5 points.
“Contrary to repeatedly expressed fears of a recession, the assessment of the financial market experts gives reason for cautious optimism that Germany will only experience a dent in economic activity,” the ZEW president, Wolfgang Franz, said in a statement. He also noted that the European Central Bank’s huge infusion of money into the banking sector last month could have contributed to the uptick.
The institute’s economic expectations index for the euro zone also gained, rising 21.6 points to stand at minus 32.5 points.
Negative readings indicate that a majority of respondents held a pessimistic outlook for how the German economy would develop in the next six months.
With the German economy thought to have contracted around 0.5 percent in the last three months of 2011, and austerity budgets in effect across Europe, “there is a widespread fear that, similar to 2008, the German economy could now also follow the downward trend of its euro zone peers, only with a lag,” Carsten Brzeski, an economist with ING in Brussels, wrote in a research note.
Yet the German job market is considerably more solid than it was in 2008, with unemployment steadily decreasing throughout 2011, to 6.8 percent in December.
Strong figures also came in from the German automobile industry, where domestic car sales rose 8.8 percent last year, despite an overall contraction in Europe, the European Automobile Manufacturers’ Association reported. Volkswagen, Bayerische Motoren Werke and Daimler all posted increased sales.
“Today’s release continues to point towards optimism that the German economy will be able to withstand the head winds from the euro zone crisis better than some other countries within the euro zone,” Lothar Hessler of HSBC Global Research wrote in a note to clients.
Analysts nevertheless expect the German economy to contract mildly in the first three months of 2012.
The German data came as Eurostat, the European Union’s statistical agency, said inflation in the 17-country euro zone slowed to 2.7 percent in December from 3.0 percent in November.
The decline in inflationary pressure provides the E.C.B., which targets an inflation rate of just under 2 percent, additional room to maneuver on interest rates. The bank last month cut its benchmark overnight rate to 1 percent from 1.25 percent, and analysts are predicting it could lower rates again in the near future.
The easing inflationary pressure was mirrored in Britain, where the Office for National Statistics said consumer prices rose 4.2 percent in December, down from a 4.8 percent increase in November. That might give the Bank of England, which also tries to hold inflation to around 2 percent, more freedom to adjust policy.
The Bank of England’s monetary policy committee this month left its benchmark interest rate at 0.5 percent, a record low, and maintained unchanged a £275 billion, or $422 billion, asset-purchasing program to provide liquidity to the financial system.
David Jolly contributed reporting from Paris.
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