German investor confidence falls sharply in September, lowest since early 2009

German investor confidence drops in September

BERLIN — German investor confidence fell sharply in September to an 18-month low as fears mounted that industrial growth and exports are slowing as the global economy loses steam, a survey showed Tuesday.

The ZEW institute’s index declined for the fifth consecutive month, dropping to minus 4.3 points from 14 in August. That was its lowest level since February 2009.

It was considerably worse than analysts’ forecast of a small dip to about 10 points and left the index, which measures professional investors’ outlook for the coming six months, well below its historical average of 27.2.

A strong export performance pushed Germany to growth of 2.2 percent in the second quarter over the previous three-month period, but there have been mounting concerns recently that cooling growth outside Europe could weigh on exports.

ZEW noted that recent data showed a 2.2 percent month-on-month decline in industrial orders in July and a tiny 0.1 percent rise in industrial production.

“This may not only indicate a temporary slowdown but could well be the first sign of a flattening of economic activity,” the group said in its report.

It added that the expiration of economic stimulus plans in many countries, and the fact many industrialized countries haven’t yet fully recovered from the crisis, “puts pressure on the export-oriented sectors.”

“In their expectations, financial experts put more weight on risks than they did before,” ZEW president Wolfgang Franz said, citing slowing U.S. growth and the eurozone’s lingering debt issues.

“Nevertheless, the risk of a double dip remains low for Germany,” he added.

While investors’ future outlook darkened, ZEW said their view of the current situation again brightened. A subindex measuring that aspect rose by 15.6 points this month to 59.9 — its highest level since December 2007.

The forward-focused ZEW index is often volatile, and has been dropping even as other indicators head upward. Surveys of business and consumer confidence have been climbing.

After the spectacular second-quarter performance, “several indicators are heralding the — inevitable — growth slowdown of the German economy in the second half,” said Carsten Brzeski, an economist at ING in Brussels.

“However, with increasing backlogs, strong business confidence, improving investment plans from businesses and the strengthening of the labor market, ’slowdown’ is actually not the best description,” he said. “The German economy is only easing back the throttle.”

The German economy, Europe’s biggest, is now widely expected to grow by 3 percent or more this year, but then to ease off somewhat in 2011.

“Next year, we won’t have this growth rate of more than 3 percent,” Finance Minister Wolfgang Schaeuble told parliament as he opened the debate on the 2011 budget.

The ZEW, or Center for European Economic Research, said 277 analysts participated in its September survey, conducted between Aug. 30 and Sept. 13.