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German investor confidence report to measure auto industry jitters

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German investor confidence report to measure auto industry jitters

Cars stuck in traffic on Germany’s autobahn

ZEW, an economic research centre, will release its latest measure of investor confidence in the German economy today.

The report comes amid recent allegations of cartel-building and rigging of emissions software among the top 5 German carmakers, resulting in plummeting investor confidence as EU watchdog investigations were launched. In August, ZEW recorded a large 7.5 point drop to 10 points.

The latest report is expected to reveal any ongoing investor pessimism over the future of the automobile industry. While the famed “Mittelstand” backbone of the German economy is small- to medium-sized businesses, large car manufacturers employ some 800,000 people and account for 20% of the country’s industrial revenue—making it the heart of the economy.

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A further drop in confidence will continue the downward trend into a third consecutive month. This will pose a major medium-term risk to the German economy and could spur Berlin to embark on major heart surgery on the automobile industry. With an election on September 24, increased oversight of the industry is likely.

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