German investor confidence rose for the second month running in September after a decline in oil prices and a weaker euro improved expectations for greater export competitiveness. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations rose to minus 41.1 from minus 55.5 in August. This was the highest reading since April.
The price of oil has now dropped almost 40 percent from its July peak and the euro has lost 8 percent against the dollar in the past three months, providing relief to consumers and exporters. It is possible that the support from the US Treasury for FannieMae and FreddieMac may have offered the hope that the worst of the US financial sectors woes were no behind us.
Unfortunately the recent unwinding of Lehman Brothers offers a warning that such a view may be still premature. So while it is likely that the price of oil may continue to fall, the real economy effects of the most recent bout of financial turmoil and its impact on the equity markets are yet to really be felt, so all in all it would not be very suprising to see confidence drop back again in October.
Edward Hugh has a lively and enjoyable Facebook community where he publishes frequent breaking news economics links and short updates. If you would like to receive these updates on a regular basis and join the debate please invite Edward as a friend by clicking the Facebook link at the top of the right sidebar.