The ZEW indicator of confidence among German institutional investors and analysts showed that pessimists outweighed optimists by 6.9% in August. In July, optimists outweighed pessimists by 10.9% in July. The decline of 17.3 percentage points was the largest since the decline of 20.7 last August. The participants' appraisal of current conditions fell by 8 percentage points from 88.2 in July to 80.2 in August. Expectations and appraisals of current conditions are shown in the first chart.

The turmoil in stock markets around the world during the period when the survey took place--July 30 to August 20--no doubt affected the participants' expectations and also their outlook for profits in selected industries.

Profit expectations for the banking and insurance industries were lowered sharply. For the banking industry, pessimists exceeded optimists by 37.3% in August while in July, optimists had exceeded pessimists by 21.9%. Comparable figures for the insurance industry were 13.2% and 23.7%. Monthly changes in profit expectations for the banking and insurance industries along with those for construction and consumer/trade industries--two other industries where profit expectations showed substantial declines in August are show in the second chart.

There were some improvements in the monthly changes of profit expectations. Most improvements involved a decline in the excess of pessimists, but profit expectations in the telecommunication industry actually showed an excess of optimists of 3.5%. Monthly changes in profit expectations for the telecommunication industry are shown in the third chart along with those for the information technology, utilities and service industries that also showed improvement in that the excess of pessimists over optimists was lower in August than in July.