The mood among German analysts and investors improved slightly in August, a survey showed on Tuesday, regaining some ground after a slump last month following Britons' vote to leave the European Union. The data from the Mannheim-based ZEW institute came after the German central bank said on Monday that the June 23 vote to leave the EU is likely to have limited immediate economic impact on the German economy, Europe's largest.
The ZEW's monthly survey showed a rise in its economic sentiment index to 0.5 points in August after it plunged to minus 6.8 the previous month. However, that was still slightly weaker than the Reuters consensus forecast for a reading of 1.8.
A separate gauge of current conditions jumped to 57.6 points from 49.8 in July. This was better than the Reuters consensus forecast which predicted a reading of 50.0.
"The ZEW economic sentiment is recovering somewhat from the Brexit shock," ZEW President Achim Wambach said in a statement.
"Political risks within and outside the European Union, however, continue to inhibit a more optimistic economic outlook for Germany," Wambach said.
German economic growth slowed less than expected in the second quarter as higher exports, increased state spending and strong private consumption compensated for weaker investment in construction and machinery.
VP Bank analyst Thomas Gitzel said the mood among German businesses remained positive and this was now also reflected in the improved sentiment among analysts and investors.
"The German economy remains on a moderate growth path. Don't expect any extraordinary growth rates, but there are also no signs of a recession," Gitzel added.
The German economy grew by 0.4 percent in the second quarter, double the Reuters consensus forecast. It was expected to cool down after a mild winter helped the economy grow 0.7 percent in the first quarter, the strongest rate in two years.
Some analysts have warned that the uncertainty following Britain's decision to leave the EU could hit German exports in the coming months, potentially tearing away one pillar of support and leading to weaker growth prospects.
But others have pointed out that domestic demand is likely to remain strong in the second half of the year due to record-high employment, rising real wages, nearly stable prices and ultra-low borrowing costs.
The German government expects buoyant domestic demand to drive an overall economic expansion of 1.7 percent in 2016, on a par with last year, which was the strongest rate in four years.
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