In December, the German ZEW survey showed a marginal improvement in sentiment, for the first time in ten months. The headline economic sentiment indicator rose from -55.2 to -53.8, while the consensus was looking for a decline to -55.8. While the unexpected increase is an encouraging sign, the ZEW index remains close to record low levels, suggesting that the outlook for German activity remains miserable. The current situation index, on the contrary, worsened more than expected, falling from 34.2 to 26.8, while a more moderate decline was expected. The ZEW added that they do not expect a technical recession, but one bad quarter in Germany, probably in the first quarter of 2012. Private spending is expected to stay at current levels, which is an encouraging sign. The increase in the ZEW economic sentiment indicator is a hopeful sign, which might suggest that the index is bottoming out, but we need further confirmation in the coming months.