BERLIN (Reuters) - Investor morale in Germany rose beyond even the most optimistic forecast in February on expectations consumption will take off in the coming months, the ZEW economic research institute said on Tuesday, buoying the outlook for Europe's largest economy.
The ZEW said its survey of investors' economic sentiment showed a rise to 71.2 points from 61.8 the previous month. A Reuters poll had pointed to a fall to 59.6, and the February reading surpassed even the highest forecast, of 68.0.
The read-out, which came as a separate read-out showed euro zone output fell less than initially estimated in the last quarter of 2020, boosted the euro.
"The financial market experts are optimistic about the future. They are confident that the German economy will be back on the growth track within the next six months," ZEW President Achim Wambach said in a statement.
"Consumption and retail trade in particular are expected to recover significantly, accompanied by higher inflation expectations," he added.
A separate gauge of current conditions eased to -67.2 from -66.4 the previous month. That compared with a consensus forecast of -67.0 points.
The Economy Ministry said on Monday lockdown measures to slow the spread of the new coronavirus in Germany will continue to weigh on the economy in the first quarter of 2021, but prospects for exporters are cautiously positive.
Chancellor Angela Merkel and the premiers of Germany's states agreed last Wednesday to extend restrictions to curb the spread of the coronavirus until March 7.
German exports rose in December as solid trade with China and the United States helped the economy as it struggles to grow under the lockdown restrictions.
Last week, German conglomerate Thyssenkrupp raised its full-year outlook for the first time in nearly four years, and CEO Martina Merz said "we're noticing signs of an economic recovery".
Separately, the European Union's statistics office, Eurostat, said gross domestic product in the 19 countries sharing the euro contracted 0.6% quarter-on-quarter in the October-December period, for a 5.0% year-on-year decline. Eurostat earlier estimated the contraction was 0.7% in the quarter and 5.1% in annual terms.
Eurostat also said that employment grew 0.3% on the quarter in the last three months of 2020 after a 1.0% quarterly rise in the previous three months. It was still 2.0% lower than in the same period a year earlier.
(Writing by Paul Carrel; additional reporting by Jan Strupczewski in Brussels; editing by Caroline Copley, Mark John, Larry King)