Recent data suggests that Germany is leading the way towards a stronger euro zone. That is good news for Germany’s exchange traded fund (ETF), which is down about 3% year-to-date. But the question remains whether the economic momentum can be carried into the future.

According to William L. Watts of MarketWatch, the European Commission’s economic sentiment indicator rose to 101.3 last Thursday, putting it above its long-term average of 100.

In addition, the consumer confidence index rose to -14 from -17, the industry confidence index rose to -4 from -6, the services index rose to 6 from 4, the retail trade index rose to -4 from -6, and the construction index rose to -29 from -30.

Employment figures for Germany have also looked brighter. Germany’s unemployment rate edged down 0.1% to 7.6%, while its seasonally adjusted number of unemployed people declined by 20,000.

With its strong recovery, some people are concerned that there will be a shortage of skilled workers, reports Monsters and Critics. Underscoring that concern is the 31.3% surge in job vacancies over the last month in Germany.

All this suggests that Germany, which is the largest economy in the euro zone, may be leading the euro zone out of its financial mess. However, Martin van Vliet of ING Bank in Brussels thinks, “with global growth momentum showing signs of slowing and domestic demand still lackluster, the euro-zone recovery is bound to lose steam in the second half of this year.”

On the automobile front, the Economic Times reports that luxury brand automakers reported strong earnings. BMW posted Q2 net profit of 834 million euros, compared to 121 million euros a year before.

The results shattered analyst expectations, and Chief Executive Norbert Reithofer said manufacturing would run at 90% capacity this year.

Although Daimler raised its earnings outlook and Volkswagen is on pace to sell a record 6.3 million vehicles, Peugeot head Philippe Varin warned that for the rest of the year “the economic context is clearly going to be less favorable than in the first half.”

For those who think Germany can continue to grow and lead the euro zone out of its recession should take a look at iShares MSCI Germany Index Fund (NYSEArca: EWG).

For more stories on Germany, visit our Germany category.

Sumin Kim contributed to this article.

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