Growing again?

Q2’s modest 0.1% quarterly contraction in euro-zone economic activity was an encouraging sign that the recession is nearing its end. Admittedly, the improvement compared to Q1’s 2.5% drop was partly related to a boost from public spending, which will not last. A fall in imports also played a role, presumably reflecting the weakness of domestic demand. But at least exports are now falling at a more modest rate – a trend which should continue in the coming quarters. And, on the face of it at least, business surveys like the Composite PMI suggest that the economy should stop contracting in the third quarter.