Are the green shoots of recovery emerging?

Last week’s euro-zone data confirmed that the economy will probably fare better in Q1 than in Q4 2012. But for now at least the euro-zone business surveys remain in recession territory. Of course, if the business surveys continue to rise, they might point to a pick-up in activity, perhaps even by the spring. But note that after sustained contractions or periods of weakness in the past, the EC ESI and composite PMI have often recorded similar sized rises to those seen since October only then to tread water or fall back. Accordingly, it is still probably too early to conclude that the recent improvement in market sentiment will inevitably lead to a virtuous circle of growth.