Sluggish recovery in the eurozone

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The Independent Online

Further signs that the European economy may be emerging from recession more slowly than the US or Britain arrived yesterday.

Eurozone industrial production rose by 0.5 per cent in May, well below analysts' expectations of a jump in output of 1 per cent, although it was the first rise in nine months. Observers were only partly placated by Eurostat's revision upwards of the production figures for May, from a drop of 1.9 per cent to 1.4 per cent.

There was also disappointment at the news that Germany's ZEW index of investor sentiment had declined this month, partly reflecting recent volatility in the markets. However, the ZEW index remains above its long-term average, encouraging the belief that "risk appetite" is returning even to one of the world's more conservative market economies.

Recent survey evidence of business confidence and a modest rise in exports have also prompted hopes that Germany might soon drag itself out of the worst recession in the federal republic's history, though most economists think growth will return only next year. However, European unemployment, especially severe in Spain, is set to dampen growth.