The pre-summer holiday season in Europe has so far yielded a political crisis in Portugal, the conviction of Silvio Berlusconi for consorting with underage prostitutes and the French president Francois Hollande suddenly discovering the virtues of austerity at the same time as being the most unpopular incumbent in the country's history. At the same time, the economics data coming out of the eurozone is likely to inspire a small kernel of optimism, if you can see through the blizzard of contradictory data.
The most worrying recent development as far as the eurozone economy is concerned is the slowdown in big ticket orders for Germany's mighty export industries. Official statistics showed that exports from Europe's largest economy fell by 2.4 per cent in May, the largest percentage drop since the height of the downturn in 2009. The reason for this is that austerity-afflicted European customers, who take 40 per cent of Germany's exports, have stopped buying - exports to these countries fell by more than 10 per cent year-on-year. In addition, there was also a worrying drop in orders from developing economies which fell by 1.6 per cent in May. Germany has developed strong trading ties with emerging markets but turbulence in China's economy, particularly the poor state of its banks is also a cause for concern.
But that is where the easy comparisons stop as many other economic indicators in Germany - house prices, imports and domestic consumption figures - have all turned positive, offering hope to the rest of the eurozone that a fundamental rebalancing between exports and imports is underway that could offer crisis-hit countries a way out of their slump. Italy is a case in point. Visitors this summer will be shocked at the empty restaurants and ubiquitous 'Vendesi' (For Sale) hanging signs over abandoned shops, even though first impressions might be deceptive. For example, although consumers are feeling the strain - hence the ability to find good tables in Florence - manufacturers are starting to expand production with the purchasing managers index (PMI) moving above 50 in June. This was the first sign of expansion since July 2011 and is the fourth monthly rise in the country's PMI since March, according to UniCredit analysts.
