Economic recovery continues

The latest economic reports from Europe, the United States and Japan indicate that the recovery in these economies probably continued at the beginning of the third quarter.

In Europe, a report from the European Commission on Monday showed that growth appears to be holding up so far in the third quarter. The European Commission reported that its Economic Sentiment Indicator continued to improve in August in both the European Union as a whole and the euro area specifically. The indicator rose by 0.6 to 102.7 in the EU and by 0.7 to 101.8 in the euro area. In both the EU and the euro area, the indicator has now risen for four consecutive months.

For all the worries of a double dip in the United States, growth in its economy has also probably held up, at least at the beginning of the third quarter. Also on Monday, the Commerce Department reported that personal consumption expenditures rose 0.4 percent in July or 0.2 percent after adjusting for inflation.

However, the picture from the income data is less encouraging. Disposable personal income increased by 0.2 percent in July but fell by 0.1 percent after adjusting for inflation. Personal income excluding current transfer receipts, generally considered a better indication of the underlying income growth trend, was flat for the second consecutive month after accounting for inflation.

At least Japan, which had reported the weakest second quarter growth rate among the major industrialised economies, had better news to report today. The Ministry of Economy, Trade and Industry reported that industrial production, which had fallen by a sharp 1.1 percent in June, rebounded slightly in July, rising by 0.3 percent. According to the ministry's survey of production forecasts, the recovery is expected to accelerate in August with production rising by 1.6 percent before settling back to a 0.2 percent increase in September.

So while the latest economic reports are not exactly painting an unambiguously optimistic picture, they do indicate that the global economic recovery was probably maintained at the beginning of the third quarter.