Data on manufacturing production for July 2010 show a growth of some 8% over the previous year and an improvement of over 1% over the last three months. The growth trend in manufacturing production had been positive since April 2009. Nevertheless, output was still some 13% below its former peak in early 2008.

It also looks as if sectors affected most negatively in the downfall continue recovering the most rapidly in the present upswing, even if there have been some signs of a deceleration of this upswing in recent months. On the other hand, the outlook for construction is rather uncertain, as its output is still around its low levels with no clearly visible trend for revival. The data and forecasts for tourism are more optimistic, although the situation still varies across countries.

The expansion of the EU trade has been moderating and the new orders have fallen recently. The internal demand and private consumption are still rather weak as the unemployment rate stays at a high level.

There are also some substantial differences in the situation among the Member States. Countries that suffered from the bursting of real estate bubbles are coming out of the economic crisis much slower than the countries having suffered from a temporary collapse of manufacturing production only. Moreover, the macroeconomic conditions of the eurozone are still fragile as illustrated by the sovereign debt problem and uncertainty about fiscal consolidation. Also, the unpopular austerity measures proposed might drag on consumer climate and public and private demand.

On the other hand, we find economic sentiments that remain positive despite worrying information on public debts. Also, the labour-market outlook is improving, and the strong growth in Asia continues, which should stimulate the growth of export and output in Europe as well.

Looking further ahead, there is still an unresolved risk that the continued limited availability of finance to firms on favourable terms could slow down the economic recovery. As shown in the recent ECB lending survey, increasing demand for loans has not yet been coupled with more favourable lending conditions or higher availability of funding.