Green shoots or just early summer madness?

While the recent warm weather has seen my garden bursting into life with gusto, I wonder if the same can really be said about the economy. Having just returned from a weeks holiday in France, where the effects of the weak pound became acutely apparent to me in terms of the sheer cost of things in Europe for us now on a £1 = 1 Euro basis, I have been surprised to find my inbox and various data feeds littered with evidence of green shoots, or at the very least claiming that the plant is not dead.

Firstly the FTSE, the pound and the commodity markets have all had a bit of a positive rally. Looks like I bought my Euros too early and my diesel too late but never mind.

The service sector has today reported a return to growth since the decline commenced in April last year and the CIPS Purchasing Managers Index leapt in May by the biggest chunk in its history, from 48.7 to 51.7, with 50 plus representing a positive number.

Human Resources magazine’s daily news feed today, claimed that the rate of decline in jobs had slowed in May and Nationwide have even recently reported a monthly increase in house prices of 1.9%.

Other green shoots bursting from my in tray on my return, included a survey of CEO’s that stated that a significant majority felt more optimistic than they did at the start of the year.

So are there really emerging signs of recovery or are we all just desperate to spot some? Well I am not sure and I have learnt the hard way that predicting things is a fools science. I hope there is some light now at the end of the tunnel. If house prices stop going backwards lenders will feel more comfortable in lending again which in turn will stimulate the market and a bit of upward inflation will pave the way for interest rates to go up a little and allow deposit takers to give some much needed extra interest to savers.

But none of us should un-cork the champagne just yet, there are many theories on whether this will be a V or W shaped recession, i.e. will it bottom out and then start to gradually increase again, or will it appear to have turned only to take another dip before sustained recovery really comes?