Parts of the European economy which were hardest-hit by the pandemic are showing signs of recovery but other areas of activity that began to bounce back earlier have leveled off, suggesting the damage will be longer-lasting than some economists hoped.┬áTravel and tourism – an important part of southern European countries’ economies – is picking up from very low levels, according to high-frequency data indicators such as travel and mobility trackers. The figures are more up to date than official economic indicators, although they are also experimental and the extent to which they reflect the subsequent trends documented in official data is variable.

However, industry and trade indicators that improved in May and June are plateauing well below normal activity levels and there is no sign of any improvement in the labor market. Christine Lagarde, European Central Bank president, last week warned of the headwinds that the economy faces. She said that “exceptionally elevated uncertainty” would continue to weigh on consumer spending and business investment.┬áCarsten Brzeski, economist at ING, said that “for the countries which lifted the lockdown measures first and which got out of the crisis the earliest, the first signs of levelling off have already appeared”.

Andrew Kenningham, chief Europe economist at Capital Economics, said the data suggest that “thelockdown was not as damaging in Germany [as in other major eurozone countries] but the recovery there has been a bit slower and may have weakened more recently”.┬áChris Hare, economist at HSBC, noted “a risk that the consumer recovery will peter out as government job support schemes are scaled back in the autumn”, although he added that “someof the recent data, particularly on the consumer side, have been encouraging” as they were “pointing to some pent-up demand coming through”.

But Barbara Teixeira Araujo, an economist at rating agency Moody’s, said that “pent-updemand will dry up soon” while slumping exports “will rein in the recovery” in trade-dependent economies such as Germany, and the tourism industry will continue to struggle.

Maddalena Martini, economist at Oxford Economics, warned that “limitsto global demand and supply disruptions will continue to weigh on growth”.