At least this is the conclusion of MS's AnnaMaria Grimaldi and Eric Chaney as the look through the latest batch of business surveys:
You might be getting excited about the summer holidays and bright, sunny shores, but this is not the case for Euroland producers. Indeed, the evidence we gathered over this past week with the release of the June business surveys seems to fully support our recently revised macro call: No significant pick-up is expected in Europe before the autumn, in the best case............
Wrapping up the information from the June surveys, our manufacturing production indicator is pointing to a decline of 0.9%Q in Q2, one-tenth lower than in May and consistent with a flat GDP reading. The first look at 3Q Euroland production is rather gloomy: The indicator is forecasting a contraction of 0.6%Q, which our GDP model turns into a modest rebound for the Euroland economy (0.2%Q). These estimates cast little doubt for now that the Euroland economy remains in dangerous waters and that we are unlikely to see a rebound before the late this year or only in 2004.
Source: Morgan Stanley Global Economic Forum