German growth slows and euro zone economic activity stumbles - but new data also suggests optimism is at highest in years. As David Pollard reports, economists are scratching their heads over the region's 'uneven' economic recovery.
For Germany it's been something of an image problem. For commuters in Europe's economic locomotive brought close to a standstill by rail strikes it was more of an inconvenience. The latest strike does now appear over as unions agree to arbitration talks. Phew, say travellers. (SOUNDBITE) (German) PASSER-BY, FLORIAN SATTLER, SAYING: "I welcome the outcome but I was angry about how long the strike lasted, nine of them. I have the general concern that if there are several unions, there are fights among unions instead of against employers. We saw what happened in England." A bigger concern has been France. Though there are signs of it returning to normal service, too. Manufacturing is contracting, according to the latest PMI readings. But services are up - and a combined reading is positive for the fourth month. German manufacturing and services: they're also positive. But both slipped - the combined reading easing back for the second month. Hinting at issues behind the bigger euro zone picture. Says Admiral Markets' Darren Sinden. (SOUNDBITE) (English) DARREN SINDEN, MARKET COMMENTATOR, ADMIRAL MARKETS, SAYING: ''We can't say that all euro zone economies are firing on all cylinders at the same time. Finland slipped back into a technical recession earlier in the month, and if we were able to dig down deeper into the data, I suspect we would find that that is the case elsewhere too.'' IG's Alastair McCaig also has concerns. (SOUNDBITE) (English) ALASTAIR MCCAIG, IG MARKET COMMENTATOR, SAYING: ''Although the sentiment figures we've seen out of the euro zone in the last quarter of last six months have been improving, we haven't necessarily seen that replicated, certainly with the same enthusiasm, as far as the economic data is concerned.'' At 53.4, the euro zone's composite reading was weaker than expected. But business optimism is on the up - the PMI survey pointing to the strongest recruitment in four years. For its compilers, Markit, it's a sign of a recovery doing ''rather well''. As for QE, its success still hangs in the balance. (SOUNDBITE) (English) DARREN SINDEN, MARKET COMMENTATOR, ADMIRAL MARKETS, SAYING: ''The question I suppose for investors is whether we're going to have in Europe a Japan-like experience, where it hasn't really achieved very much ... Or would we get an American-style bounceback where QE aided a strong recovery in the economy. And it's to the latter that the ECB will be hoping that their QE moves.'' And it could, he adds, take another six months for that to become clear.