THERE are continued signs today that the recent market placidity in Europe is not proof the crisis is over. Begin with this Reuters piece, with the encouraging headline, "Eurozone shows further signs of recovery". Splendid! Only:

Markit’s Eurozone Composite PMI, based on business activity across thousands of companies, and a good gauge of economic growth, rose in January to a 10-month high of 48.6 from 47.2 in December – an improvement on the preliminary reading of 48.2. While still below the 50 mark that divides growth and contraction, where it has been since February last year, it has risen for the third straight month.

The good news, in other words, is that the euro-zone economy continues to shrink, albeit at a slower pace. Digging into the figures, it is clear that there is some legitimately good news. German activity showed an outright expansion in January and contraction in Spain has slowed dramatically from late last year. But Italy is merely treading water, and the recession in France—the euro area's second-largest economy—is rapidly deepening in a very discouraging sign.

Movements in bond yields add to the troubling French picture. When markets move to more of a "risk on" position, French yields rise. German bunds do the same, but Germany's debt picture is less troubling and its economy is more robust. Too much optimism in Europe could tip France toward peripheral status.

France is also distressed by the impact of calmer financial markets on the euro. Euro-area panic had one useful side effect: the euro tumbled against other major currencies, providing a boost to euro-area exporters and an uptick in external demand for the single currency's desperate economies. As crisis fear recedes, the euro rises, the more so since the European Central Bank is decidedly less interested in fighting slow growth and high unemployment than central banks in America, Britain, and Japan. The French domestic economy is shrinking; if market confidence fades further, the French government may find itself moving from gradual to crash austerity, worsening this condition. France has rapidly become less competitive relative to euro-area trade partners; at the start of the crisis French unit labour costs were well below those around the periphery, but they have since risen while high unemployment has squeezed down wages elsewhere. If extra-euro-zone trade can't buoy up the economy, higher unemployment is inevitable. That is a major reason why Francois Hollande is now sounding the alarm on the euro's strength and calling for an exchange-rate policy. Essentially none of the past year's improvement in the euro area's current-account balance can be attributed to France.

Meanwhile, it certainly doesn't help anyone that German economic strength is scarcely translating at all into more domestic purchases. Retail purchases continued to shrink rapidly in December, and German sales were no exception. Because the euro-area adjustment process is driven by the mechanism of high-unemployment leading to falling wages and import compression, "successful" adjustment in one part of the euro area almost by definition means increasing difficulties in another part. There is another route to success available. The ECB could ease much more aggressively, allowing the German economy to run hotter (thereby facilitating internal euro-area adjustment) and contributing to less upward pressure on the euro (thereby maintaining support from external demand). Instead, the ECB is standing by while recession and deflation proceed. Maybe the euro zone won't break under the strain. But the risk of collapse is much higher than it ought to be.