IT IS difficult to find anyone with a good word to say about the economy. Britain’s recovery from the deep recession of 2008-09 has been pitiful. Official estimates suggest that GDP is still 4% below its pre-recession peak. Among G7 economies only Italy, the largest country in the euro zone’s benighted periphery, has fared worse.

In the early months of 2011 forecasters reckoned that the British economy would grow by 2.1% this year. The latest consensus is that it will shrink by 0.3%. A forecast by the OECD, the rich-country think-tank, published on September 6th was even more dismal: it thinks the British economy will shrink by 0.7% this year.

The economy is so cursed, it seems, that it cannot even manage a bit of deflation to go with its lingering slump. Since the onset of crisis in August 2007 the average inflation rate has been 3.2%, well above the government’s 2% target and higher than in other rich countries.

Britain’s policy brass had hoped for a “rebalancing” of demand away from debt-ridden consumers and cash-strapped government towards exports supported by investment. Exports now look a poor bet. The euro zone is still in a mess; the failure of America’s politicians to agree a budget plan means their country is approaching a fiscal cliff; hitherto fast-growing emerging markets are slowing. At home, businesses have been loth to invest. Fearing a calamity in the euro zone, they have tended to pile up cash rather than splashing it on new buildings and machinery that might end up idle.

Yet there are tentative signs that the economy is stirring. An index of activity in service industries compiled by Markit, a research firm, jumped from 51 to 53.7 in August, a far stronger reading than analysts had expected (a reading above 50 implies growth). The index for manufacturing, which takes in readings for jobs and orders as well as output, rose by four points to 49.5. The latest survey of industry from the CBI, an employers group, was a bit perkier.

Jobs are surprisingly plentiful. Payrolls have increased by more than 700,000 since the first quarter of 2010, when employment touched bottom. Although the government’s deficit-reduction plan has resulted in the loss of 660,000 government jobs, 1.4m new posts have been created in the private sector (some of them are public-sector jobs that have been reclassified). And the pace of job creation has accelerated by more than can be explained by any plausible boost from the Olympic games in London. Employment rose by 236,000 in the three months to July, an annualised increase of 3.2%.

Britain’s labour market has proved more resilient than America’s. The proportion of working-age people in work in each country was similar before the crisis. The rate in Britain is now more than four percentage points higher (see first chart). Recent jobs growth is five times the rate needed to keep pace with the swelling of the working population, calculates Kevin Daly of Goldman Sachs, and is equivalent to an increase in America’s non-farm payrolls of 750,000 a month for three months. In America, growth of just 250,000 non-farm jobs a month is viewed as healthy. The jobs figures seem almost too good to be true. Sceptics point out that the fastest growth has been in part-time work and self-employment (although these categories overlap). Many laid-off staff have probably relabelled themselves as freelancers; they may have little or no paid work. But growth in casual work is what you would expect early in a recovery. And jobs growth is still impressive even when the self-employed are excluded. Why employment has been so strong, while GDP has been weak, is a mystery. Whereas America’s recovery has come from squeezing more output from fewer workers, Britain’s productivity seems to have fallen. There are competing explanations for this. A low rate of corporate bankruptcy has kept lay-offs to a minimum. Firms are clinging to experienced workers who would be expensive to rehire when the economy turns. Perhaps weak firms are kept alive and strong firms starved of capital by fragile banks. Whatever the cause of weak productivity, it must eventually pick up. Lies and statistics

Some big firms, including Tesco, have added workers to improve customer service. But in many instances, such as in the car industry (see article), more jobs are usually a response to rising sales. So the GDP figures may be understating growth. The initial estimate for the second quarter of 2012—a decline of 0.7%—has been revised upward to a fall of 0.4%. Even this smaller fall is explained by a lull in production owing to an extra bank holiday for the queen’s Diamond Jubilee in June. The early signs are that the effect will reverse in the third quarter. Manufacturing output jumped by 3.2% in July, as factories returned to normal.

Experience suggests that other revisions will follow, perhaps years later. Take the recession of the early 1990s. As late as August 1998 it was thought that the economy had recovered to its pre-recession level of output in the first quarter of 1994. It is now thought to have reached that point an entire year earlier.

Recovery may be driven by something that most have almost given up for lost. Consumer spending plunged during the recession and has languished around its level in mid-2005. But spending, particularly on durable goods, now appears to be picking up. Retail sales rose strongly in the year to August; a year earlier they were falling (see second chart). New car registrations are up 3.3% this year.

Last year could scarcely have been worse for consumers. Wages were sluggish, employment was flat, inflation spiked and jobs taxes increased. Now wages are nudging up and strong jobs growth means many more people are earning. Inflation has fallen to 2.5%, half its peak last year. And because most of the tax hikes in the government’s deficit-reduction plan were front-loaded in 2011, the fiscal squeeze is proving less painful this year for householders. Real disposable income is rising by a respectable 1.7% a year—a big improvement on a year ago, when it was shrinking.

In time, and with luck, a burst of consumer-led growth might spur more capital spending by cash-rich businesses. Firms may soon feel less need for the comfort of a large cushion of cash, if the likelihood of a nasty euro-zone blow-up recedes. The new Bank of England facilities designed to insure banks against a sudden loss of funding should help the flow of credit and make companies less anxious.

Recoveries typically have inauspicious beginnings. The rebound from Britain’s double-dip recession is likely to be tentative and modest. It is vulnerable to bad news from abroad. Fiscal tightening, though less stringent than in the past two years, will be a headwind. It will be a long time before people feel truly bullish about the economy. But at least the deep sense of pessimism may now begin to lift.