We get the first reading on US second quarter economic growth this week and most analysts reckon there will be a sharp improvement.

Growth will still be negative for the quarter, according to the report, the first of three over the next two months.

Some estimates put growth for the second quarter at an annual -1.5 per cent to -2.0 per cent, up from the tough dip of 5.5 per cent in the March quarter and the more than 6 per cent contraction in the December quarter.

At the same time there’s been another round of sentiment surveys in Europe, especially Germany, which have again suggested a slow improvement. But that’s been promised now for the past three months, without much improvement shown.

South Korea has had its strongest quarterly growth for more than five years in the second quarter, according to a preliminary report released Friday — its fourth consecutive monthly gain.

At the same time the purchasing managers’ index rose to 46.8, a 10-month high but still below the threshold of 50 that would suggest expansion is on the way.

But some economists warn that the US could be caught, like the UK, in a situation where growth is improving, but market estimates are way too optimistic.

Consumer confidence is turning down and is approaching April levels, according to the Reuters/University of Michigan survey released on Friday.

That’s despite the return of the stockmarket rally in the last 10 days (since July 10).

The accuracy of this survey will be tested this week with the latest US Conference Board survey of consumer confidence: the late June one was weak.

For the second quarter in a row UK economists have badly underestimated the state of the economy.

The first reading for the first quarter was a contraction of 1.9 per cent, which most economists thought acceptable and started revising up the second reading.

Unfortunately that was terrible; it was recast as a contraction of 2.4 per cent.

Since that news a month ago, UK retail sales seem to have perked up, unemployment isn’t as bad (but still rising) and house prices are starting to turn positive, so there were expectations of a fall in growth of just 0.3 per cent and an annual fall year on year of 5.2 per cent.

But UK GDP shrank by 0.8 per cent in the second quarter, the Office for National Statistics said, in a preliminary estimate. Compared to the same period last year, output fell by 5.6 per cent — the largest annual decline since current records began in 1955, the UK statistical office.

The UK’s GDP has contracted for five consecutive quarters, with output shrinking by a total of 5.7 per cent since the start of that period.

In contrast, South Korea saw the strongest growth in five years in the second quarter, thanks to the recovery in demand caused by heavy government spending and China. South Korean growth rose 2.3 per cent from the first quarter (which was up 0.1 per cent).

But it was still 2.5 per cent down from the second quarter of 2008. The country joins Singapore, Vietnam and China in reporting a sharp turnaround in demand and growth, unlike what we are seeing in Europe and the US.