THE US economy has not sprung back as strongly as previously thought, data showed yesterday, while other figures revealed that the recovery in housing and confidence remained brittle.

The recession is effectively over in the world’s largest economy, but relief has been tempered with concern over how robust the recovery will prove to be once the US government starts to remove some of its expensive support.

Yesterday’s data fed into those concerns. The US commerce department said gross domestic product grew at a slower pace in the third quarter than it originally thought, at an annual rate of 2.8 per cent instead of its first estimate of 3.5 per cent.

In contrast, German business morale rose in November to levels not seen since the collapse of US investment bank Lehman Brothers last year, boosting hopes that a recovery in Europe’s largest economy can gain momentum.

Economic think tank Ifo’s business climate index, based on a monthly poll of some 7,000 firms, rose to 93.9 this month from 92.0 in October, exceeding a consensus forecast for a 92.5 reading and bringing the survey to its highest level since August 2008. It was the eighth consecutive rise in the index and pushed the euro higher against the dollar and Bund futures lower.

There was also positive news from the euro zone’s second- largest economy, with French consumer spending rising more sharply than expected in October as shoppers splashed out on household equipment and clothes.

Ireland recorded the second- highest increase in manufacturing orders worked on in September among EU members, according to figures released yesterday.

Data from the EU’s statistics office, Eurostat, shows that industrial new orders in the euro zone rose by 1.5 per cent in September compared to the previous month. In the EU as a whole, orders increased by 1.7 per cent.

The highest increases in total manufacturing working on orders were in Denmark, which recorded a rise of 43 per cent and Ireland, up 19.7 per cent. The largest decreases were in Estonia, Portugal and Lithuania. – (Additional reporting: Copyright the Financial Times Limited 2009)