Despite the Covid recovery, the consumer-led recovery in the Eurozone continues


Unofficial data shows that the return of new coronavirus cases in the euro area this summer has little impact on the euro area’s economic recovery, indicating that European consumers are promoting economic recovery.

High-frequency indicators show that indicators such as leisure venues, consumption, travel, and recruitment are at or close to the highest levels since the beginning of the pandemic. This indicates that the rebound in economic output in the second quarter will continue in the three months to the end of September.

The surrogate indicator is Widely concerned Since the beginning of the pandemic, because they have provided a more timely measure of activity, even if they are not as comprehensive and reliable as official data.

Capital Investment macro economist Jack Allen Reynolds said: “The delta variable seems to have a small impact on the economy.”

Silvia Ardagna, an economist at Barclays Bank, said: “High-frequency indicators indicate strong activity.”

After the sharp rise in June and July, the tracking indicators compiled by the Organization for Economic Cooperation and Development used liquidity indicators and Google Lyrics Search as proxy indicators of the labor market, consumption, and sentiment, and remained stable in August, about the same as since the beginning of the pandemic. The highest level.

A line chart of percentage changes relative to the same week in 2019 (average for 4 consecutive weeks) shows an improvement in activity in the major Eurozone economies

“The major Eurozone economies are proving [to be] OECD economist Nicolas Woloszko said that the resistance to the fourth wave of Covid infection is stronger than ever.

The optimistic outlook of the consumption-driven part of the euro area economy is in sharp contrast to the euro area’s manufacturing industry.The escalating supply chain delay is Aggravate worry According to recent surveys, companies have an outlook on the coming months.

According to statistics from the German Statistics Office, German truck mileage-a representative of industrial production-has been in an almost uninterrupted downward trend since its peak in March.

Line chart shows that German truck mileage has been declining

Ardagna said that the overall economic rebound was “driven by the recovery of private consumption, because household spending has increased sharply with the reopening of the service industry.”

Google’s data on the number of visits to bars, shops and restaurants illustrates the recovery of the entire service industry.

ING economist Bert Colijn (Bert Colijn) said: “I think we currently believe that the Delta variable has little effect on liquidity.”

A line chart of percentage change compared to pre-pandemic levels* (a rolling average for 7 consecutive days) shows that visits to shops, restaurants, and entertainment venues have almost completely recovered

The data also shows that the peak tourist season this summer is much stronger than last year. In Spain, the hotel occupancy rate has recently exceeded 50% for the first time since the pandemic began.

Jamie Lane, vice president of research at rental data company AirDNA, said: “The number of new short-term rental bookings in Germany, Italy, Portugal and Spain is rising rapidly.” The survey results are in line with booking trends tracked by travel data analysis company Sojern.

A line chart of the percentage change compared to the same week in 2019 (three consecutive week average) shows that Europeans booked more hotels

Holger Schmieding, an economist at the investment bank Berenberg, said that despite the quiet tourism industry in May and June, the subsequent high-frequency data showed a “significant upward trend” indicating that the Eurozone Mediterranean economies will “enjoy half of the normal summer” this year. .

This is permeating the work of the service sector. Data from the job advertising website Indeed shows that the level of job vacancies has skyrocketed-only Spain’s hiring levels are still below pre-pandemic levels.

“The vaccination rate has now surpassed that of the U.S., and in some cases even surpassed that of the U.K., and economic activity in the Eurozone is recovering strongly-this is good for the labor market,” said Allie Henderson, an economist at the wealth management company Investec. Say.

The pre-pandemic level* line chart of the percentage change in job postings shows that the demand for workers is rising rapidly

However, certain economic sectors are still far away from their pre-pandemic performance. For example, although the number of European flights has reached the highest level since the beginning of 2020, it is still 30% lower than the level in 2019.

A line chart of the percentage change from the pre-pandemic level* (seven-day moving average) shows that European flights have been at the highest level since the beginning of the pandemic

In mid-August, the box office revenue of the four largest economies in the Eurozone reached US$16 million, an increase of 70% over the same weekend last year. But according to data from the Box Office Mojo website, this is still far below the $50 million in the same period in 2019.

Forms of entertainment that attract large numbers of people, such as concerts and performances, are still restricted in many countries.

The histogram of the amount taken over the weekend in mid-August (in millions of US dollars) shows that box office revenue is still far below pre-pandemic levels

According to Google Mobile data, the use of public transport has improved in recent months, but in all major Eurozone countries, the use of public transport is still below pre-pandemic levels.

This has stabilized the overall economic performance of the Eurozone at a level much lower than in 2019. The EU’s output is not expected to return to its pre-pandemic scale until next year—and the United States and China have already done so.

Rory Fennessy, an economist at Oxford Economics, pointed out that “the boost from restrictions on broadband has begun to fade and is a sign of stabilization”.

Marcel Alexandrovich, an economist at investment bank Jefferies, said that in August, European economic activity had been “laterally moving.” However, he added that he believes that the Eurozone economy is still expected to grow at a quarterly growth rate of approximately 3% in the third quarter, up from 2% in the three months ending in June.

Ardagna said that she expects the euro zone’s GDP growth to reach a peak of 2.8% in the third quarter.

Overall, economists expect that despite headwinds, the recovery will continue.

Colin said that given that the latest wave of Covid-19 seems to have peaked, “the concern about the continued economic rebound in the third quarter should be reduced.”

“We do believe that Delta Air Lines poses a significant downside risk to our outlook for the rest of the year, but the current impact still seems to be modest,” he added.


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