European schoolchildren’s return to the classroom has boosted their parents’ office attendance, but leisure activity has begun to fall as fresh coronavirus-related restrictions hold back the economic recovery in the continent’s services sector, data suggest.

Alternative economic data such as travel volumes, visits to entertainment venues and restaurant bookings indicate that the resurgence in infections is choking off earlier signs of revival in the most affected industries.

But the reopening of schools across the continent for the start of the autumn term has helped boost the number of people travelling into their workplaces and public transport use is rising in many cities.

“Decelerating high-frequency data point to ebbing economic momentum,” said Ludovico Sapio, economist at Barclays. A sustained recovery in domestic demand has “yet to materialise” and any recovery is likely to be “all the more fragile and protracted” given the resurgence of Covid-19 cases, he said.

Since the onset of the pandemic, alternative economic data have become a widely-watched early indicator, although their link with official statistics is uncertain.

This is especially so as changes in output have become smaller and harder to measure accurately than the massive drop-off in activity at the height of national lockdowns. Seasonal effects also make the interpretation of alternative data complex.

Eurozone services activity declined in September, according to a widely watched business sentiment survey published this week, although manufacturing continued to improve. A recovery in global trade is supporting growth in export-led industries.

Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said the overall position was “start-stop cycles in the most virus-sensitive sectors, governed by shifts in restrictions to keep the disease in check”.

Restrictions rise again

Compared to this spring, virus-related restrictions in Europe are still light, “but . . . they look quite broad-based”, said Evelyn Herrmann, economist at Bank of America, who warned that risks to the recovery “are growing — from rising restrictions and from consumer and business behaviours even without these restrictions”.

Line chart of 100 = strictest level of restrictions showing European countries' Covid restrictions: a mixed picture

Reopening of schools boosts travel

The reopening of schools helped more workers return to their workplaces in September, Google data suggest, although work-related travel is still below pre-crisis levels in all main European economies as working from home remains common.

The use of public transport has risen this month in many European cities, according to Moovit, a transport and mobility app.

Angel Talavera, head of Europe economics at the consultancy Oxford Economics, said an improvement in alternative economic indicators this month, led mainly by increased mobility and the return to school and work, was “rather encouraging”.

Line chart of % change from pre-crisis levels (rolling seven-day average) showing Travel to workplaces has increased

Line chart of % change compared to pre-crisis levels* showing Public transport use is rising in some cities

Exports lift manufacturing

Measures of manufacturing and exports activity are also improving. The Freightos Baltic China-Europe rates index — a proxy for the health of the shipping container market — rose in September after global trade increased over the summer.

The numbers of trips made by German lorries on toll motorways remained steady in September and the Bundesbank’s weekly activity indicator, an experimental measure, was still showing a strong reading in mid-September, the latest data available.

The German economy, which is more reliant on exports and manufacturing production than other main European nations, looks “more resilient than expected”, said Stefan Schneider, chief economist at Deutsche Bank.

Line chart of Freightos Baltic China / East Asia 40 Container Index, rebased showing Freight rates from East Asia to Europe are rising

Line chart of Index, seven-day rolling average showing The number of truck trips in Germany has plateaued

Fresh downturn in services sector

Europe’s services industry is suffering from the resurgence of the virus.

Across Europe’s four largest economies — Germany, the UK, France and Italy — travel to hotels, bars and restaurants has declined from this summer’s highs, according to Huq, a company that tracks geospatial location data.

Cinema revenues are largely depressed across Europe and are declining again in countries including France, Spain and Germany, which experienced a pick-up after national lockdowns lifted.

The growth in searches for car rental, travel and hotels in France, Germany and the UK has levelled off and in some cases begun to fall, according to SimilarWeb, a website tracking company.

Barbara Teixeira Araujo, an economist at the rating agency Moody’s, said the services sector “is already feeling the pain from the resurgence in cases”.

Line chart of Average for France, Germany, Italy and the UK, by type of destination (2019 level = 100) showing The recovery in travel to European services hubs falters

Chart showing that the box office: people are returning to cinemas, but some markets are recovering faster than others
Line chart of France, Germany and the UK, by type of search (annual % change, rolling seven-day average) showing The recovery in travel-related web searches has stalled

International travel slows again

International travel was one of the worst-affected industries in the early stages of the pandemic and now that Europe’s main summer season is over, it is taking a fresh hit.

In September, flight numbers declined relative to last year, reversing the summer’s steady recovery, according to FlightAware, a flight data website.

Domestic tourists helped to fill up European hotels during the summer and hotel occupancy nearly doubled to 40 per cent between June and August, according to hotel consultancy STR, but September saw a reversal of the trend.

The fall in occupancy rates was sharpest in Spain, where about one in three hotels has failed to reopen at all, the highest proportion of any main European economy.

Line chart of Daily flights to and from European airports (rolling seven-day average, '000s) showing Europe's flight numbers dipped in September

Line chart of Occupied rooms as % of total available (open hotels only) showing European hotels are filling fewer rooms

Doubts over jobs prospects

Spain is also the first leading economy to show signs of a fresh deterioration in the labour market, according to jobs website Indeed.

Job opportunities in most other countries remain well below pre-pandemic levels and swaths of jobs across the continent have been supported by unprecedented levels of government aid.

But “the eurozone is now entering a tricky transition period from gradual withdrawal of government support toward implementation of the EU’s economic reform programme”, warned Marion Amiot, senior economist at the rating agency S&P.

Line chart of Job postings on Indeed (annual % change) showing Job opportunities remain depressed


Source link

Comments to: Europeans return to workplace but reduce leisure activity

Your email address will not be published. Required fields are marked *

Attach images - Only PNG, JPG, JPEG and GIF are supported.


Welcome to Typer

Brief and amiable onboarding is the first thing a new user sees in the theme.
Join Typer
Registration is closed.