Real-time data shows the economy is bouncing back already – but how long will it last?

The rest of the summer and the autumn may well be a two-steps-forward, one-step-back affair, writes Hamish McRae

Chancellor Rishi Sunak serves food to customers in Wagamama, after announcing meal discounts for restaurant patrons in a bid to help the industry recover from the coronavirus crisis (Rishi Sunak)

Are you dining out this week, using the chancellor’s £10 voucher to do so? Or maybe you’ve realised you will need a new car come the autumn and have looked up prices online? Perhaps you’re wondering whether this is the moment to move from the flat for somewhere with a garden, checking your options on Zoopla?

If you are doing any of these, you are, of course, part of the back-to-normal trend across the UK economy. But you are also doing something else. You are giving real-time information about what is happening to the economy, and the big message from that is that in the UK, activity is coming up steadily – so far.

The “so far” qualification is important because until the end of June, much the same was happening in the US, but July was flat. The first few days of August look a little better – but keep your fingers crossed.

Real-time data is the great revolution in economic statistics. Until this year, everyone focused on official data: GDP figures, retail sales, unemployment and so on. But all these are backwards-looking and in any case, are frequently revised. The main forward-looking stats are the purchasing manager indices, or PMIs, a clumsy phrase for a polling operation of companies. They are asked whether they expect orders, production, exports, employment and so on to go up, down or sideways. In normal times, they give a decent feeling for what will happen to the economy. But this year has been so utterly abnormal that they don’t help much. If an airline has grounded its entire fleet, it cannot say anything very helpful about the demand for air travel.

So here is a quick sketch of real-time data for the UK. Seated diners on the Open Table network fell to zero but are now back up to 80 per cent of the level of 12 months ago. Hotel occupancy in the UK regions is running at 50 per cent, which is very low, and in London at about 20 per cent, which is catastrophic. The message is that restaurants are recovering but hotels aren’t.

Driving, however, is pretty much back to normal, with the Apple mobility index running 40 per cent above its January level. Public transport indicators are all coming up but differ as to the extent of the revival. Citymapper reckons usage of 40 per cent of the normal level, Apple around 60 per cent, but both are climbing steadily. The message here is that we are happy to use our cars but cautious about trains and buses.

That squares with something else. Google searches for car brands are running well above the normal level for this time of year, as are property searches. People are planning ahead. They also seem to be planning to travel more. Here the real-time data is still very weak, with flights at Heathrow and Gatwick about 25 per cent of normal, but EasyJet is planning to increase flights from 30 per cent of normal to 40 per cent.

Pull all this together and it looks as though the economy has recovered to around 95 per cent of its pre-Covid-19 level. Barclays do an activity tracker that shows a steady climb back from the bottom at 75 per cent of normal in the second week of April. After a blow like that – something that has never happened since the Second World War – it is encouraging that things are now only 5 per cent off. The fact that we are spending much less in restaurants is offset by higher spending on food at home and on home improvements too. But we are still running down by that 5 per cent, and the recovery may now be tailing off. That is an obvious concern as the various government support schemes come to an end.

There are two big messages here. One is that the recovery is real but overly dependent on government support. The other is that there is an embedded desire in people to get back to their normal lives, even if the new normal is going to be a bit different from the old.

My guess is that the rest of the summer and the autumn will be a two-steps-forward, one-step-back affair. There will be bouts of optimism, such as the news that world shares are at a five-month high. And there will be bouts of pessimism, particularly over the dangers of a second wave of the virus. However, if we focus on actual real-time data, we will have a speedy and accurate feeling for what is happening. So far, that message is cautiously positive.