Europeans have started going back to work, shopping and dining, suggesting that the worst economic damage from the blockages of the coronavirus pandemic has passed, but overall activity remains well below standards normal, which indicates the long-term recovery the region is facing.

High-frequency data indicators such as mobility and consumer spending suggest that the sharp economic contraction that has hit major European economies since March began to ease in May and early June.

The figures are more up-to-date than official economic indicators, which were only released in April, although they are also experimental and to the extent that they reflect later trends documented in official data is variable.

“There is evidence that European economies are going through the worst of this very sharp drop in production,” said Neil Shearing, group chief economist at Capital Economics. “Things are starting to melt. . . but I think the recovery is going to be extremely weak. ”

For many economists, the data confirms the idea that the pandemic has widened the gap in economic performance between the countries of northern and southern Europe.

Shopping and leisure

Eurozone buyers bought fewer goods in April than in any other month since records started in 1995, official figures show. However, since the closings began to loosen in May, trips to stores, bars and restaurants have started to increase again, particularly in France and Italy, according to data from Google Mobility.Spain and the United Kingdom lag behind, while Germany and other northern European countries experienced more moderate contraction and smaller differences from pre-crisis levels, reflecting in many of the less stringent restrictions.

Car sales in the EU fell 76% a year in April, according to industry data. But browsing the Internet, a forward indicator of spending, indicates a certain normalization of consumer demand. Car sales website visits increased in early June as showrooms started reopening, according to web tracking company SimilarWeb. Europeans have also shown renewed interest in buying furniture and homes.

High-frequency data indicates “that the recovery took off in mid-May, with Germany in the lead,” said Claus Vistesen, chief eurozone economist at the Pantheon Macroeconomics.

But economists warn that the recovery will be gradual across the region, particularly in countries and sectors where closings have been tighter or hampered by some lingering restrictions, as well as weak consumer and business confidence.

Bert Colijn, senior economist at ING, warned that “a lot of restrictions will stay with us for a while, which means [activity] it will take longer to return to its pre-crisis level. “

Job

Figures to be released this week should show that in April industrial production in the euro area experienced the sharpest contraction since records started in 1992. But data from Google Mobility suggests that the decline in travel by Europeans to factories and offices eased in May. The same pattern is reproduced in the data on roads and public transport.

Nikola Dacic, an economist at Goldman Sachs, said the mobility indicators should be “very informative about the rate at which activity increases in the initial phases of recovery”, as the crisis is mainly due to movement restrictions.

New job openings remain moderate, however, even in less affected economies like Germany.

The high unemployment rate and declining household incomes should also contribute to the continued economic slowdown. Rosie Colthorpe, an economist at Oxford Economics, said that across Europe “high uncertainty and poor job prospects mean consumers can choose to save rather than spend.”

European governments and central banks have supported the economy with major stimulus packages, but some economists fear that support will run out before activity is strong enough to support more hires. “We believe that a fragile recovery will require regular interventions for some time,” said Nadia Gharbi, European economist at Pictet Wealth Management.