A new weekly activity index (WAI) for the German economy has been developed at the Bundesbank to assess the impact of the COVID-19 crisis on economic activity from a near-time perspective. “In the current situation, the WAI and the estimate of GDP growth derived from it supply valuable and, above all, timely information on how the coronavirus epidemic is impacting economic activity in Germany,” the Bundesbank’s experts write. 

From mid-March, the WAI showed a dramatic decline in real economic activity: the index value for the last week in March stood at -2.2, which corresponds to a quarter-on-quarter decline in gross domestic product (GDP) of 1.9% in the first quarter of 2020. This means that the WAI value at the end of March was quite close to the Federal Statistical Office’s flash estimate of -2.2%. During the month of April, the WAI showed a further marked fall and currently stands at -4.6. This means that economic activity (as measured by the WAI) in the 12 weeks up until 12 May was 4.6% below the level of activity in the preceding 12 weeks. “If the WAI persists at its current level through to the end of the second quarter, economic activity as measured by the WAI would be 4.6% down on the previous quarter,” the experts Report.

Composition of the WAI

The WAI is composed of seven high-frequency indicators that are recorded weekly and available with short lead times. These are augmented by data on monthly industrial production and on quarterly GDP. “One key selection criterion for including an indicator in the index is that it should display sufficient explanatory power in relation to economic activity,” the Bundesbank’s experts explain. Thus, the high-frequency indicators electricity and toll (road charge) capture the production sector and trade, respectively, while the flights indicator creates a point of reference for global activity. The unemployment and short-time work variables, which relate to the labour market, are derived from Google search terms. The cash indicator captures a part of consumer behaviour, while the air pollution variable serves as a metric for the mobility sector.