Bank of England turns to Google to understand UK economy

13th June 2011

The UK's central bank is using internet search data in order to widen its understanding of unemployment, consumer spending and the housing market, as reported on The Guardian's website.

The decision to use search data was announced in the Bank's Quarterly Bulletin after it found a correlation between Google searches for 'estate agents' and changes in house prices.

As reported: "Research has shown evidence of a correlation between the volume of certain search terms on Google and economic data from traditional surveys. Although the Bank admits that the approach has its limitations, it believes online search data can be an increasingly useful source of intelligence about the state of the UK."

Nick McLaren and Rachana Shanbhogue, who wrote the article, are quoted as saying. "As further developments are made in this area, and the backrun of the data increases, these data are likely to become an increasingly useful source of information about economic behaviour."

They claim Google search data is more contemporaneous than official job market data; the quarterly labour force survey (LFS) data for January-March is published in mid-May.

However using Google search has its limitations.

"There is only a short backrun, there is no information on the actual volume of searches, and as the index is based on a subsample the backrun of data can change," Shanbhogue and McLaren warned.

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