“Housing IS the business cycle” stated Professor of Economics, Edward E Learner, in his well-known paper on the subject*. Even if patterns have shifted slightly since the crisis in 2008, housing is still perceived as being a ‘robust forward indicator’ to cyclical economic swings. So, having accurate, up-to-date information on what’s happening in the construction industry plays a vital role in economic forecasting.
Enter ConsTrack, conceived and co-developed by ESA and GeoVille – an Austrian global leader in satellite-based land monitoring. ConsTrack is an innovative, automatic system that offers very precise status reports and images of large-scale construction from Space covering substantial areas; enriching and adding value to the array of business cycle indicators available.
While satellite-based remote sensing has a relatively long track record in areas such as agriculture and climate, its arrival on the economics scene is quite novel.
Maria Lemper, Project Manager at GeoVille, says: “Until now we’ve only had statistical information – without spatial coverage. ConsTrack gathers reliable and consistent spatial data in near real-time and transforms them into meaningful, objective statistical information.”
Roberta Mugellesi-Dow, Technical Officer at ESA explains: “ConsTrack’s IT information system uses big-data processing of the data streams of Sentinel-2 (one of the satellites from the EC’s Copernicus programme, developed and operated by ESA), covering the whole of Europe on a weekly basis. As a result we have a complete overview of construction activities on a national and European level.”
ConsTrack can provide insights such as when construction starts, the size of the site (i.e. in km²) as well as the type of construction. In this way, the system enables regional and commercial banks to monitor and report on construction activities in a standardised way.
Traditionally, conventional indicators such as building permits have been used to monitor developments in the construction industry. But surveys can be compromised by human interference, insufficient coverage, or delays in their availability, as well as being affected by bias. Building permits also only indicate the wish or desire to build, whereas ConsTrack expresses the actual construction activity.
“ConsTrack provides a satellite-based indicator that can significantly increase the relevance, accuracy and timeliness of economic observations which have an immediate impact on stock and credit markets.”
Maria Lemper, GeoVille
“We have the final algorithm ready and the system is operational,” continues Lemper; “It’s a very exciting time for GeoVille, we already have the first interested customers on board and are looking forward to future cooperation.”
* Leamer, Edward. (2007). Housing Is the Business Cycle. International Economic Review Proceedings. 46. 149-233. 10.1016/B978-0-12-397874-5.00047-6.