Austrian industry is in excellent condition at the start of summer 2017. It not only remained on its growth path, the upturn also actually accelerated. "The UniCredit Bank Austria Purchasing Managers' Index rose to 60.7 points in June. After February 2011, the Indicator therefore reached the second highest level since the start of its survey in autumn 1998. Industrial activity is still showing no signs of fatigue and was more dynamic than ever at the start of summer", said UniCredit Bank Austria Chief Economist Stefan Bruckbauer.
The upward trend can be felt at a broad level. Nearly every partial result of the monthly survey of Austrian Purchasing Managers shows a clear improvement compared with the previous month. "In June Austrian industrial enterprises expanded their production very significantly. Additional staff were also recruited in order to cope with the large number of new orders. In this strong demand environment, however, raw material prices are still rising in spite of the dampening effect of the oil price", said Bruckbauer.
The considerable increase in new and follow-up orders had the strongest impact on the rise in the UniCredit Bank Austria Purchasing Managers' Index in June. The Subindex for New orders climbed to 62.1 points, the highest level since the start of 2011. "In June industrial enterprises in Austria again received more orders from abroad. However, domestic demand increased very substantially. As a result, industrial companies expanded their production to a noticeable extent. The Production Index rose to 62.2 points, i.e. the second highest level ever", said UniCredit Bank Austria Economist Walter Pudschedl. In spite of the expansion of production capacities, order backlogs rose again in June. It is apparent that Austrian industrial enterprises slightly underestimated the strength of demand.
Boost for the job market
The strong economic boost for Austrian industry is having an increasingly positive effect on the job market. Employment in manufacturing increased by around 2.5% - with a rising tendency recently- in the first six months of 2017. Taken as an annual average, the number of employees will rise to 600,000 for the first time since the crisis year of 2008.
The number of jobseekers in the sector will decrease appreciably at the same pace to less than 30,000.
"The unemployment rate will probably decline in the economy as a whole in Austria from 9.1% last year to 8.7% in 2017. The unemployment rate in manufacturing industry will actually decrease even more. With a probable drop of half a percentage point to 4.5%, manufacturing will further extend its comparatively more favourable position in 2017", was Pudschedl's expectation.
Oil price curbing price dynamism in purchasing
The rise in average input prices dropped in June for the third time in succession since the lower oil price checked the upturn caused by other raw materials, e.g. many metal products and plastics. Since the increase in output prices also slowed down slightly in June, the earnings situation of companies did not change overall due to price trends compared with the previous month.
Good prospects: highest industrial growth since 2011
Industrial activity is therefore buoyant in the middle of 2017. Standing at more than 60 points, the latest UniCredit Bank Austria Purchasing Managers' Index indicates a highly dynamic growth phase which should also continue in the next few months. This is firstly based on some partial results from the latest Indicator. The index ratio between "New orders and stocks" is very high at 1.25, which shows that the strength of demand will probably lead to further marked rises in production compared with the respective previous month after taking account of existing stocks capacities in the summer months. Secondly, the European environment is also still strong. The provisional Purchasing Managers' Index for the eurozone rose to 57.3 points while the most recent IFO Business Climate Index for Germany stood at 115.1 points, i.e. the highest level since 1991.
"In view of the very positive economic environment at present, production expectations of Austrian industry are still clearly pointed upwards. The Index for Future Output was at a high level in June (66.8 points): Calculated as part of the Purchasing Managers' Index survey, it holds out the prospect of noticeable expansion in the industrial sector over the coming twelve months. In 2017 we are now expecting an increase of at least 3.5% in production in domestic industry. This would represent the highest figure since 2011", concluded Bruckbauer.
Enquiries: UniCredit Bank Austria Economics & Market Analysis Austria
Walter Pudschedl, Tel.: +43 (0) 50505 - 41957;