BA-CA Purchasing Manager's Index in December:
Industrial sector still steaming ahead at the end of the year, but past its peak
- Industry books 1 per cent growth per month since May
- Good order levels and job growth continue
- No signs of a noticeable slowdown yet
The BA-CA Purchasing Manager's Index consolidated somewhat in December after climbing to a new record in November, slipping back from 58.9 to 57.7. "The index couldn’t hold the high level from November and we saw drops in all of our PMI indicators, though none were significant", said Marianne Kager, chief economist at Bank Austria Creditanstalt (BA-CA). In spite of this decline, production growth remains robust at the end of the year. "In spite of this slight reversal in the PMI, year-on-year industrial growth at the end of 2006 is certain to top 10 per cent," said Stefan Bruckbauer.
All PMI indicators for December showed vigorous activity in the industrial sector in Austria, with only a slight slowing. The production indicator fell from 59.8 to 58.9, but this still means that the great majority of industrial companies polled reported increasing output. New orders, both from Austria and abroad, also increased significantly in December, though at a somewhat slower rate than in November. In spite of this, production was not able to keep pace with the incoming orders, and the level of orders on the books rose again. The index figure was 56.0, lower than the 59.1 posted in November but still well above the 50 mark.
Another sign that economic growth is continuing in spite of the slight slowdown is the fact that finished goods stocks decreased again, at a faster rate than in November. The labour market also benefited from the strong economy: the queried industrial companies reported an increase in the number of jobs, and the indicator remained virtually unchanged from November at 56.3 (down marginally from 56.4).
The PMI shows that a large number of companies are still reporting longer delivery times for primary materials, but less than in November. The corresponding indicator rose from 37.1 in November to 38.9 in December. "Industry is still working at its capacity limits, though the level of activity has declined marginally since December," said Kager. The rate of increase for purchasing prices slowed somewhat as well, but the index value is still high at 67.4.
All in all, Austrian industry is finishing off the year 2006 in excellent shape. Production has been growing by 1 per cent a month for months, a situation that was last seen in 1999. "Even though our index fall back somewhat in December, Austrian industry has lost none of the vigour that we first saw in May," said Bruckbauer, "The figures for December show no signs of a noticeable cool-down at the beginning of 2007." Nevertheless, the economists at BA-CA are expecting economic growth to slow as 2007 progresses, especially as a result of weakening foreign demand.
Note: PMI figures above the 50.0 mark indicate growth in the manufacturing sector compared to the previous month; readings below the 50.0 mark indicate contraction. The greater the divergence from 50.0, the greater the change signalled. This report contains the original data from the monthly survey among purchasing managers of industrial companies in Austria. The survey is sponsored by Bank Austria Creditanstalt and has been carried out by NTC Research under the auspices of ÖPWZ, the Austrian Productivity and Efficiency Centre, since October 1998.
Enquiries: Bank Austria Creditanstalt Group Economics and Market Analysis
Stefan Bruckbauer, Tel. +43 (0)5 05 05 ext. 41951