24You

The new online banking of Bank Austria.

BusinessNet

The online banking for companies.

olbImgAlt To the MegaCard GoGreen-youth account
MegaCard GoGreen-youth account. The free MegaCard GoGreen-youth account for everyone from 10 to 20 years, and receive a welcome gift. To the MegaCard GoGreen-youth account
30.10.2006

BA-CA Purchasing Managers' Index in October:
Rising Employment and Sales Prices Confirm Strong Level of Industrial Activity

  • High backlog of orders ensures strong second half-year
  • Growth will remain above 10 per cent in the next few months

"Austrian industry also reported strong growth in October," said Marianne Kager, chief economist at Bank Austria Creditanstalt (BA-CA), summing up the result of the BA-CA Purchasing Managers' Index for October. Although the BA-CA PMI dipped slightly to 58.0 compared to 58.2 in September, it remained at a very high level. "The second half-year will probably be one of the most dynamic in recent years for Austrian industry," said Stefan Bruckbauer from BA-CA.

Purchasing managers once again reported a slight acceleration in production growth for October compared to September, with the reading rising from 57.3 to 58.2. This strong growth in industry thus follows a sharp rise in incoming orders in recent months. In October the indicator for incoming order growth was very high at 58.1, despite a slight decline compared to September (59.0). The same is true of the intake of foreign orders, which continued to grow extremely dynamically, although it was not possible to maintain the brisk pace reported in September. In keeping with the slight decrease in incoming orders and sharp increase in production, the assessment of total orders fell slightly from 59.5 to 57.9. According to Kager, "Austrian industry is still well supplied with orders even if order growth weakens slightly". The BA-CA economists do not therefore anticipate any slowdown in industrial production. In the closing months of the year, growth could even rise noticeably above 10 per cent.

This high level of industrial activity also led to a further increase in the level of employment in industry, even if the pace of employment growth is slowing down somewhat. However, at 55.2, the relevant index remains well above the 50 mark, albeit slightly lower than in September (57.5). Nevertheless, this reading is still the third highest since the BA-CA launched its PMI in 1998. "Austrian industry will once again be unable to meet this strong demand in autumn with existing resources, as a result of which employment will continue to rise accordingly," said Bruckbauer. Purchase quantities as reported by managers also continue to show strong growth, with the index rising from 57.7 to 58.8. The downside of this trend is the sharp increase in prices, the reading for which remained extremely high in October at 70.0. However, strong demand is increasingly allowing Austrian industrial companies to raise their sales prices. At 56.6 this indicator even reached its previous record level again. "Due to strong demand, Austrian industry can increasingly pass on some of its higher costs in the form of higher sales prices," said Bruckbauer. In 2007 the BA-CA economists are expecting the pace of industrial production to decrease somewhat as a result of developments in the most important sales markets, although Austrian industry is not yet feeling any signs of this.

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.

 charts

Enquiries: Bank Austria Creditanstalt Economics Department
Stefan Bruckbauer, Tel. +43 (0)5 05 05 EXT. 41951
E-Mail: economic.research@ba-ca.com