BA-CA Purchasing Managers’ Index in November:
Industry picks up the pace again, PMI reaches record high
- Production flying high, order books swell again
- Industry posts strong employment growth with signs of bottlenecks in capacity
Austrian industry will be powering full speed ahead until the end of the year. "The BA-CA Purchasing Managers’ Index reached its highest level ever in November", reported Marianne Kager, chief economist at Bank Austria Creditanstalt (BA-CA). Sitting at 58.9 the PMI rose by another 0.9 points compared to October. "The renewed improvement in sentiment in November means that industry growth will remain above 10 percent until the end of the year", said Stefan Bruckbauer from BA-CA.
All of the major components of the Purchasing Managers' Index played instrumental roles in this latest rise. For example, the ratio of queried purchasing managers reporting an increase in industrial production growth over the previous month rose from 58.2 to 59.8. At the same time there was another rise recorded in incoming orders following a slight dip in October. The situation is similar for the intake of foreign orders, which once again managed to accelerate after the period of decline that followed its peak in April. "Foreign demand is picking up again in what is left of the year", said Marianne Kager, going on to say that "this renewed acceleration towards the end of the year was really not anticipated in the summer." According to the economists at BA-CA, the increase in foreign demand cannot be attributed solely to the pull-in effects of the German hike in value added tax, which is also demonstrated by the improved industry sentiment in most European countries. Moreover, domestic demand is proving to be rather robust as well.
In keeping with this strong industrial activity, the employment figures at manufacturing companies also rose in November, with the corresponding value moving from 55.2 to 56.4 and thus only marginally short of the record figure recorded in September. The indicator for purchase quantities reached its highest level in the eight years since the survey began, rising from 58.8 to 59.7. At the same time the majority of queried purchase managers complained of delivery delays, with the ratio of those reporting longer delivery deadlines remaining well above the average. Prices continued to increase sharply as well, recording a figure of 69.1 in November which is only just under the record values of the previous months. "The keen demand of recent months is increasingly resulting in bottlenecks in industrial capacity, which impacts positively on employment growth yet has its downsides in the form of delivery delays and price hikes", said Bruckbauer.
All in all the year 2006 is set to be one of the best years for Austrian industry since the 1960s. With growth expected to be in the region of 9 percent, 2006 will rightfully number among the best years for Austrian industry since the 1960s. Looking back over the present decade, it is certainly the most successful year. By European comparison there is no other country in the euro area that has grown as strongly this year, and if one looks back over the development of the euro area since 1999, Austria sits in second place behind only Ireland as regards industrial output. BA-CA assumes that industrial production will continue on its dynamic course through into 2007.
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 Economics & Market Analysis
Stefan Bruckbauer, Tel. +43 (0)5 05 05 41951