BA-CA Purchasing Managers' Index in September:
Industry steps on the gas
The Purchasing Managers' Index of Bank Austria Creditanstalt (BA-CA) rose strongly again in September to 58.2 compared to 56.3 in August, thus almost topping its record high of 58.4. "Production managers reported a brisker pace of activity in September compared with the second quarter as industry managed to expand by more than eight percent", said BA-CA chief economist Marianne Kager. "This renewed and powerful rise in the Purchasing Managers' Index was surprising and points towards very high industrial growth for the third quarter", revealed Stefan Bruckbauer.
All components of the PMI improved in comparison to August, which underlines the robust nature of industrial activity moving into the autumn. This renewed growth in industry was boosted substantially in September by external demand. The partial index for export demand rose from 55.8 to 59.3, thus outstripping the growth figure for all new orders, which rose from 57.1 to 59. "Order intake proved to be more dynamic in September than in August, which is primarily attributable to the rapid pace of export orders", added Kager. The good level of orders in recent months is also confirmed by the optimistic assessment of total orders at 59.5. In keeping with these trends the production managers reported a stronger increase in production for September than in August. The relevant indicator rose from 56.9 to 57.3. "In light of such encouraging order activity and production expectations, industrial output in September is likely to reach its highest annual growth rate of this current upswing, and we are anticipating a figure of almost 10 percent", said Stefan Bruckbauer.
The robust order intake and the rising production volumes also led to renewed growth in employment in September, with the indicator rising from 53.8 to 57.5, its highest mark since the PMI began in 1998. "The increase in industrial employment seen over recent months is set to continue through the autumn and could even pick up pace", revealed Marianne Kager. This encouraging picture painted of industrial activity is complemented by somewhat stronger growth in sales prices, the continued drop in inventories of finished goods and the ongoing rise in purchase prices despite the decline in raw material prices. Purchase quantities reported by purchasing managers have also increased more strongly.
Thus overall, industrial activity is maintaining a somewhat higher rate of growth in the autumn than was anticipated even a short time ago. In line with this development the economists at BA-CA have once again revised their economic growth forecast for 2006 upwards. "In keeping with the extremely robust industrial activity in the autumn, Austrian economic growth in 2006 shall exceed 3 percent; we expect a figure of 3.1 percent", said Bruckbauer. The economic experts at BA-CA continue to predict that global economic activity will cool down in 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 Department
Stefan Bruckbauer, Tel. +43 (0)5 05 05 EXT. 41951