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28.12.2007

BA-CA Purchasing Managers’ Index in December: Renewed slowdown at year-end

  • BA-CA PMI falls again sharply in December
  • Order inflow from Austria and abroad now increasing only slightly
  • Job growth slows, but still remains high
  • Weak expansion for industry in Austria at year-end

The BA-CA Purchasing Managers’ Index (PMI) fell in December from 55.0 to 53.2. Marianne Kager, chief economist at Bank Austria Creditanstalt (BA-CA) reported: “Austria’s industry is weakening slightly at the year-end, but for the time being remains in positive territory.” After the upturn in November, the Purchasing Managers’ Index dropped in December to its third lowest level this year. “Compared to December 2006, the momentum in industry has slowed considerably,” said BA-CA economist Stefan Bruckbauer.

This downturn in industrial sentiment compared to November 2007 and December 2006 stems from weaker export orders. In contrast, the slowdown in orders from Austria was less pronounced. “Although the order intake is no longer rising so quickly, orders are not yet declining,” commented Marianne Kager.

Unlike in October this year, at 51.6 the value for foreign orders remained above 50 in December, indicating further, yet slow, growth. The index component for the overall order intake (domestic and foreign) was somewhat better at 52.6, but still came in below November’s value of 53.5 and the level for December 2006 in particular, of 57.3.

In line with weaker growth in incoming orders, the industrial enterprises surveyed reported slower expansion in production. The index component for production performance fell from 55.7 in November to 52.3 in December. Although this is still positive, it is considerably below the pace of growth at the end of 2006 when the index climbed to 58.9.

Industrial enterprises also reported a signficant slowdown in orders on hand, which at 50.9 were approaching stagnation level (50).

The index component for employment also dropped from 56.8 to 54.1, although this is still very high. Growth in order intake and production has clearly slowed at the year-end, but industrial employment is still expanding very strongly at the moment” explained Stefan Bruckbauer. With regard to prices, despite the clearly slower upswing in demand in December, there was no sign of the pressure on prices easing compared to November. The increase in both purchasing and sales prices was again higher than in the previous month, although the rate of increase was still below the rates in the first half of the year. “Despite the sharper rise in purchasing and sales prices in December, the increase in the fourth quarter was the lowest for around two years,” said Kager.

Overall, the Austrian industry ended 2007 with somewhat stronger growth than in October, which was a very weak month. Nevertheless, the upswing has considerably slowed and growth has slipped from around 10 percent at the start of the year to 2 to 3 percent at present. “A further slowdown in industrial expansion would bring industry in Austria close to stagnation level and would make another downwards revision in the outlook for 2008 necessary,” commented Stefan Bruckbauer. However, the BA-CA economists assume that the downturn will not continue at this pace over the next few months.

Note: PMI figures above the 50.0 mark indicate growth 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, which 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)50505 ext. 41951
E-mail: economic.research@ba-ca.com