BA-CA Purchasing Manager's Index in July:
Industry keeps its summer break short
- PMI points up again in July
- Higher level of orders confirms continued brisk industrial activity
- Pace of growth will slow little in the second half of the year
The Bank Austria Creditanstalt Purchasing Manager's Index (BA-CA PMI) rose again slightly in July from 53.5 to 53.8 after its dip in June. This is indicative of stabilising industrial growth. "Austria's industry kept its summer break short. The sector is still showing good growth," says Marianne Kager, chief economist at BA-CA.
Growth in new orders slowed somewhat in July because of lower domestic demand, but increasing orders from abroad were able to compensate for this in part. Kager: "Export orders were again a major source of business for Austria's industry." This index component rose again above the growth threshold of 50 – from 49.4 in June to 50.8 in July to be exact.
Even though new order intake slowed somewhat, industrial output rose slightly in July, and the index component climbed from 53.6 to 54. Purchasing managers also reported a higher level of orders on their books. The index component for orders on hand even jumped nicely from 51.2 to 53.4. This points to continued good industrial activity in the third quarter.
Brisk economic activity in key markets, which was good for Austrian industry, also led to limited supplies of raw and input materials and high material costs. Companies were again confronted with strong rises in average purchasing prices in July. Selling prices in industry went up slightly as a result, this index component rose from 53.0 to 53.8.
"The indicators are pointing to robust industrial activity. Growth is stabilising – and at a higher level than we expected in the spring," says Kager. The employment figures for July also mirror this development. The employment index reached 53.1, which means that companies are building up staff, though not at the same rate as in May and June.
The economists at BA-CA are still optimistic about the second half of 2007. Industrial growth will be slower than last year, but the difference will be moderate. Rising levels of orders on hand, higher prices and higher employment levels mean that industrial activity may flatten towards the end of the year. But it is already apparent today that any slowdown will be moderate. Kager: "All in all, Austrian industry will enjoy a better year than average in 2007."
charts (PDF; 64 KB)
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) 50505 ext. 41951