BA-CA Purchase Managers' Index in January:
Rapid industrial growth slows
- Slower growth in the number of orders, particularly from abroad
- Continued growth in employment albeit at a slightly slower rate
Following the sharp rise in the BA-CA Purchase Managers' Index (BA-CA PMI) during the past year, growth is likely to have peaked in November 2006. Having fallen slightly for the first time in December to 57.7, the PMI recorded a perceptible downturn to 56.0 in January. "Industry is continuing to grow but the period of extraordinarily rapid growth is now past", said Marianne Kager, Chief Economist at Bank Austria Creditanstalt (BA-CA).
Purchasing managers reported slower growth in foreign orders, in particular; this index fell from 57.4 to 54.7 – the lowest figure since October 2005. "The situation regarding domestic orders remains more encouraging. Economic activity is cooling more slowly here", stated Stefan Bruckbauer at the BA-CA.
The index for incoming orders fell from 57.3 to 55.4 – the lowest figure since February 2006. The production indicator posted a similar decline from 58.9 to 56.9 – also the lowest figure since February 2006. Accordingly, reported growth in orders on the books also turned out to be lower than last month's figure. The index achieved a figure of 54.2, demonstrating that Austria's industry still has a substantial order backlog. Appropriately employment also increased in January, albeit somewhat less sharply than in December. "Growth in employment in the industrial sector remains strong despite a slight decrease in the rate of growth", said Kager.
The continuing reduction in stocks of finished goods, the renewed extension in delivery times and further stockpiling of primary materials provide further signs that Austria's industry remains very dynamic. However, it is likely that growth in these indicators also peaked at the end of 2006. The same is true of purchase prices.
Despite the downturn in all the indicators, it must be said that Austria's industry is growing rapidly at the beginning of the new year. The growth could even exceed the average rate for the last ten years once again. If the expected slowdown is now becoming apparent, this contraction in industrial growth is occurring across Europe. "The rate of growth posted by Austria's industry is slowing. The sector is moving into calmer waters but we see no signs of it becoming becalmed", said Bruckbauer.
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)5 05 05 DW 41951