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30.10.2007

BA-CA Purchasing Managers' Index in October:
Austria's industry unable to avoid the global slowdown

  • Overall orders position stagnant because of falling foreign orders
  • Growth in production ebbs markedly
  • Employment remains buoyant for the moment

The BA-CA Purchasing Managers' Index (BA-CA PMI) fell from 55.4 to 52.8 in October, which is the lowest level for two years. Marianne Kager, Chief Economist at Bank Austria Creditanstalt (BA-CA): "Having trended upwards in August and again in September, the BA-CA PMI has now fallen sharply in October. Industrial growth is now weakening perceptibly." The main trigger for the fall in the BA-CA PMI was the decline in incoming orders. "Incoming orders stagnated for the first time in over two years and foreign orders even fell", says BA-CA economist Stefan Bruckbauer.

In October, the index for incoming orders fell from 53.8 to 50.1. The decisive factor behind this development was the reduction in incoming orders from abroad, which fell to the lowest figure, at 48.2 index points, for two and a half years.

In line with the slowdown in demand, the industrial companies surveyed also reported slower growth in production; the index fell from 55.9 to 52.1. "The downturn in industrial growth in October was the sharpest since the recession in 2001," summarised BA-CA Chief Economist Marianne Kager. Despite weaker growth in output, there was a further slight rise in stocks of finished products because of stagnant demand; the relevant index rose from 51.9 to 52.0. The figure for orders on hand declined to 50.3, which is close to the stagnation level of 50.

"Despite the stagnation in incoming orders, growth in employment in industrial companies remained high in October", stated BA-CA economist Stefan Bruckbauer. The figure in question only fell marginally from 54.9 to 54.8. This indicates that entrepreneurs are still optimistic for the time being.

Inflation provides a further indicator of the slowdown in industry. Purchasing price inflation fell sharply in October from 62.3 to 58.1. The slowdown in the upward trend in input prices and slackening demand also depressed the increase in sales prices markedly, the figure fell from 54.0 to 51.6. The picture of a slowdown in industry is completed by slower growth rates in  quantities purchased.

As a result, in the opinion of the economists at BA-CA, it is clear that Austrian industrial companies will not be able to avoid the global slowdown despite a slight revival in August and September and, consequently, they see their expectations that the economy will cool in 2008 confirmed. Despite the waning momentum at the year end, 2007 as a whole is likely to be another very strong year for Austria's industrial companies.

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.

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Enquiries: Bank Austria Creditanstalt Group Economics and Market Analysis
Stefan Bruckbauer, Tel. +43 (0) 50505 ext. 41951
E-Mail: economic.research@ba-ca.com