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29.03.2007

BA-CA Purchasing Managers' Index in March:
Industry growth still robust, but clear signs of slowdown

  • Strongest decline for 5.5 years
  • Dip in growth for incoming orders and output in March
  • Employment still rising solidly

The Purchasing Managers' Index of Bank Austria Creditanstalt (BA-CA) fell in March from 57.8 to 55.6 (values above 50 indicate growth), the lowest level for one year. "Despite the decline in our Purchasing Managers' Index in March, industrial activity remains very robust", said Marianne Kager, chief economist at BA-CA.

Even though the index has fallen to its lowest level since February 2006 at 55.6, it is still well above the critical 50 mark and the long-term average of approximately 53. Nevertheless, March saw the most pronounced fall since September 2001. "The largest drop in the BA-CA EMI since 2001 reveals that industrial activity would appear to have peaked", said BA-CA economist Stefan Bruckbauer.

The setback in the BA-CA EMI in March was primarily attributable to the marked decline in growth recorded for incoming orders and the weaker rise in output. Although the index for total incoming orders is currently at its lowest level for one and a half years after dropping 3.3 points from 57.3 to 54.0, incoming export orders only fell by 2 points, from 56.2 to 54.2. "It was mainly growth in domestic orders that slowed in March", revealed Kager.

This weaker increase in orders was accompanied for the first time by slower output growth, with the corresponding index falling from an extremely high 59.7 to 56.3. "In spite of the more sluggish growth in orders and output, industry still expanded by more than 10 percent at the end of the first quarter", said Bruckbauer. The robust nature of economic conditions in industry is confirmed by the persistently strong employment growth reported by the industrial companies surveyed. The relevant indicator rose again slightly from 54.6 to 54.9.

Further indicators of vigorous albeit slowing industrial activity are the slower growth in material inventories and the weaker growth in delivery times. Even purchase and sales price growth has dipped somewhat. All in all, the March EMI confirms the expectation of the BA-CA economists that economic activity in Austria remained strong in the first quarter of 2007 but will slacken off throughout the rest of the year. This supports the forecast of economic growth falling just short of 3 percent in 2007, slowing as the year goes on.

 Charts

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 Press Office
Peter N. Thier, Tel: +43 (0)5 05 05 52371; e-mail: peter.thier@ba-ca.com