BA-CA Purchasing Managers' Index in February:
Industry must expand capacities continuously
- Renewed increase in February - no slump in sight for industrial activity
- Growing capacities induce rises in employment, prices and delivery times
- Production set to remain above long-term trend for some months to come
The decline in the BA-CA Purchasing Managers' Index in January was followed in February by another increase. At 57.8 (January: 56, values above 50 indicate growth) the index is again as high as it was in December 2006, and therefore industrial activity is surprising on the upside. "Austrian industry is continuing its outstanding development through the first quarter", according to Marianne Kager, chief economist at Bank Austria Creditanstalt (BA-CA).
Both the intake of domestic as well as foreign orders picked up pace again in comparison to January. Stefan Bruckbauer from BA-CA on the production levels reported by purchasing managers: "The growth in industrial output in February surpassed the 2006 average. The figures for February were so good that they even beat the previous months, which themselves were very strong on average."
The renewed pick-up recorded in incoming orders in February managed to swell the order books again. The purchasing managers reported some bottlenecks in capacity with suppliers of raw materials, which is reflected in the recent increase in delivery times for raw materials as well. It is also verified by the still powerful increases in prices. "In light of the robust economic activity Austria's manufacturing companies are still facing lengthening delivery times and higher prices", said Kager.
Although the employment index fell in February from 55.1 to 54.6, job numbers in manufacturing are still growing at a relatively sound pace. "The companies are also working at the limits of their capacities, illustrated by the rising employment, rising sales prices and the expanding inventories of materials", according to Bruckbauer. Thus despite the modest ups and downs of the PMI the economists at BA-CA see no signs yet of stagnating industrial activity. Even if industry sentiment does drop slightly over the coming months, production will still remain above its long-term trend for some months to come.
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