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30.05.2007

BA-CA Purchasing Managers’ Index in May:
Less support for industry from exports

  • PMI recovers slightly in May after sharp fall in April
  • However, exports stagnate for first time in four years
  • Nevertheless, dynamic growth in employment continues

The Purchasing Managers’ Index of Bank Austria Creditanstalt (BA-CA) recovered somewhat after the sharp fall in April, rising from 52.9 to 54.1. “Austria’s industry is once again a little more optimistic after the marked collapse in sentiment in April,” commented Marianne Kager, Chief Economist at BA-CA.

However, despite the renewed upturn, the index remains below its value at the beginning of the year and also below the average for 2006. “Despite the slight rise, the PMI confirmed again in May that growth in industry in Austria is slowing,” explained Stefan Bruckbauer from BA-CA.

Due to the good order situation in recent months the indicator of industrial output was relatively high, as of 53.4 in May. However, this means that after a slide in growth from 12.6 percent in December to 7.5 percent in March, the pace of growth in industrial output will slow further.

Nevertheless, the significant increase in orders in recent months and associated optimistic sentiment on the part of industry are still having a positive impact. This is reflected in particular in the employment rate, which after a brief dip in April, posted significant gains again in May.

The corresponding component indicator rose to 54.1, up from only 51.8 in April. There was also a slight upturn in purchasing volumes compared to April. “Strong demand in recent months is continuing to have an effect and purchasing volumes and the employment rate in particular highlight the optimistic sentiment still prevailing in industry,” stated Kager.

At the same time, however, there are clear signs of an imminent slowdown. Growth in export orders, in particular, continued to decline in May. “For the first time in four years, orders from abroad have not increased,” said BA-CA economist Bruckbauer. At 50.2, the relevant indicator is very close to the stagnation level of 50. Domestic orders again posted somewhat stronger growth and overall the index for all orders climbed from 51.4 to 51.8. However, this is still clearly down on the values for the preceding months. The slowing rise in purchase and sales prices also shows that the pace of growth in industry is good, but declining.

Despite the slowdown in economic expansion, as a result of the very strong rise of plus 30 percent since 2002, the level of industrial output in Austria today remains considerably above the average value for the euro-zone at the start of the upturn, where the industrial output grew by 13 percent. Only Ireland has recorded similarly strong growth rates in industrial output. But, this also means that despite the relatively favourable environment, Austria must expect growth in industrial output to slow. However, there are no signs as yet of a slump.

 Charts

N.B.PMI figures above the 50.0 mark indicate growth on the previous month, readings below the 50.0 mark indicate a decline. The greater the divergence from 50.0, the greater the growth or contraction tendencies. 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 patronage of ÖPWZ since October 1998.

Enquiries: Bank Austria Creditanstalt Economics and Market Analysis
Stefan Bruckbauer, Tel. +43 (0)5 05 05 ext. 41951
e-mail: economic.research@ba-ca.com