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30.01.2008

BA-CA Purchase Managers’ Index in January: No indication of an economic slowdown

  • BA-CA EMI rises again in January
  • Growth in new orders, orders in hand and in production
  • Rising input prices are impacting on sales prices
  • Industrial growth stabilised at a lower level

In January, the BA-CA Purchase Managers’ Index (PMI) rose from 53.2 to 54.1. “At the beginning of the year, Austrian industry shows no sign of an economic collapse and looks in rather better shape once more”, says Stefan Bruckbauer, Deputy Chief Economist at Bank Austria Creditanstalt (BA-CA). Following the slowdown in December, there are signs that growth is stabilising albeit at a far lower level than at the beginning of the previous year.

The upward trend at the beginning of the year is apparent across a wide front. Growth in incoming orders increased both from within Austria and, most notably, from outside it. “Business is going well, demand for Austrian industrial products is particularly strong from abroad”, according to Bruckbauer. At 53, the index for total incoming orders is both up on the comparative figure for December and slightly up on the average figure for 2007, which was a very successful year for industry.

Since order books have filled up, new production capacity has been commissioned. Industry has therefore been able to increase production more rapidly once more. The figure for production output rose from 52.3 in December to 54.8 in January, which means it precisely matched the annual mean for 2007.

BA-CA Purchasing Managers' Index and components

 

BA-CA
PMI

New
orders

Output

Employ-
ment

Suppliers'
delivery times

Stocks of
purchases

Prices 1)

Backlog
of work 1)

 Sep.07

 55.4

 53.8

 55.9

 54.9

 38.4

 50.4

 62.3

 55.1

Oct.07

 52.8

 50.1

 52.1

 54.8

 42.2

 51.0

 58.1

 50.3

 Nov.07

 55.0

 53.5

 55.7

 56.8

 44.5

 53.2

 57.2

 53.5

 Dec.07

 53.2

 52.6

 52.3

 54.1

 44.2

 51.8

 58.7

 50.9

 Jan. 08

 54.1

 53.0

 54.8

 55.4

 44.7

 51.2

 64.9

 53.3

 

 
 

 

 

Austrian industry can continue to distinguish itself as a “job machine”. The index for employment rose to 55.4 in January (December: 54.1). This is the second strongest rate of increase since the beginning of the previous year. Although the engine of industrial economic activity is running at a lower speed than it was a few months ago, growth in employment remains buoyant. “Employment in industry has expanded continuously for more than two years and this trend is continuing at the beginning of 2008 as well”, says BA-CA economist Walter Pudschedl.

The only downside to current industrial growth is the strong inflationary pressure. The increases in the cost of input materials caused by high oil prices, transport and energy have pushed the purchase price index to its highest level for more than six months. In this connection, rising prices were a particular problem for Austrian industrial companies. “The rise in purchase prices accelerated faster than at any time since this figure has been measured”, says Pudschedl. As a consequence of the increase in purchase prices, Austria’s industrial companies have increased their sales prices more markedly. The increase in sales prices exceeded the figures for the previous month and was the second largest since the survey started more than five and half years ago. Admittedly, according to BA-CA’s estimates, it is unlikely that the additional costs have been passed onto sales costs in full.

At the beginning of 2008, Austrian companies are again experiencing a slight tailwind following the last few months when trends were clearly downwards. According to seasonally adjusted figures, Austrian companies had even stopped expanding temporarily. The current increase in the Purchase Managers’ Index provides support for the view of BA-CA economists that the industrial economy has now stabilised. Following growth of just under 6 per cent in the previous year, respectable, albeit far slower industrial growth of around 3 per can be expected in 2008. “Even if we view the next few months with only qualified optimism, the BA-CA PMI shows that Europe’s and consequently Austria’s industry has so far been better able to insulate itself from the negative influences emanating from the USA than many feared”, states Bruckbauer.

Note: PMI figures above the 50.0 mark indicate growth compared with 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.

Enquiries: Bank Austria Creditanstalt Group Economics and Market Analysis
Walter Pudschedl, Tel. +43 (0)50505 ext. 41957
e-mail: economic.research@ba-ca.com