The new online banking of Bank Austria.


The online banking for companies.

olbImgAlt To the GoGreen-account
GoGreen-account – the green current account. Because everyone can do something for the environment. To the GoGreen-account

Bank Austria Purchasing Managers' Index for February:
Surprisingly robust signals from Austria's industry

  • February's Purchasing Managers' Index marks highest level in 2.5 years
  • Production surges after a healthy jump in order intake
  • Employment in the sector showing first signs of stabilisation
  • Disadvantageous price trends may slow the recovery
  • Recovery on good footing, solid 4 per cent growth in industry sector for 2010

"Austria's industry sent surprisingly strong signals in February," said Helmut Bernkopf, the member of Bank Austria's Management Board responsible for Corporate & Investment Banking, summarising the results of the current Purchasing Managers' Survey. Austria's industrial firms are profiting more and more from the recovery of the global economy. "Thanks to the fact that new business is picking up, especially with foreign customers, we will see further increases in production output. However, even as capacity utilisation is growing and the employment situation is slowly starting to stabilise, rapidly rising purchasing costs are causing new difficulties for companies," said Stefan Bruckbauer, chief economist at Bank Austria, summarising the results of the latest survey of Austrian processing companies.

The overall index, which depicts the results of a survey of Austrian industrial companies on their business situation, has been climbing since April 2009. "The pace at which the Bank Austria Purchasing Managers' Index is rising accelerated in February. At 55.4 points, the indicator is well in growth territory and has reached its highest mark in roughly two and a half years," said Bruckbauer. After being hit by a serious slide at the beginning of last year, Austria's industry is now making up ground fast, and there are more and more signs that the recovery in the country's processing sector will be substantial and sustained.

The marked improvement in the Purchasing Managers' Index can above all be attributed to a strong increase in new orders. Order intake has not grown as strongly as in February for over three years. Export orders grew especially nicely, posting the third-highest gain since the survey was conducted for the first time in October 1998. "Quickening demand from Germany, Austria's most important export market, is especially beneficial for the Alpine republic's industry and is boosting the level of orders on hand. The order backlog sub-component has risen to 56.5 points, the fastest rate at which the order books have filled in three years," reported Walter Pudschedl, an economist at Bank Austria. In light of the improved orders situation, companies have already started increasing their production capacities. The output index has now also risen for eight consecutive months to an impressive 58.8 points, the highest level since the beginning of  2007.

Thanks to the better overall situation, employment conditions in industry have also shown first signs of stabilisation. "The personnel cuts that we have seen for 22 straight months now – which in 2009 eliminated nearly 37,000 jobs in the processing industry or 6% of total sector staff in annual comparison – are coming to an end. The current employment component is just slightly below the neutral mark, which means that very few jobs were lost in February," said Pudschedl. Terminations for operational reasons were the exception, but the fact that positions that became vacant were still not filled in many cases shows that companies are keeping a close watch on their production capacity needs. The quickening pace of the recovery is having a positive effect on the labour market, but an "all clear" would be premature now with capacity utilisation levels well below their long-term averages in many companies. Conditions on the industry-sector labour market may also become more difficult again when the part-time work agreements expire in the coming months.

The hefty increases in demand caused purchasing prices to rise substantially in February. These rises were exacerbated by conservative stock-keeping policies intended to keep costs low combined with the fact that many companies were apparently surprised by the strength of the recovery. Austrian companies are now encountering difficulties obtaining materials because their suppliers do not have sufficient stocks and need more time to fill their orders. Average delivery times for industrial companies increased more rapidly than in almost two and a half years in February, and stocks on hand have fallen again significantly. "While purchasing prices and volumes  rose in February, selling prices are falling because of the sharp competition. This caused the notable deterioration in the cost situation that already began for Austria's industrial companies in August to accelerate, and this could rob the recovery of some of its momentum," explained Bruckbauer.

The optimism that has been growing steadily among European and local goods producers for months is now being confirmed by the indicators. Austria's industry is on a solid and accelerating course of recovery. The noticeable rise in the Bank Austria Purchasing Managers' Index, the healthy increases in new orders and the growing order backlog show that the export-driven upswing is on sound footing. Especially the latest improvement in the ratio of new orders to stocks, which reached a new high in February, is a clear sign that production will have to increase further in the coming months to meet demand. "The chances that the recovery will continue for domestic industry have increased for the short term. However, we think that growth will be restrained over the medium and long term as government stimulus programmes run out and as orders that were delayed because of the crisis are now placed and filled. After a decrease of 13.2% last year, we expect that industrial output will increase by at least 4% in 2010," said Bruckbauer, summarising the expectations of  Bank Austria's economists for Austria's industry. After being hit hard by the global economic downturn, Austria's industry will again become a key driver of the country's economy as the current year progresses. But the sector still has a long way to go before it can make up all of the ground that it lost.

 charts (PDF; 69 KB)

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 of purchasing managers from industrial companies in Austria. The survey is sponsored by Bank Austria and has been carried out by Markit Economics under the auspices of ÖPWZ, the Austrian Productivity and Efficiency Centre, since October 1998.

Enquiries: Bank Austria Economics & Market Analysis Austria
Walter Pudschedl, tel. +43 (0) 50505 ext. 41957
E-mail: walter.pudschedl@unicreditgroup.at

 back to the summary