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28.01.2010

Bank Austria Purchasing Managers' Index for January:
Increasingly solid recovery for Austrian industry

  • Bank Austria Purchasing Managers' Index hits highest level in 22 months in January
  • Production on the rise, thanks to increasing orders from Austria and abroad
  • Price trends challenging for companies; labour productivity growing
  • Stronger-than-average production declines in Styria, Salzburg and Carinthia in 2009
  • After contracting by 13 per cent in 2009, Austrian industrial output is set to grow by 4 per cent in 2010

In January, the Bank Austria Purchasing Managers' Index (PMI) increased from 50.8 to 51.8 points. "Austrian industry is looking stronger again at the beginning of this year, as the recovery in this sector is moving ahead, step-by-step," said Bank Austria chief economist Stefan Bruckbauer. For the last one-half year, the indicator has been hovering around the growth threshold of 50 points. The three consecutive increases in the index now bring the indicator to the highest level since March 2008, confirming that the previously patchy rebound in Austrian industry is growing more and more solid. Prospects for a stable growth trend in the coming months are improving.

For the first time in more than two years, all of the components of the PMI improved in January. Growth in incoming orders was even quite robust. While the improvement in new business was mainly borne by foreign demand in the past, this positive trend was also strongly supported by domestic purchasers in January as well. "Business is improving again, as the regionally quite well-balanced demand for Austrian industrial production is picking up tangibly," noted Bruckbauer. The index for overall new orders is currently at 53.2, higher than the comparable values for the past two months, after rising for the seventh month in a row.

In January, previously idle production capacities were brought back on line or capacity utilisation was increased, as order books are filling up again. Industrial enterprises boosted their production significantly again. This was reflected in the increase in output from 52.8 in December to 54.4 points in January, the strongest gain in output since March 2008.

The global recovery in industrial activity is pushing commodity prices higher. Purchasing prices also continued to rise and even accelerated in January, in particular due to higher prices for energy. On the other hand, due to the intense competitive pressure, sales prices had to be lowered even more than in the previous month. "The current trends in prices represent a challenge for companies during this period of relatively subdued recovery. As a result, there is still pressure to boost labour productivity, and job losses will continue," explained Walter Pudschedl, economist at Bank Austria. Nevertheless, the pace of job losses in the industrial sector declined yet again in January. Several months will pass, however, before a turning point is reached in this trend.

Austrian manufacturing firms are beginning to feel some improvement in conditions in early 2010. The assessment of Bank Austria's economists that the growth trend for the industrial sector is stabilising is supported by the current increase in the Purchasing Managers' Index, and in particular by the ratio of the index for new orders to inventory levels, which has always been a good indicator for industrial activity and has been favourable for the last eight months. "Following a steep decline of around 13 per cent in 2009, we expect Austrian industrial output to grow by around 4 per cent again in 2010," said Pudschedl.

Slump in industry hit Styria hardest in 2009
"From a regional perspective, those federal states which have a broader structural basis and are highly competitive at the international level have the best prospects for making up lost ground and achieving industrial production growth that is higher than the Austrian average," said Bruckbauer. "In our opinion, this includes Upper Austria and Vorarlberg in particular." At the regional level, industrial production varied strongly last year: due to the problems in the automotive and metals industry, Styria suffered a 20 per cent drop in goods manufacturing. In 2009, the output declines seen in Salzburg – due in part to restructuring in the cellulose industry – and Carinthia were also worse than the overall average for Austria. Industrial production in Lower Austria and Tyrol was average in 2009, whereas the more strongly industrialised states of Upper Austria and Vorarlberg registered slightly better results. Vienna and Burgenland were also affected by the global downturn in demand, but the declines in these two regions were at least limited to single-digit territory, thanks to their strong focus on the production of consumer goods.

 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

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