Bank Austria Purchasing Managers' Index in November:
Significant pick-up in industrial activity in November
- Bank Austria Purchasing Managers' Index climbs to 54.3 points: highest reading for 2.5 years
- Austrian companies react to growing demand with strongest expansion of production since spring 2011
- Again job cuts
- Supply difficulties accelerate rise in purchasing prices, higher costs cannot be fully compensated for in sales prices
- Outlook predicts faster upswing in industry: high ratio of new orders/inventories and tailwind from Europe
Business in Austrian industry is starting to run better and better. The sideward movement in industrial activity, which has prevailed for more than two years, is increasingly turning into a growth trend. "In November the Bank Austria Purchasing Managers' Index confirmed its upwards trend from the previous months. The indicator climbed by 1.5 to 54.3 points. This signals the strongest upturn in industrial activity for the last 2.5 years", revealed Bank Austria's chief economist Stefan Bruckbauer. The current recovery among Austrian manufacturers is clearly evident in practically every component of the monthly survey conducted among Austrian purchasing managers. "Austrian industry noticeably ramped up its production in November as demand rose strongly. This is also reflected in the growing order backlog, longer delivery times and rising prices. The one bitter pill for the time being, however, is the loss of jobs", said Bruckbauer.
As the European economy recovers, demand for Austrian industrial products is continuously improving. The order books are quickly filling up. "In November, Austrian industrial companies recorded their fastest growth in order intake for more than 2.5 years. The robust jump in new and follow-up orders from abroad was also responsible for the swift increase in production output at companies", explained Bruckbauer. Output rose in Austria for the fifth month in a row, and has not been as strong as this since spring 2011.
The greater utilisation of production capacities was no longer enough in November to cover the tangible increase in demand, which meant that order backlogs rose at Austrian companies. "The brisker demand for industrial products that are "made in Austria" prompted a sharp increase in the volumes of raw materials and intermediate products purchased. Since supplier inventories were low, this resulted in longer delivery times and rising prices", commented Bank Austria economist Walter Pudschedl. Prices rose in particular for various metals, electronic components and wood, resulting in the fastest growth in purchasing prices this year. However, for the first time since this summer, the circumstances of demand were good enough so that at least some of the higher costs could be offset in sales prices. The strongest growth in prices was observed at manufacturers of consumer goods. The prices of capital and intermediate goods increased the most. On the whole, however, the latest price trends have increased the cost pressure on Austrian businesses somewhat.
The rise in employment last month proved to be unsustainable. The employment index of the survey sank from 50.6 to 48.8 points, pushing it back below the 50-point growth threshold. This means that apart from two months, Austrian industry has steadily been shedding jobs since mid-2012. Over this period, employment in Austrian manufacturing has risen by approximately 2,500 to a seasonally adjusted 583,000. However, the pace of the job cuts has started to slow. "The capacity-in-use of Austrian industry has fallen over the course of the year, and currently sits at below 83 percent, well under the long-term average. The clear increase in production can therefore be handled using available HR reserves", said Pudschedl, adding: "There will only be substantial expansion investments and a sustainable increase in production personnel if the recovery in industry continues at pace in the coming months."
Bank Austria's Purchasing Managers' Index recorded tangible growth in November. Almost every component of the current survey is heading upwards. "The clear and broadly-based growth trend in the Purchasing Managers' Index makes it quite obvious that Austrian industrial activity is picking up pace", said Bruckbauer, and he is optimistic that: "The pace of the recovery will only increase even more over the coming months. The ratio of new orders relative to inventories has now easily left its long-term average behind, and the stimulus from abroad is having an ever-greater impact." The ongoing improvement in industrial activity in Europe is providing a nice tailwind for developments in Austria. The Purchasing Managers' Index for the eurozone rose to 51.5 points in November, driven first and foremost by strong growth in export orders. In Germany especially, Austria's main trading partner, the upwards trend in manufacturing continues. The German Purchasing Managers' Index improved to 52.5 points in November, up another 0.8 points compared to the previous month.
Tabellen (PDF; 38 KB)
Enquiries: Bank Austria Economics & Market Analysis Austria
Walter Pudschedl, Tel.: +43 (0) 50505 - 41957;
E-mail: walter.pudschedl@unicreditgroup.at
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.