Bank Austria Purchasing Managers' Index for January:
Austrian industry continues growth trend of recent months
- Bank Austria Purchasing Managers' Index at 54.1 points in January reveals stable growth path for Austrian industry; positive trend of previous months continues
- Robust increase in orders fuels powerful, ongoing rise in production
- Employment remains stable in January
- In light of current price trends cost pressure on businesses is growing more slowly
- Encouraging order situation promises capacity increases in the coming months
Austrian industry has got the year off to a great start, and the upwards trend from the second half of 2013 has stabilised. "In January 2014 the Bank Austria Purchasing Manager's Index reached 54.1 points, similarly to the previous month, thereby demonstrating that Austrian industry has continued its robust growth path of the previous months", said Bank Austria chief economist Stefan Bruckbauer, analysing the current results of the monthly survey among purchasing managers of Austrian industrial companies. Boosted by the pick-up in economic activity in neighbouring European countries, the Austrian manufacturing sector is leading the recovery of the Austrian economy. Although the pace of the industrial upturn is still moderate, it is now very stable. "The order books filled up in January, especially with orders from abroad. Production was ramped up significantly once again, but the order backlogs have thickened and delivery times lengthened. For the second time in four months, employment in industry at least did not fall in January", said Bruckbauer, revealing some details of the ongoing improvement in industrial economic activity in Austria at the start of 2014.
"The brightening up of the economic climate in Austrian industry is principally being driven by the jump in demand in recent months for products and services "made in Austria". Above all, the upturn in the German purchasing managers' index to 56.3 points in January promises a continued boost to demand for Austrian industry. Purchasing managers' indices improved throughout Europe in January", concluded Bank Austria economist Walter Pudschedl. The purchasing managers' index for the eurozone rose in January by 1.2 to 53.9 points – its highest reading since May 2011 – and has been growing now for seven months.
New and follow-up orders have now been rising in Austria on a monthly basis since mid-2013. New orders did not increase as much overall in January as in December, but demand picked up from abroad. Austrian industrial companies markedly increased their production output once more in January – for the seventh month in a row. New order flows were so strong that the order backlogs rose faster than ever before since March 2011.
While the signs of a recovery in Austrian industry have been tangible for more than six months now, the situation on the labour market has yet to improve. Employment in January remained stable against the previous month. For the second time in four months, no jobs were lost in industry. "Even if there is still no long-term trend reversal in sight, some momentum is returning to the job market in industry. We assume that industry will become the driving force behind jobs in the Austrian economy in 2014, after employment in manufacturing stagnated during 2013 at 583,300", said Pudschedl, confidently. All in all, the economists at Bank Austria believe overall employment will increase by roughly 1 percent, but the jobless rate in Austria will increase to an annual average of 7.8 percent in 2014.
"Price trends in purchasing and in sales weighed down on the cost and earnings situations of Austrian industrial companies in January on the whole. Input prices have been rising more swiftly than sales prices for five months now", said Bruckbauer. Input prices rose because of the growing demand for primary materials and raw materials, but also due to capacity bottlenecks at suppliers. Sales prices on the other hand were raised only to a moderate extent, although the increase was the strongest within the last six months. More than 80 percent of the survey participants were unable to increase sales prices at all because of the fierce competition.
"The Bank Austria Purchasing Managers' Index shows that Austrian industry grew in January, and this trend is set to continue", said Bruckbauer convincingly, before adding: "Order trends in the coming months will bring further increases in production." It is not just new business, particularly from abroad, that is growing strongly, order backlogs are increasing sharply too along with delivery times. The ratio of incoming orders relative to inventories sits at the high level of more than 1.10. In the past this has always been a reliable indicator for dynamic industrial development.
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Enquiries: Bank Austria Economics & Market Analysis Austria
Walter Pudschedl, Tel.: +43 (0) 50505 - 41957;
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.