Bank Austria Purchasing Managers' Index for February:
Austria's industrial recovery continues
- Bank Austria Purchasing Managers' Index for February exhibits solid growth at 53 points
- Pace of recovery slightly down on previous month
- Strong demand from Germany, more moderate demand from emerging markets: decreasing order numbers curbing production expansion
- Current price trends further drive up industry costs
- Industry recovery 2014: four percent industrial growth expected
For the seventh month in succession, Austrian industry is on the up. "In February the Bank Austria Purchasing Managers' Index fell slightly to 53 points, but despite this Austrian industry continued to grow although, like Germany, it was unable to temporarily increase the pace", said Bank Austria Chief Economist Stefan Bruckbauer. Almost every aspect of the latest survey of purchasing managers in Austria's industrial businesses emphasizes a slight slowdown in the domestic manufacturing sector's recovery. In February industry experienced a slowdown in the rate of new orders, the order book grew more slowly, manufacturing growth was more moderate and the disadvantageous trend in purchasing and sales prices slightly intensified. "Even if some aspects point to a slight slowdown in the pace, the longer lead times are an indication of a continued rapid rate of recovery, which ought to continue in the coming months", according to Bruckbauer.
Austrian industry's quieter economic progress in February was quite markedly characterised by somewhat lower growth in demand for products "made in Austria". Overall, however, domestic demand and new export business maintained good momentum. In the opinion of Bank Austria economist Walter Pudschedl, "Whilst sustained robust demand from our neighbour Germany provided strong drive, the trend in new orders from emerging markets was more restrained. Consequently, the February rise in production was somewhat less than in the past four months. At 54.9 points, the manufacturing output index continues to exceed the long-term average". Growth in orders and manufacturing was so strong in February that the order book increased for the seventh month in succession.
Growth in demand causes purchasing prices to rise
Once again the purchasing volume greatly expanded due to the sustained increase in orders and production. The big increase in demand created a perceptible rise in purchase prices in February, especially for consumer goods manufacturers. The increase was, however, a little weaker than in previous months, which can primarily be ascribed to falling prices in the intermediate products sector. Pudschedl believes that "Greater competitive pressure largely prevented Austria's manufacturers from being able to pass on the marked rise in purchasing prices to their customers in February. Sales prices only rose very slightly in February, so that in the final analysis the cost situation for domestic businesses has worsened slightly compared to the previous month".
Rate of expansion slowly starting to take the strain off industrial sector employment market
The expansion in Austrian industry, which commenced in the second half of 2013, is starting to have a positive impact on the sector's employment trend. "New jobs were created in February for the second month in succession. The growth of employment in domestic industrial businesses is currently, however, very low. Increased production is primarily leading to improved productivity at present", said Bruckbauer. In view of the level of production capacity, which is still below average, a dynamic continuation in the recovery is required for a perceptible improvement in the manufacturing employment market situation.
Average 2014 growth of up to four percent expected
Despite the slight decline, compared with the previous month, in the Bank Austria Purchasing Managers' Index for February, the prospects for a rejuvenation of domestic industry's upwards trend are favourable. "Following the moderate 0.6 percent rise in industrial production in 2013, we are assuming that the rate of recovery will soon increase and are expecting average growth for 2014 of up to four percent", according to Bruckbauer. The current ratio of the new orders index to that for warehouse stocks is at a steady high, which indicates an upturn in the industrial economy. The coming months promise strong demand from abroad in particular. The Purchasing Manager Indices for February that are already available show clear growth, over the 50 point threshold, for the European industrialized nations, especially Germany. The USA's Purchasing Manager Index even rose to 56.7 points in February.
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Enquiries: Bank Austria Economics & Market Analysis Austria
Walter Pudschedl, Tel.: +43 (0) 50505 - 41957;
Note: PMI values over 50.0 indicate growth compared with the previous month, figures below 50.0 indicate a decline. The further away from 50.0 the values are, the greater is the trend towards growth or contraction. This press release contains the original data from the monthly survey of Austrian industrial purchasing managers, which is sponsored by Bank Austria and has been conducted by Markit Economics under the auspices of the ÖPWZ.