Bank Austria Purchasing Managers’ Index for February:
Still no upswing in sight for Austrian industry

  • Downtrend in Austrian industry losing momentum: Bank Austria Purchasing Managers’ Index rises slightly in February to 48.7 points
  • Weak order situation continues, but production output is now only barely declining
  • Job cuts in Austrian industry decelerating

 The situation in Austrian industry hardly changed in February compared with the previous month. In contrast to the rest of Europe, where improvements can already be felt, there are still no signs of an economic recovery. “The Bank Austria Purchasing Managers’ Index rose to 48.7 points in February. However, at this level it still indicates slight declines in growth compared with the previous month,” explained Stefan Bruckbauer, chief economist at Bank Austria. The indicator, which is based on a monthly survey of purchasing managers at Austrian manufacturing companies, has now been below the growth threshold for half a year. “Significant declines in orders once again led to a cutback in production in February. Employment was scaled back and purchasing volumes reduced despite rapidly falling prices. Companies also continue to be very cautious when it comes to their inventories,” said Bruckbauer, summarising the development of some of the sub-components of the current survey.

Austrian industrial companies apparently still have a very conservative view when it comes to the outlook for the development of business going forward. “Certain sub-components of the Bank Austria Purchasing Managers’ Index for February suggest that industrial activity is starting to stabilise. The decline in production output clearly decelerated compared with the previous month, which can be attributed to both the consumer goods segment and the input and investment goods segment. And at 49.6 points, the production index has almost returned to neutral territory,” said Bank Austria economist Walter Pudschedl. The pace of the decline in new orders has also slowed, in large part thanks to export orders. At the same time, the only moderate reduction of order backlogs is an impressive indication of the excess capacities available in Austrian industry.

 Jobs have been cut in Austrian industry recently. However, “the decrease in the number of jobs that has been under way for six months decelerated again in February. While additional jobs were cut in the consumer goods and input goods segments, manufacturers of investment goods started hiring new employees,” reported Pudschedl.

In light of the weak demand and the prospect of persistently falling prices, Austrian companies drastically reduced their purchasing volumes in February. In line with the trend that has continued for over a year now, inventories of input materials shrank in February. In the interest of pursuing a cautious and cost-effective inventory approach, Austrian industrial companies also reduced inventories of finished goods, resulting in the largest decline in a year. Average delivery times increased only marginally.

“While the purchasing managers’ index for the Eurozone continued its slight upward trend in February and once again signalled growth at 51.1 points, Austrian industry continued the downswing that has prevailed over the past six months. However, some of the sub-components of the Bank Austria Purchasing Managers’ Index point to a deceleration of the downtrend. Production output in particular is getting closer to stabilising,” said Bruckbauer in summary.

Charts (PDF; 40 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.