Bank Austria Purchasing Managers' Index in March:
Austrian industry continues on downward trend
- Decline in Austrian industry picks up at start of spring: Bank Austria Purchasing Managers' Index sinks to 47.7 points in March
- Weak demand ensures sharp fall in production
- Stronger contraction in employment in Austrian industry
- Weaker euro restrains fall in input prices: cost relief fading
- Recovery of sector likely to be put off until H2 2015 at the earliest
Austrian industry has been unable to join the ongoing improvement in the European economic climate at the start of spring either. "The downwards trend in Austrian industry accelerated in March, bucking the positive overall trend throughout Europe. Bank Austria's Purchasing Managers' Index lost an entire point in March and now totals just 47.7", analysed Bank Austria's chief economist Stefan Bruckbauer. The indicator that is based on a monthly survey of purchasing managers at Austrian manufacturing companies has barely been lower over the last two and a half years than just now. "Not only did production and new orders fall again in March, the contraction in employment picked up too in comparison to the previous month. By contrast, the decline in input and output prices slowed", said Bruckbauer, summarising some of the details from the latest survey.
The deterioration in Austrian industry's position in March is reflected particularly in the sharp fall in production. "The decline in production at Austrian industrial companies at the start of spring is a direct consequence of the continued drop in demand. Given the weak assessment of the macroeconomic climate there was a drop in new orders from Austria in particular, but fewer new orders were received from abroad too compared to the previous month", said Bank Austria economist Walter Pudschedl. In spite of the tough competition on foreign markets, the pace of the decline in new export orders did at least slow somewhat. The lack of new and follow-up orders caused the order backlog to thin further in March too.
Weak demand and the drop in production prompted Austrian manufacturers to reduce their workforces in March again. "The steady fall in the number of jobs in Austrian industry for more than six months even accelerated at the start of spring. Given the current development of orders there is currently no turnaround in sight regarding employment and unemployment trends in the sector", added Pudschedl. The situation on the labour market will likely remain tense for some time to come in view of the persistently low utilisation of capacities in Austrian industry.
"The cost relief noticeable in recent months for Austrian industrial companies owing to the sharp fall in input prices faded somewhat in March. The weaker euro resulted in higher import prices for commodities and intermediate products in some cases", explained Pudschedl. The decline in output prices caused by the strong competition also slowed. The difficult conditions meant Austrian industrial firms continued to adopt very prudent inventory management policies. For example, purchasing quantities are as low as they have ever been for almost two and a half years.
"While the purchasing managers' index for the eurozone maintained its upwards trend in March and signalled even stronger growth than in previous months with a reading of 51.9 points, Austrian industry is continuing its downward spiral from previous months at an even faster pace", summarised Bruckbauer. The latest survey result from Austria's purchasing managers currently offers no sign of an imminent trend reversal because the correlation between new orders and inventories, generally a reliable indicator for developments in the coming months, is showing no upwards movement either. Industrial activity is suffering from a lack of new export orders and the weak investment demand from within the country, which means the recovery of the sector is likely to be put off until the second half of 2015 at the earliest.
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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.