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29.04.2015

Bank Austria Purchasing Managers’ Index for April:
Austrian industry shows first signs of recovery

  • Bank Austria Purchasing Managers' Index climbs to 50.1 points in April signalling end of decline
  • For the first time in almost a year, increased demand for "made in Austria" products boosts production output
  • But: contraction in employment continues in Austrian industry
  • Austrian industry joins recovery of economic climate in Europe with some delay

The downward trend for Austrian industry has come to an end and industrial activity has stabilised. "Bank Austria's purchasing managers' index rose significantly in April signalling the end of the decline. With 50.1 points the indicator reveals no decline in Austrian industry for the first time in eight months", analysed Bank Austria’s chief economist Stefan Bruckbauer. Industrial activity has therefore improved on a broad basis for the first time since early autumn 2014. "Austrian industry has ramped up its production output as it is now receiving more new orders from Austria and abroad again. The sharp drop in stocks of finished goods and the stabilisation of output prices are additional signs of slowly recovering demand. However, contraction in employment in Austrian industry continues", says Bruckbauer, summarising the most important details of the monthly survey among Austrian purchasing managers.

Increased demand from the USA and from Europe resulted in more new orders for Austrian industry in April. Orders from Austria also increased for the first time in almost one year. This resulted in an expansion of production by Austrian manufacturers. "The improved order situation and the increased production were particularly crucial for the strong improvement in Bank Austria’s purchasing managers’ index in April. The production index reached 51.7 points and therefore its highest reading since August 2014; what is more, the index of new orders is sitting at 50.6, its highest level for one year", revealed Bank Austria economist Walter Pudschedl. As a result of the upturn in new and follow-up orders, order backlogs have begun to stabilise.

However, Austrian production companies continued to reduce their workforces in April. "Despite increased demand and expanded production, the steady fall in the number of jobs in Austrian industry seen for more than six months now has continued. That said, the speed of the job cuts has slowed since the stabilisation of industrial activity, though there is no turnaround in sight with regard to 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 better demand climate has so far barely made an impact on price trends. Input prices have been falling for over half a year as a result of cheaper commodities, and the falling price trend even intensified in April despite purchased quantities falling more slowly. As a result of the strong competition pressures, output prices were lowered for the tenth time in succession, albeit to a modest extent. "Price trends bolstered the earnings positions of Austrian companies in April as the marked reduction in input prices caused by cheaper commodities was not fully matched by output prices. Moreover, efforts were directed at improving the cost/income situation amidst the persistently difficult economic conditions by purposefully reducing inventories", summarised Pudschedl. Stocks of purchases have now been falling since last summer, and the decline even picked up pace in April. Stocks of finished goods fell faster in April than ever before in the last five years. Alongside conscious inventory management, however, this is also likely to have been influenced by the growing demand.

Since September 2014 Bank Austria’s purchasing managers’ index has been below the growth threshold of 50 points, while the eurozone’s indicator over the same period has constantly showed European industry on an upwards trend. The provisional purchasing managers’ index for the eurozone in April sits at 51.9 points, displaying continued growth, driven amongst other factors by German and Italian industry, which are the main customers of Austrian manufacturers. "The latest survey results among Austrian purchasing managers only exhibits a stabilisation of industrial activity in Austria for now, despite the positive data from Europe", analysed Bruckbauer, before adding: "But Austrian industry now does seem capable of slowly siding with the positive development trends in European industry. From the summer at the latest, the recovery in the sector in Austria should also be reflected in positive growth rates."

 Charts (PDF; 216 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.