Bank Austria Purchasing Managers' Index in May:
Austrian industry maintains moderate growth path

  • Bank Austria Purchasing Managers' Index climbs to 50.3 points in May, growing for second month in succession
  • Production output increases again despite marginal drop in new orders
  • Employment squeeze in Austrian industry slows
  • In spite of slowing external demand, the weak domestic demand is more of a problem

"In May, Bank Austria's Purchasing Managers' Index rose marginally to 50.3 points. This means that for the second month in a row the indicator is above the 50-point growth threshold", explained Stefan Bruckbauer, chief economist at Bank Austria. Austrian industrial activity is improving, but the pace is very slow. "Austrian industry ramped its production output up more strongly in May than in the previous month, in spite of the marginal drop in new orders overall. The fall in employment continued, albeit at a noticeably slower pace than before. Since the decline in input prices slowed considerably, the cost/income situation of domestic businesses worsened slightly compared to the previous month", said Bruckbauer, summarising the most important details of the monthly survey among Austrian purchasing managers.

"Austrian industrial companies responded to the improvement in new orders in the previous month with a clear increase in production output. The production index rose to 52.3 points in May, its highest reading since August of last year", commented Bank Austria economist Walter Pudschedl. Yet the growth in new orders did not continue in May. In fact, some minimal declines were registered. The expansion experienced once again by consumer goods producers is in contrast to the lack of new orders received by manufacturers of intermediate goods. Whereas demand from neighbouring European countries and also from the Far East rose at least to some extent, domestic demand lagged behind the previous month. This led to a noticeable thinning of the order backlog, which points towards a renewed increase in surplus capacities.

Amidst the weak demand, Austrian industrial companies continued to reduce their workforces. "Although production output increased quite significantly in May, jobs were still lost in Austrian industry again; that said, the pace of these job cuts did slow considerably. Sitting at 49.2 points the employment index rose to its best reading since August 2014", revealed Pudschedl. However, the situation on the labour market will likely remain tense for some time to come in view of the contracting order flow and the still low utilisation of capacities in Austrian industry.

The decline of average input prices slowed markedly in May, and is now minimal. At the same time, the fierce competition triggered a much stronger fall in output prices. "Over the last six months, Austrian industry has benefited from tumbling prices for raw and primary materials. Current price developments both for purchasing and sales have bucked this trend. The cost situation of producers eased somewhat in May on average", added Pudschedl. The ongoing reduction in stocks is aimed at countering the adverse trends in costs and income. Primary material stocks have now been in decline for roughly eighteen months, while finished goods inventories have been falling for months too. In both cases though, the pace of the decline dropped slightly in May.

Bank Austria's Purchasing Managers' Index managed to rise slightly again in May. "There is still some upwards potential in terms of the pace of the ongoing recovery in Austria's industrial activity. The last three downturns in Austrian industry, which took place in 1993, 2002 and 2009, were always followed by a strong correction with industrial growth in excess of 5 percent. For the coming months though there are no signs of such a pick-up in activity", analysed Bruckbauer. Alongside the sluggish development of the Bank Austria Purchasing Managers' Index at present and its constituent parts, industrial activity is slowing on a global scale too. The US purchasing managers’ index slumped to 53.8 points, its lowest reading since January 2014, while the Chinese indicator has been languishing below the growth threshold for three months now. While the preliminary Purchasing Managers' Index for the eurozone rose 0.3 points to 52.3 in May, Germany lost some momentum, which is a crucial market for Austrian (supplier) industries. "We assume that Austrian industry will continue its recovery in 2015, but for the time being the pace of this development will lag behind the progress made in earlier upswings. In 2015 we expect industrial growth in Austria will total roughly 2 percent", said Bruckbauer, in conclusion.

 Tabellen (PDF; 187 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.