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30.12.2015

Bank Austria Purchasing Managers' Index in December:
Decline in orders dampens Austria's industrial growth at the end of the year

  • Industrial growth has slowed down: Bank Austria Purchasing Managers' Index declined to 50.6 points in December
  • Thanks to the stable environment in Europe, the economic slowdown seen at the end of the year will only be temporary
  • Slight increase in output despite decline in new orders
  • Industry creates new jobs: strongest increase in employment in 3.5 years
  • Decline of prices for raw materials lowers input prices: profit situation relaxes slightly

Austria's industrial activity has clearly slowed down at the end of the year. "The Bank Austria Purchasing Managers' Index declined to 50.6 points in December. Thus, Austria's industry has continued to grow moderately but at a slower pace than before," says Bank Austria Chief Economist Stefan Bruckbauer. Still, the Purchasing Managers' Index – which is based on a monthly survey among Austrian purchasing managers – has been above the neutral growth threshold of 50 points for nine months in a row. "Austria's industrial companies were able to slightly increase output despite a decline in new orders in December. However, there are further signs for an economic downturn, such as a smaller quantity of purchase, a lower order backlog and constant inventory reduction. Still, we have seen a clear increase in employment," says Mr Bruckbauer, summarizing the key results.

"For the first time in more than six months, the order backlog of Austria's industrial companies has shrunk. New orders – especially from abroad - declined as a result of expenditure restraint and global economic uncertainties," says Bank Austria Economist Walter Pudschedl. The decline in new orders caused both the order backlog and the quantity of purchase to shrink. Besides, the Austrian industrial companies continued their cautious, cost-conscious stocks management and clearly reduced their stocks of purchases. Even though they were able to raise output in December, the ninth monthly output increase in a row was remarkably lower than in the three months before. The slower pace was the result of a production decline in consumer goods, while intermediate and investment goods continued to expand.

The job market has benefitted from the upward trend in the Austrian industry since spring, regardless of the lower survey results of December. "The Austrian industry has created new jobs since autumn. At the end of 2015, employment in the production sector increased stronger than in the previous 3.5 years," says Mr Pudschedl. Still, with an average 580,000 employees in 2015, employment in the Austrian industry was about 0.5 percent, or almost 3,000 employees, below 2014 levels.

The Austrian industry was again able to benefit clearly from the noticeable decline of commodity prices, particularly oil, in December. According to the economists of Bank Austria, the considerable decline of purchasing prices for energy, as well as various metals and synthetic materials, compared to the previous month, with output prices adjusted only slightly, on average led to an easing in the cost and revenue situation of domestic industrial companies.

The current Bank Austria Purchasing Managers' Index and individual components of the monthly survey show a slowdown of the domestic industrial development towards the end of the year 2015. However, the recovery of the Austrian industry has not stopped. The index ratio of new orders to stocks points towards a continuation of the upwards tendency for the next months. For more than six months, the quotient has been above 1 and thereby shows that the strength of demand, considering the existing stock capacities, will probably lead to further production increases compared to the respective previous month. "We assume that the temporary dent in the domestic industrial development, which appeared shortly before the end of 2015, will soon be overcome. The good European environment will offer the necessary support in the next months in spite of high global uncertainty factors," Mr Bruckbauer says with optimism. As opposed to the Austrian data, the Purchasing Managers' Index of the euro zone even increased slightly to 53.1 points in December. Support came from better survey results in the core countries of Germany and France. According to the economists of Bank Austria, following an increase of at least 2 percent in 2015, the Austrian industry is, in general, still on recovery course and will reach its long-term growth path with about 3 percent in 2016.

Enquiries: Bank Austria Economics & Market Analysis Austria
Walter Pudschedl, Tel.: +43 (0) 50505-41957;
E-Mail: walter.pudschedl@unicreditgroup.at

Note: Levels of the PMI above 50.0 are a sign of growth compared to the previous month. Levels below 50.0 are a sign of decline. The farther the levels are away from 50.0, the stronger the growth or decline tendencies. This press release contains the original data from the monthly survey among purchasing managers of the Austrian industry, which is sponsored by Bank Austria and has been carried out by Markit Economics since October 1998 under the auspices of the ÖPWZ.