UniCredit Bank Austria Purchasing Managers' Index in September
Setback for Austrian industry at the start of autumn
- The UniCredit Bank Austria Purchasing Managers' Index fell to 47.6 points in September. The upward trend seen over the summer stalled
- A more rapid decline in new business prompted companies to reduce production
- Job cuts were significantly increased in order to boost productivity and competitiveness
- Accelerated cost increases and demand-driven discounts in sales weighed on companies' earnings
- Optimism in the industry has waned: the index of production expectations for the year fell to 53.7 points in September, falling below the long-term average for the first time in six months
With the onset of autumn, the industrial economy in Austria has clouded over somewhat. “The UniCredit Bank Austria Purchasing Managers' Index fell to 47.6 points in September. The upward trend over the summer stalled. The indicator once again fell well below the neutral line of 50 points, which signals growth in the manufacturing industry”, says UniCredit Bank Austria Chief Economist Stefan Bruckbauer.
The unfavourable development in Austria is accompanied by a deterioration in the industrial economy in large parts of Europe, with headwinds for the manufacturing sector emerging in Germany and France in particular. “The preliminary purchasing managers' index for the eurozone fell to 49.5 points in September, dropping back below the 50-point mark that indicates growth. The decline in the purchasing managers' indices in the main markets of Germany and France to 48.5 and 48.2 points respectively contributed significantly to this”, says Bruckbauer, adding: “In particular, the significant decline in new orders, also weighed down by US tariff policy, suggests that European trading partners are unlikely to provide any fresh impetus for Austrian industry, at least in the short term.”
The positive momentum in domestic industry that was evident in the summer evaporated in September. “The UniCredit Bank Austria EinkaufsM managerI ndex fell by 1.5 points in September compared with the previous month, caused by a deterioration in all sub-indices, particularly the demand-side components. New business from Austria and abroad declined sharply, prompting companies to reduce production volumes. Staff numbers were cut at an accelerated pace. Significantly higher costs had a major impact, especially as output prices were reduced slightly. The forward-looking indicators, in addition to new orders , the volume of purchases, inventories and business expectations, do not point to an improvement in the challenging situation facing Austrian industry in the coming months”, says Bruckbauer, summarising the key findings of the monthly survey.
Production output down, less new business
The decline in the UniCredit Bank Austria Purchasing Managers' Index in September was primarily attributable to the reduction in output by domestic industrial companies. Although the production index fell only slightly to 49.7 points, this represented a clear reversal from the previous month's growth, which was the strongest in more than three years. The decisive factor for the decline in production was the accelerated decline in new orders.
“High uncertainty on the part of customers triggered a postponement of orders and considerable reluctance to place new orders. In addition, the protectionist US tariff policy and strong competition from abroad, coupled with reduced price competitiveness following sharp cost increases, led to an accelerated decline in new business. Almost a third of the companies surveyed received fewer new orders from home and abroad, while only slightly more than 20 per cent recorded more orders than in the previous month”, says UniCredit Bank Austria economist Walter Pudschedl.
Even more jobs lost
Due to lower capacity utilisation, domestic industrial companies once again reduced their workforce in September, primarily by not filling vacant positions. Austrian industry has now been reducing its workforce for 29 months in a row. Around 620,000 people are currently employed in manufacturing, almost 26,000 fewer than in spring 2023.
“The ratio of the employment index, which fell to 44.4 points, to the significantly higher and less sharply fallen output index of 49.7 points suggests an increase in labour productivity in domestic industry in September, as has been the case for the past year and a half. In view of the headwinds caused by the protectionist US tariff policy and the high energy and wage cost increases of the last two years, job cuts in industry will continue in the coming months. It will also be necessary to adjust staffing levels to the current lower production requirements and to increase efforts to improve competitiveness in the export business. The moderate wage agreement in the metalworking industry, with its signal effect on other sectors, will contribute to this, but it is only a first step, which should be followed by, among other things, an end to investment restraint and a reduction in energy costs”, says Pudschedl.
Rising costs, falling prices
While input prices in industry fell in the eurozone and especially in Germany in September, Austria saw a further acceleration in the rise in costs . The input price index rose to 54.4 points, the highest level since January 2023. Higher prices for energy, raw materials and commodities are weighing more heavily on domestic industrial companies than on their European competitors and are causing higher inflationary pressure.
“As domestic industrial companies were unable to pass on the higher purchasing costs to their customers due to subdued demand and strong competition for new orders, output prices fell again in September, even at a slightly faster pace than in previous months. Overall, the contrasting price trends in purchasing and sales further weighed on the earnings situation of domestic industrial companies”, says Pudschedl.
Industrial outlook weighed down by weak demand
Austrian industry is still waiting for a breakthrough. The signs of recovery seen in the summer have evaporated with the onset of autumn. The decline in new business has solidified and is limiting production prospects.
“Although the ratio between order development and stocks of finished goods has improved immediately, it remains in negative territory , which does not require any expansion of production to fulfil existing customer orders . As a result, the optimism of companies for the year as a whole has also declined significantly. The expectations index fell to 53.7 points in September, its lowest level since March of this year. This means that it has once again fallen below the long-term average”, says Bruckbauer, adding: “While many companies are hoping for an upturn in the economy and, in particular, in industrial demand, concerns about high costs and the associated impact on competitiveness have increased.”
In the first seven months, industrial production in the manufacturing sector rose by an average of 3.2 per cent in real terms, which means that despite the cautious outlook for the final quarter as indicated by the current UniCredit Bank Austria Purchasing Managers' Index, Austrian industry will end 2025 with an increase in production. However, production fell by 1.7 per cent in 2023 and by as much as 4.9 per cent in 2024. Production output in 2025 will therefore not reach the real level of three years ago.
Enquiries:
UniCredit Bank Austria Economics & Market Analysis Austria
Walter Pudschedl, Tel.: +43 (0)5 05 05-41957;
Email: walter.pudschedl@unicreditgroup.at