UniCredit Bank Austria Purchasing Manager Index in October
Austrian industry starts the final quarter with a slight improvement
- The UniCredit Bank Austria Purchasing Managers' Index rose to 48.8 points in October, the second-best value in the past three years
- Slight expansion in output following stabilisation trends in order development
- Strongest decline in the number of employees in six months
- Longer delivery times and the ongoing reduction in stocks of purchases indicate supply chain disruptions, including for semiconductors
- The ongoing rise in costs and higher price markdowns in sales once again put pressure on the profit margins of domestic companies
- Optimism has risen significantly: The index of production expectations for the year rose to 59.7 points in October, the highest level in 45 months
After the setback of the previous month, the cautious upward trend of the summer in Austrian industry continued at the beginning of the final quarter. „The UniCredit Bank Austria Purchasing Managers' Index rose to 48.8 points in October. Although the indicator still fell short of the neutral line of 50 points, above which growth in the manufacturing industry is signalled, at least the second-highest value of the past three years was recorded,” says UniCredit Bank Austria Chief Economist Stefan Bruckbauer, adding: “The economic situation in Austrian industry remained very fragile in October, burdened by concerns among companies about weakening demand, geopolitical tensions, high costs and declining competitiveness. However, the signs of stabilisation have strengthened and give hope for an improvement in the industrial economy in 2026.”
The improvement in the UniCredit Bank Austria Purchasing Managers' Index in October by as much as 1.2 points compared to the previous month was driven by almost all components. “Domestic industrial companies expanded their production slightly in October, supported by a significantly more favourable order situation. Nevertheless, staffing levels were reduced at a faster pace in order to counter rising costs. While labour productivity continued to improve as a result, demand-driven price reductions in sales nevertheless put additional pressure on profit margins,” says Bruckbauer, summarising the most important results of the monthly survey.
Production output up slightly, new business down only slightly
The increase in production was a key driver for the rise in the Bank Austria Purchasing Manager Index at the beginning of the last quarter of 2025. The output index rose to 50.7 points.
“Although the decline in new and follow-up orders continued in October, there was a clear trend towards stabilisation. At 49.0 points, the index for new business was only just below the growth threshold and thus reached its best value in 3.5 years. This trend was evident in both domestic demand and orders from abroad,” says UniCredit Bank Austria economist Walter Pudschedl. In October, existing production capacities once again exceeded the resources required for new business, resulting in a significant drop in order backlogs.
Supply chain problems are a burden
Despite the incipient stabilisation of the demand environment, the quantity of purchases of domestic industrial companies was once again falling significantly.
“Due to the lower quantity of purchases coupled with a slight increase in output, stocks of purchases fell rapidly in October. Lower purchasing volumes, the reduction in inventories of primary materials and longer delivery times on the supplier side are likely to be related to the supply chain problems with semiconductors, which are needed in vehicle construction and mechanical engineering, among others,” says Pudschedl. The inverse delivery time index fell to 46.1 points, indicating the sharpest increase in delivery times for exactly three years.
Accelerated job losses
Despite the slight increase in production and the stabilisation of the order trend, the reduction in the number of employees in the domestic industry continued in October. The pace of the decline in employment even accelerated significantly. The employment index fell to 43.7 points, the lowest value since March of this year. Since the beginning of the year, the number of employees in Austrian manufacturing has been reduced by more than 10,000 people, a decrease of 1.5 per cent. In absolute terms, the biggest job losses were in the industrial strongholds of Upper Austria and Styria, with a loss of just under 3,000 and 2,300 employees respectively. In relative terms, the biggest reduction was in Burgenland.
“The ratio of the lower employment index to the significantly higher and slightly higher output index again indicates an increase in labour productivity in the domestic industry in October. Efforts to increase productivity in the sector will continue in the coming months in view of the deteriorating international competitiveness of domestic industry due to high cost increases,” says Pudschedl, adding: “After an average of 3.8 per cent in 2024, the unemployment rate in domestic industry is expected to rise to an average of 4.3 per cent in 2025.”
This means that the unemployment rate will once again be significantly lower than in the economy as a whole at 7.5 per cent. While an unemployment rate of less than 3 per cent in regional manufacturing can be expected in Tyrol in 2025, Vienna is likely to have the highest rate of all federal states at over 8 per cent.
Rising costs, yet higher price discounts
High energy prices and labour costs continue to pose major challenges for domestic industry. Costs continued to rise for the fourth month in a row, at least at a slightly slower pace than in the previous month. “Although the rise in costs slowed down, there was no easing of the earnings situation for domestic industrial companies in October, as even higher discounts were granted in sales than in the previous month due to weak demand and the resulting competitive pressure,” said Pudschedl.
Austria's industry more optimistic for 2026
The current UniCredit Bank Austria Purchasing Manager Index points to a consolidation of the industrial economy with the slight increase in production in October. However, the index ratio “new orders to inventories” shows how fragile the situation remains. With very few exceptions, the ratio has been below 1 for three and a half years, signalling that demand will not immediately lead to significant increases in production compared to the previous month, taking into account existing storage capacities.
Despite the current improvement, there is still a lack of new orders. The outlook for export demand is subdued in view of the increase in protectionism in international trade, especially as the impetus from European industry remains limited. Although the preliminary Purchasing Managers' Index for the manufacturing industry in the eurozone rose to 50.0 points in October, the index in Germany, the most important customer for Austrian industry, is below the growth threshold of 50 points at 49.6 points.
“In view of the challenging international environment and the continued restrained demand, the industrial economy in Austria will not gain momentum in the coming months for the time being,” says Bruckbauer, adding: “However, optimism among domestic industrial companies for 2026 has increased significantly. The expectations index for production in the coming twelve months rose to 59.7 points, the highest value since February 2022. Although the outlook continues to be burdened by economic policy uncertainties, hopes of an incipient tailwind from investment programmes in Europe, particularly in Germany, have increased.”
Enquiries:
UniCredit Bank Austria Economics & Market Analysis Austria
Walter Pudschedl, Tel.: +43 (0) 5 05 05-41957;
e-mail: walter.pudschedl@unicreditgroup.at