UniCredit Bank Austria Purchasing Managers' Index in December
Weak order intake in Austrian industry weighs on the turn of the year – but optimism has increased
• The UniCredit Bank Austria Purchasing Managers' Index fell to 49.3 points in December, returning to below the neutral threshold
• The renewed decline in new business led to a slowdown in production expansion
• Job cuts slowed somewhat again in December
• The reduction in purchasing volumes led to a decline in raw material stocks, but weak demand caused finished goods stocks to rise
• Persistent cost pressures and sales discounts caused earnings to deteriorate again at the end of the year
• However, optimism increased: the index for production expectations for the year reached 59.8 points, the highest level in over four years
The industrial economy slowed down again somewhat at the end of the year. "The UniCredit Bank Austria Purchasing Managers' Index fell to 49.3 points in December 2025. After exceeding the neutral threshold for the first time in over three years in the previous month, the indicator slipped back below the 50-point mark, which signals growth," says UniCredit Bank Austria Chief Economist Stefan Bruckbauer, adding: "Although the domestic industrial economy improved in the course of 2025, the situation remains tense at the end of the year. A stable, sustainable growth phase is still not in sight. Among other things, international guidelines argue against this. The purchasing managers' indices for the manufacturing industry in the US and the eurozone deteriorated in December for the second month in a row. While the purchasing managers' index in the USA remained in positive territory at 51.8 points, the indicator in Europe fell even further below the neutral threshold to 49.2 points, weighed down by a renewed decline in Germany, the most important trading partner of Austrian industry.
In line with the unfavourable international trend, the UniCredit Bank Austria Purchasing Managers' Index deteriorated by 1.1 points in December, but still reached its second-highest level since mid-2022. "The decline in the UniCredit Bank Austria Purchasing Managers' Index in December was mainly due to a renewed decline in orders, which led to a slowdown in production expansion. Job cuts continued, but were significantly weaker than in previous months. Cost inflation was somewhat more subdued than in November, but continued to weigh on earnings due to sales discounts, which companies attempted to offset with a particularly cautious purchasing policy," says Bruckbauer, summarising the key findings of the monthly survey.
New business down again
The sharp decline in orders had the strongest impact on the decline in the UniCredit Bank Austria Purchasing Managers' Index. After domestic industrial companies recorded more new business in the previous month for the first time in more than three and a half years, the order index fell to 47.2 points in December, a three-month low. The lack of demand from abroad had a particularly strong impact on Austrian industry. The export order index even fell to 46.5 points.
Due to the sharp decline in new business, domestic companies slowed down their production expansion in December. At 50.2 points, the production index signalled only a minimal increase in production output compared with the previous month. While production increased in the intermediate goods and capital goods sectors, there was actually a decline in the consumer goods sector," says UniCredit Bank Austria economist Walter Pudschedl, adding: "For the first time in three and a half years, order backlogs in domestic industry increased again. The rise in backlogs would have justified a somewhat stronger expansion in production, but companies preferred to take a cautious approach in view of the economic situation, which continues to be assessed as uncertain."
Pace of job cuts slowed
Despite the third consecutive expansion in production, Austrian industry once again reduced its workforce in December. However, job losses were significantly lower than in previous months. The rise in the employment index to 48.0 points even signals the slowest pace since May 2023, when the current phase of personnel adjustments to lower production requirements began.
"The renewed reduction in employment coupled with a slight expansion in production suggests a further improvement in productivity in domestic industry in December. In view of the lack of new business, structural changes at the global level and the sharp rise in costs in recent years, industrial companies will continue to place a high priority on adjusting personnel capacities to increase productivity. Depending on how orders develop, job cuts will continue in the first few months of the coming year," says Pudschedl.
After the loss of almost 9,000 jobs in the previous year, a further 13,000 jobs were lost in Austrian manufacturing in 2025, with metal goods production and automotive manufacturing being particularly hard hit. At around 620,000, the current employment level is more than four per cent below the figure for mid-2023, when job cuts began.
"On average for 2025, the unemployment rate in industry climbed to 4.3 per cent, compared with only 3.8 per cent in 2024," says Pudschedl, adding: "Despite the major challenges, job cuts in Austrian industry should slowly come to an end over the course of the coming year. We expect the unemployment rate in the sector to stabilise at 4.3 per cent in 2026. This means that the unemployment rate will continue to be significantly lower than in the economy as a whole, with our expectation being an average of 7.4 per cent in the coming year."
Cautious inventory management
In view of the uncertain economic situation, domestic companies continued their cautious purchasing policy. Efforts to reduce costs and increase liquidity led to a reduction in purchasing volumes with the aim of pushing ahead with inventory reduction. Inventories in raw material warehouses fell again at a faster pace than in the previous month. However, this was also due to longer delivery times as a result of capacity bottlenecks on the supplier side, particularly for imports from Asia. Delivery times lengthened in December for the seventh month in a row and at the fastest rate in more than three years. While stocks of raw materials and intermediate goods were reduced, stocks in finished goods warehouses rose due to insufficient demand.
Further cost increases, but falling sales prices
In view of the increasing pressure on supply chains, there was a further increase in the cost of raw materials in December, particularly for some metals and metal products, as well as for wood and products from the electrical engineering and electronics sector. The rise in costs slowed down, at least compared with the previous month, as shown by the decline in the purchasing price index to 52.8 points. By contrast, selling prices fell for the eighth month in a row, and at a faster pace than in the previous month. Strong competition and subdued demand are forcing companies to offer discounts.
"The current price trends, with rising purchase prices and falling sales prices, once again led to a deterioration in the profit margins of domestic industrial companies in December. This unfavourable earnings trend has been observed in eleven of the twelve months of the current year 2025," said Pudschedl.
Optimism for 2026
Despite the renewed decline in new business, Austrian industrial companies are entering the new year 2026 with great optimism. Production expectations for the coming twelve months rose slightly again at the end of 2025. At 59.8 points, the expectations index in December even reached its highest level in over four years.
"The industrial economy has stabilised over the course of 2025, but despite the burgeoning optimism among businesses, the road to a stable and robust recovery still seems to be a long one," says Bruckbauer, adding: "Geopolitical risks, necessary structural adjustments due to new, successful competitors in Austria's areas of strength on international markets, and home-grown cost problems are limiting the industry's growth potential in the coming year. However, following the 3.5 per cent increase in industrial production on average for 2025, which is also attributable to a low base in the previous year, we expect a respectable real growth in production of around 2 per cent in the coming year."
Enquiries:
UniCredit Bank Austria Economics & Market Analysis Austria
Walter Pudschedl, Tel.: +43 (0) 5 05 05-41957;
Email: walter.pudschedl@unicreditgroup.at