UniCredit Bank Austria Purchasing Manager Index in February
Tailwind for the recovery of Austrian industry
- The dip at the beginning of the year has been overcome: The UniCredit Bank Austria Purchasing Managers' Index improved to 49.4 points in February
- Slight rise in new orders led to a minimal increase in production output
- However, the pace of job losses in the domestic industry increased again in February
- The strongest rise in costs for three years triggered the first increase in output prices for ten months despite fierce competition
- Cautious purchasing and cost-conscious inventory management emphasise the only slowly diminishing uncertainty about the sustainability of the recovery underway
- Improving outlook: Expectations index rose to 62.6 points in February, the highest level in four years
After a weak start to the year, the industrial economy showed signs of improvement again. "The UniCredit Bank Austria Purchasing Managers' Index reached 49.4 points in February, a clear increase on the previous month and the second-highest value since the slump in the industrial economy in summer 2022," says UniCredit Bank Austria Chief Economist Stefan Bruckbauer, adding: "The recovery of the domestic industry has made progress. The previously volatile upswing has regained a little more stability. The turnaround became a little more visible again, but the pace of economic progress remained subdued and continued to be slower than in previous recovery phases."
The rise in the UniCredit Bank Austria Purchasing Managers' Index was driven by an improvement in almost all components. "New orders increased slightly in February, which resulted in a slight increase in production. The slight easing of economic uncertainty was reflected in a smaller decline in purchasing volumes and a slower rate of destocking. The cost increases that were at least partially passed on to customers also fit into the picture of a gradual stabilisation of the situation in the sector. However, the big downer in February was the renewed acceleration of staff reductions to increase productivity," says Bruckbauer, summarising the most important survey results.
In view of the gradually broader and more stable foundation of the economic improvement in the domestic industry, the prospects for production growth in 2026 are good. "Despite the challenges posed by geopolitical uncertainties, increased protectionism in global trade, tougher competition from the Far East and the difficult cost situation, we expect industrial production in Austrian manufacturing to increase by at least 1.5 per cent on average in 2026," says UniCredit Bank Austria economist Walter Pudschedl, adding: "Domestic companies have become very optimistic again. The expectations index for production over the next twelve months has risen to 62.6 points, the highest value for over four years."
The current optimism was apparently fuelled by the upward trend in industrial activity in Austria's most important export markets. The preliminary Purchasing Managers' Index for industry in the eurozone rose to 50.8 points in February. The improvement in Germany to 50.7 points, supported by stronger demand at home and abroad, provided the necessary boost.
New business up, but export orders lagging behind
After domestic companies had significantly reduced their production output in January, February saw a return to the previously slightly positive trend. The production index rose to 50.1 points. "Domestic companies increased production slightly because there was some movement in demand. The index for new business reached 50.4 points, signalling at least a slight increase in incoming orders for the first time in three months. However, the revival was exclusively due to increased domestic demand. However, the decline in new export orders in February was at least significantly lower than around the turn of the year," says UniCredit Bank Austria economist Walter Pudschedl.
In addition to the still somewhat subdued demand and geopolitical uncertainties, new business continues to be held back by high prices in some cases and high inventories held by customers. Although the index for new orders was higher than the production index for the first time in over a year in February, domestic companies still had to focus heavily on working off backlogs in order to utilise their capacities, which consequently decreased again. Here too, however, the negative trend slowed down. Despite the reduction in order backlogs, average delivery times increased in February and were even slightly longer than at the start of the year. This was due to production cutbacks on the supplier side as well as delivery difficulties for some raw materials.
Job losses in the industry intensified
Despite the slight increase in new orders and output, job losses in Austrian industry have accelerated. The employment index fell to 44.1 points. This indicates the highest rate of job cuts since October. "Despite the economic bright spots, the majority of domestic companies reduced their headcount in February in further adjustment to the lower production requirements compared to 2022 and increased labour costs. The willingness to retain skilled workers in order to get off to a faster start in the increasingly favourable market environment has decreased due to the long period of weakness. As employees continued to be laid off even though production increased slightly, productivity in domestic manufacturing should have increased again in February. A trend that has been continuing for exactly two years," says Pudschedl.
With a seasonally adjusted figure of over 27,000 people, the number of jobseekers in Austrian industry is now 35 per cent higher than at its lowest point around two and a half years ago. "The unemployment rate in the Austrian manufacturing industry has been trending upwards since spring 2023, but has begun to stabilise in recent months. The labour market situation in the industry could begin to ease later in 2026. After averaging 4.3 per cent in 2025, we expect this figure to remain the same in 2026, meaning that the unemployment rate in industry will continue to be significantly lower than in the economy as a whole at 7.3 per cent, although the downward trend will become apparent earlier," says Pudschedl.
Despite the generally tight labour market situation, skilled workers are still being sought in the domestic industry. Companies have currently registered around 7,500 vacancies. On average, there are currently 3.5 jobseekers for every vacancy in manufacturing in Austria, compared to just 1.5 around two and a half years ago . While there is no national average labour shortage in the industry, the situation is more challenging in individual professions, and this also applies regionally. In Tyrol, the vacancy rate is 1.7, and in Salzburg there are only 2 jobseekers for every vacancy.
Strong increase in costs
Although domestic companies once again reduced their purchasing volumes in February, which was reflected in a further reduction in inventories of primary materials, there was a significant increase in costs due to supply bottlenecks for some primary products and raw materials. The input price index climbed to 56.2 points, indicating the strongest increase in three years. "High energy and labour costs as well as the current shortage of some raw materials caused input prices for Austrian industry to rise for the eighth month in a row. The rise in costs has even accelerated recently," says Pudschedl, adding: "The price increase in purchasing was at least partially passed on to customers for the first time in February. This is a first sign that companies' pricing power is increasing again somewhat due to demand. However, output prices rose only slightly, meaning that the earnings situation of domestic businesses is likely to have deteriorated further on average."
Enquiries
UniCredit Bank Austria Economics & Market Analysis Austria
Walter Pudschedl, Phone: +43 (0) 50505-41957;
e-mail: walter.pudschedl@unicreditgroup.at