Austria: Activity in the manufacturing sector resumes downward trend in May
The manufacturing Purchasing Managers’ Index (PMI), compiled by Bank Austria and released by IHS Markit, came in at 57.3 points in May, below the prior month’s reading of 58 points and marking the lowest reading since March of last year. Although the PMI resumed the largely downward trend seen since the start of the year, the indicator remained well above the crucial 50-point threshold that separates expansion from contraction in the manufacturing sector in Austria. The manufacturing sector has remained in expansionary territory for 38 consecutive months, the longest run in the near 20-year history of the survey.
May’s print reflected a slowdown in new orders and output growth; employment, however, continued to grow strongly. New orders expanded for the 29th consecutive month, but at a slower pace on the back of weakening domestic and foreign demand. Subsequently, output also moderated. This was largely due to comparatively weak growth in the production of consumer goods. On a more positive note, employment continued to increase at a historically strong pace. Job creation was particularly robust among producers of investment goods.
Despite strong employment gains and weakening new business and output growth, backlogs of work rose again in May. Backlogs have increased uninterruptedly since September 2016. Moreover, supply chain pressures remained strong, with input delivery times lengthening, albeit at the softest pace since September 2017. In terms of prices, inflationary pressures remained elevated, with input and output prices rising strongly. Lastly, output expectations remained positive; however, they eased to a one-and-a-half-year low.