Austria: Drop in foreign demand continues to weigh on manufacturing sector
February 26, 2019
Business conditions in the Austrian manufacturing sector improved at the slowest pace in over three years in February, with the Bank Austria Purchasing Managers’ Index (PMI) dropping from 52.7 in January to 51.8. More positively, the index remained above the neutral 50-point mark that separates expansion from contraction in the sector, marking the 47th consecutive month in which operating conditions improved.
The drop in the headline figure came on the back of the strongest drop in new export orders since October 2012, which led to a fall in overall new orders for the second consecutive month. However, output continued to grow at a solid pace and benefited from a sharp increase in consumer goods output. Output growth combined with a drop in new orders translated into a decrease in outstanding work while stocks of finished goods also rose, suggesting that output growth is likely to moderate in the absence of a recovery in demand dynamics. Despite this, manufacturers continued to bring aboard new staff, although the pace of onloading eased. In terms of prices, inflationary pressures softened as purchasing costs rose at the weakest pace in over two years due to a drop in demand. Subsequently, growth in output prices also moderated. Sentiment among manufacturers was somewhat optimistic despite concerns over an economic slowdown.
Austria Fixed Investment Forecast
FocusEconomics Consensus Forecast panelists expect gross fixed investment to rise 2.7% in 2019, which is down 0.1 percentage points from last month’s forecast. The panel sees fixed investment growth of 2.0% in 2020.
Author: Jan Lammersen, Economist