Austria: Manufacturing PMI jumps to multi-year high in March
Manufacturing operating conditions in Austria improved at the second-strongest pace on record in March, with the UniCredit Bank Austria Manufacturing Purchasing Managers’ Index (PMI) jumping to 63.4 from 58.3 in February. Consequently, the index moved further north of the neutral 50-threshold that separates expansion from contraction in the manufacturing sector compared to the prior month as the recovery gained traction.
The marked jump was driven by the fastest rise in output and new orders in over three years, with growing capacity pressures driven job creation higher. Demand dynamics were buttressed by the easing of lockdown restrictions and rekindled investment spending. Export orders were chiefly driven by greater German demand. Austrian manufacturers, meanwhile, were unable to keep up with increased demand and backlogs of work rose while stocks of finished goods declined. Furthermore, as supply chain pressures intensified, firms increased their purchasing activity to safeguard inputs. Turning to prices, supply shortages and higher cargo costs put pressure on input prices, with cost inflation accelerating for the fifth month running. That said, this was largely passed on to customers. Lastly, expectations rose to the second-highest level since the series began over eight years ago.
The improvement in operating conditions continued to gain traction at the close of the first quarter. While this should bode relatively well for the economic performance in the first quarter, lingering coronavirus restrictions a cause for moderation; the services sector, which accounts for most of the economy, was the hardest hit by the measures to slow the spread of Covid-19.