Austria: PMI drops to lowest level since March 2015 in May
May 28, 2019
Bank Austria’s Purchasing Managers’ Index (PMI) moved further south of the neutral 50-point mark in May, as the index fell to an over four-year low of 48.3 (April: 49.2), indicating weakening economic momentum in the second quarter.
The index was driven down by a marked drop in new export orders; the first fall in output since early 2015; flagging confidence; and weakening job creation. The eighth consecutive decrease in new export orders, linked to uncertainty and a downturn in the automotive industry, continued to exert downward pressure on overall new orders, which dropped for the fifth month running. Meanwhile, production fell as output of consumer, intermediate and capital goods all decreased, ending a four-year streak of growth. Job growth slowed the weakest level in more than three years while purchasing activity also declined at a multi-year quick pace due to softening demand and output requirements. As demand weakened, however, stocks of finished goods increased. This means that if in subsequent months demand picks up, output growth will likely grow at a softer pace as firms will look to offload finished goods.
Softer demand, simultaneously, led to an improvement in suppliers’ delivery times and easing inflationary pressures. Input price inflation was subdued despite uptick in oil prices. On the other hand, output price inflation accelerated from the weak level seen in the prior month.
Author: Jan Lammersen, Economist