Austria: PMI falls for the fifth time this year in June
June 27, 2018
The first half of this year has been a period of moderation in the Austrian manufacturing sector, as the manufacturing Purchasing Managers’ Index (PMI)—compiled by Bank Austria and released by IHS Market—fell for the fifth time in six months in June. The PMI dropped to 56.6 points from 57.3 points in the prior month, logging the lowest reading since December 2016. Nonetheless, the PMI remained above the critical 50-point threshold that separates expansion from contraction in the manufacturing sector. It also remained above the long-term average of 52.2 points, pointing to healthy business conditions in the first half of the year. The sector has recorded expansions for 39 consecutive months, the longest sequence in the near 20-year history of the survey.
June’s dip was driven by slower jobs growth; growth in new orders was unchanged, while output growth increased somewhat. Although the labor market lost momentum, June marked the 27th consecutive month of jobs growth. The expansion in output came on the back of the intermediate and investment goods sub-sectors, as production of consumer goods remained comparatively soft. Furthermore, backlogs of work grew in June but at a softer pace than in May due to the moderation in new orders growth in recent months.
In terms of prices, inflationary pressures remained elevated, with input prices increasing strongly. As a result, output prices expanded as manufactures passed the burden on to consumers. Lastly, manufacturers’ outlook on output over the next 12 months remained positive.
Author: Jan Lammersen, Economist