Austria: PMI remains entrenched in contractionary territory in December
December 27, 2019
Manufacturing conditions continued deteriorating in Austria at the end of the year, with the UniCredit Bank Austria Manufacturing Purchasing Managers’ Index (PMI) remaining unchanged at 46.0 in December. Consequently, the index remained below the 50-threshold that separates a contraction from an expansion in business conditions for the ninth-consecutive month to end the “worst year for [the] manufacturing sector since 2009.”
The print reflected a further drop in output that was among the steepest in the past decade, particularly due to strong contractions in the production of intermediate and investment goods. This is likely linked to lingering external headwinds weighing on demand dynamics. Anecdotal evidence highlighted an aversion to investment, weakness in the auto sector and generally subdued demand. Moreover, order book volumes declined as did new export orders. Weakness in underlying demand dynamics influenced purchasing activity as pre-production inventories declined at an over-ten-year steep pace, while stocks of finished goods also fell. Furthermore, weak demand led to a further reduction in suppliers’ delivery times while firms were able to negotiate lower prices with suppliers, feeding through to lower output charges. This was also in part due to intense competition.
Output expectations improved again at the close of the year; however, they remained subdued by historical standards and firms highlighted lingering concerns regarding the global economy, suggesting employment levels are unlikely to rise significantly going forward.
Author: Jan Lammersen, Economist