Austria: Weakening foreign demand spearheads loss of steam in Austria's manufacturing sector in January
January 29, 2019
Business conditions in the Austrian manufacturing sector improved at the softest pace in nearly two-and-a-half years in January, with the Bank Austria Purchasing Managers’ Index (PMI), released by IHS Markit, easing to 52.7 from 53.9 in December. However, the print remained above the neutral 50-point mark separating expansion from contraction in the manufacturing sector and above the long-term average of 52.3. Moreover, January’s result marked the 46th consecutive month in which operating conditions improved.
Having said that, the drop in the headline reading came on the tails of weakening foreign demand as exports declined at the strongest pace since October 2012. As a result, total new orders fell for the first time in over three years in the month. Output growth slightly picked up pace in January despite softer inflows of new orders. There was more positive news as firms continued to take on new staff, in part due to efforts to clear outstanding orders. Firms also picked up purchasing activity as a result of increased production. In terms of prices, cheaper oil and steel drove a reduction in input cost inflation while output price inflation eased to a three-month low.
Author: Jan Lammersen, Economist