Austrian Manufacturing PMI Drops to 39-month Low
The downturn in the Austrian manufacturing sector intensified in September as output, new orders and employment all declined at faster rates. There were signs of inflationary pressures returning to the sector as both input costs and output prices increased during the month.
The seasonally adjusted Bank Austria Manufacturing PMI – a composite indicator designed to provide a single-figure snapshot of manufacturing performance – dropped for the seventh successive month to 45.1 in September, after posting 46.7 in August. Worsening business conditions in the sector have now been signalled for three months in a row, and the latest deterioration was the most marked since June 2009.
Austrian manufacturing production decreased for the third successive month in September, and at a solid pace that was the sharpest in ten months.
Respondents indicated that the reduction was largely reflective of a sharp fall in new orders. New business contracted at a substantial pace over the month. The latest decline was the sharpest since April 2009.
Panellists reported falling client demand amid an ongoing deterioration in economic conditions. New export orders also decreased substantially as panellists highlighted weakness in the Eurozone.
With new orders declining at a steep rate, manufacturers lowered their employment levels and depleted backlogs of work. The fall in staffing levels was solid, and the fastest since January 2010.
After three successive months in which input prices had fallen, a rise in cost burdens was recorded in
September. Where input prices increased, this was mainly linked to higher raw material costs.
Firms reported passing on higher input prices to their clients, resulting in a second successive monthly increase in prices charged. Furthermore, the rate of inflation was solid and the fastest since June 2011. The overall rise in output prices was driven by consumer goods producers.
Austrian manufacturers lowered their purchasing activity again in September, extending the current sequence of decline to five months. The latest fall was the sharpest since May 2009. With demand for inputs declining, suppliers were able to quicken deliveries during the month. Lead times shortened for the fifth month running, albeit at a reduced rate.
Efforts to reduce inventories were signalled by respondents in September. Stocks of both purchases and finished goods fell markedly. The reduction in post-production inventories also quickened, to the fastest in 31 months.