Sharpest Fall in Austria’s New Business in 2012 So Far
Business conditions in the Austrian manufacturing sector deteriorated again in August amid a further
reduction in output and faster declines in both new orders and employment.
Input costs continued to decrease, but firms raised their output prices slightly. Meanwhile, falling demand for inputs led to a marked shortening of suppliers’ delivery times.
The seasonally adjusted Bank Austria Manufacturing PMI dipped to 46.7 in August, down from 47.4 in the previous month. The reading signalled a solid deterioration in operating conditions in the sector, and the sharpest since July 2009.
The decline in the PMI index was partly reflective of a sharper reduction in new orders which was the fastest in 2012 so far. New export orders also decreased at a marked rate.
Output, meanwhile, fell at a slower pace during the month. The second consecutive decline in production was modest. Respondents linked the reduction in output to lower new orders. Production fell particularly sharply at consumer goods firms.
With output falling less quickly than new orders, outstanding business was depleted again in August. The rate of reduction was solid, and broadly unchanged from July. Firms cut their staffing levels for the third month running, and linked the latest decline to falling workloads and cost reduction efforts.
Input prices decreased for the third successive month in August. Although still solid, the latest decline was much weaker than the substantial reduction seen in the previous month. Where input costs fell, firms linked this to lower prices for raw materials including aluminium and cotton.
Despite the reduction in input costs, manufacturers raised their output prices for the first time in three
months. That said, the rate of inflation was only marginal.
Suppliers’ delivery times continued to shorten. Moreover, the latest improvement was marked, and the strongest since June 2009. Purchasing activity decreased for the fourth consecutive month in response to falling workloads. The pace of decline was solid, albeit weaker than that seen in July.
As input buying fell, pre-production inventories also decreased. Stocks of purchases have now fallen in six of the past seven months. Stocks of finished goods also declined, ending a four-month sequence of accumulation. Anecdotal evidence suggested that a reduction in output had led to the fractional decrease in post-production inventories.