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Austrian manufacturing sector stalls

Christian Fernsby ▼ | March 28, 2019
March saw overall business conditions across Austria's manufacturing sector stagnate, according to the latest PMI data from UniCredit Bank Austria, thereby ending a record sequence of improvement that had lasted almost four years.
Austria   The PMI registered a reading of 50.0 in March
The headline UniCredit Bank Austria Manufacturing PMI is a composite single-figure indicator of manufacturing performance.

It is derived from indicators for new orders, output, employment, suppliers’ delivery times and stocks of purchases.

Any figure above 50.0 indicates overall improvement of the sector.

The PMI registered a reading of 50.0 in March, down from 51.8 in February.

This marked the first time in four years that the index has failed to post above the 50.0 no-change threshold.

The fall in the index – the twelfth in the past 15 months – reflected all of its sub-components except stocks of purchases, which rose at a slightly firmer rate amid slowing production growth.

Output rose in March at the weakest pace in over three-andhalf years.

The only notable growth was in consumer goods production, though even here the rate of expansion slowed since February.

The loss of momentum observed across the sector in March was underpinned by a further decrease in inflows of new orders, the third such fall in as many months.

Moreover, reflecting particularly weak trends in the intermediate and capital goods sub-sectors, the rate of decline in order books accelerated to the quickest since November 2014.

Meanwhile, the latest fall in new export orders was the most marked in almost six-and-a-half years.

Firms commented on hesitancy among clients amid a backlog drop of uncertainty, both political and in relation to the car industry.

Austrian manufacturers slowed the rate of job creation in March as backlogs of work fell for the second month in a row.

The latest increase in employment was the weakest since May 2016, although still solid by historical standards.

Purchasing activity was meanwhile scaled back, marking the first drop in buying levels in over three years.

With demand for inputs falling during the month, pressure on supply chains eased.

Average lead times on purchased items improved for the first time since July 2013, albeit only marginally.

The survey also linked lower demand for raw materials to a further slowdown in input price inflation, to the weakest in almost two-and-a-half years.

Factory gate prices meanwhile increased at a rate that was unchanged from February's 26-month low.

Finally, confidence among Austrian manufacturers towards the year-ahead outlook for output remained subdued.

The degree of optimism was slightly stronger than in the previous survey period but still among the lowest seen over the past four years.