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Austrian manufacturing upturn continues at marked pace

Staff Writer | February 28, 2017
Austria’s manufacturing sector continued to enjoy its best period of growth for nearly six years during February.
Austria inflation
Austria   Bank Austria Manufacturing PMI
This was signalled by the seasonally adjusted Bank Austria Manufacturing PMI posting 57.2, down only fractionally from January’s 70-month high of 57.3.

The sharp improvement in business conditions was again bolstered by higher output and new work.

Both rose at substantial rates well in excess of their respective long-run averages.

Moreover, data showed that the expansion of new work was broadbased across domestic and export markets.

Panellists commented on stronger inflows of new orders from Europe, Asia and the US.

Among the three monitored sub-sectors, producers of intermediate and investment goods far outperformed their counterparts in consumer goods.

Both enjoyed marked improvements in operating conditions, whereas consumer goods producers reported only a modest upturn.

That said, growth in the latter sector followed a marginal contraction during January.

Employment was another key contributor to growth of the Austrian manufacturing sector as a whole.

The rate of hiring accelerated to the quickest since June 2011.

Anecdotal evidence associated hiring with efforts to meet client demand.

A larger workforce failed to alleviate capacity pressures, however.

Backlogs of work rose markedly, albeit at a slower pace than in the prior two months.

Purchasing activity showed a similar trend, rising sharply in the face of stronger order book volumes.

In fact, the rate of expansion picked up to a near six-year high.

Companies also mentioned having raised their input buying ahead of anticipated price hikes.

As a result, stocks of purchases increased for just the second time since July 2015.

Greater levels of purchasing had the side-effect of increasing pressure on supply chains in February.

Average lead times lengthened to the greatest extent in over five-and-a-half years.

Meanwhile, cost pressures faced by Austrian manufacturers remained considerable.

The rate of purchase price inflation eased only slightly from January’s multi-year high, amid reports of a general rise in raw material costs.

Intermediate goods producers saw the sharpest increase.