Purchasing Managers Index

Transcription

1 Purchasing Managers Index UNICREDIT BANK AUSTRIA ECONOMICS & MARKET ANALYSIS AUSTRIA November 218

2 Overview Domestic orders keep Austria s industry on the upswing UniCredit Bank Austria Purchasing Managers Index rises to 54.9 points in November, defying the European trend Despite a decline in demand from abroad, new business increased slightly overall due to domestic orders Austrian companies expand production in November for the first time in three months, employment growth accelerates slightly Input and output prices rise evenly: Cost and earnings situation unchanged Medium-term business expectations, however, again weaken, but Austrian industry remains optimistic Author: Walter Pudschedl Imprint Published by UniCredit Bank Austria AG Economics & Market Analysis Austria Rothschildplatz 1 12 Vienna Telefon +43 () Fax +43 () econresearch.austria@unicreditgroup.at as of 28 November 218 UniCredit Research Page 2

3 Domestic demand compensates for declining export business Prices rose slightly again In detail The slowdown in the industrial sector seen since the beginning of 218 came to an end in November. In November, the UniCredit Bank Austria Purchasing Managers Index rose again for the first time in three months, reaching a high of 54.9 points. Austrian industry thus defied the sustained downward trend in Europe. In the euro area, the preliminary purchasing managers index, brought down by developments in Germany and France, continues to show a downward trend and currently stands at 51.5 points. This means that the European purchasing managers index is once again well below the Austrian level. For almost three years, the Austrian industrial sector has been growing at an above-average rate compared to the euro area as a whole. Summing up the most important results of the monthly survey of Austrian industrial companies, one can say that domestic industry is proving to be very resistant to negative external influences. Despite fewer foreign orders, new business increased overall and domestic industrial companies boosted production and took on additional employees. Inventories were also built back up to a greater extent, although prices accelerated somewhat. Compared to the development in the euro area, Austrian industry stands out above all due to the sustained strong growth in new domestic business. Demand from abroad is slowing down. Export orders declined for the second month in a row in November, but strong domestic demand more than compensated for these losses. With more new business in the books, Austrian industrial companies once again expanded production more strongly than in the previous months. With its rise to 54.8 points, the production index signals very strong growth for domestic industry. Despite the acceleration in production expansion, order backlogs have risen sharply. Domestic industrial companies have clearly underestimated the number of new orders. In view of the higher order intake, Austrian industry also raised its quantity of purchases again in November and further increased its stocks of purchases. However, suppliers delivery times were considerably extended due to the high level of capacity UniCredit Bank Austria Purchasing Managers' Index seasonally adjusted not adjusted Source: IHS Markit, UniCredit Research UniCredit Research Page 3 November 218

4 More jobs Optimism in industry declines utilisation. Despite the dampening effect of lower oil prices, the strong trend in price increases that we have seen for around 2.5 years even intensified somewhat in November. The increase in input prices and the increase in output prices essentially balanced each other out, so that on average the cost and earnings situation of domestic operations did not change compared with the previous month. As a result of strong demand and increased production expansion, domestic industrial firms again accelerated the increase in employment compared with the previous month. The sub-index climbed to 56.4 points. The indicator shows that although employment growth in domestic industry is now lower than at the beginning of the year, it remains above average in a long-term comparison. For 218 as a whole, we expect the number of employees in the manufacturing sector to rise by more than 3 per cent. This corresponds to almost 2, additional jobs compared with the previous year. The unemployment rate in the sector will fall from 4.4 to 3.8 per cent on an annual average. In 218, the unemployment rate in manufacturing will thus only be half as high as the expected figure of 7.7 per cent for the economy as a whole. The current Purchasing Managers Index surprisingly showed a slight improvement in November, especially in view of the fact that the euro area is moving in the opposite direction. However, this should not obscure the fact that November only represented a break in the slowdown in the industrial sector that has been underway since the beginning of the year. It is unlikely that domestic demand will, in the coming months, continue to fully compensate for the decline in new orders from abroad as a result of the slowdown in global trade due to less supportive financing conditions and increasingly protectionist trade policies. In addition, the order situation is no longer as positive as at the beginning of the year, although it remains very favourable by long-term standards. As a result, the index ratio between new orders and stocks of finished goods, a reliable signal for the strength of the industrial sector to be expected in the near term, has become more balanced. Stocks of finished goods are therefore largely sufficient to meet new orders in the coming months without any further acceleration in production expansion. The index for the annual outlook determined in the survey again weakened significantly compared with the previous month to 51.8 points, its lowest level since the beginning of 215. The pace of growth in Austrian industry will slow somewhat in the coming months, as a number of political uncertainties and increased protectionism are dampening the outlook for 219. With an increase in production of around 3 per cent, domestic industry will nevertheless expand strongly in the coming year, although we are not likely to reach the growth rates seen in the two previous years. Vehicle construction and the electrical industry will continue to be two sectors with aboveaverage growth rates. By contrast, the outlook for the steel industry in 219 is much more cautious. UniCredit Research Page 4 November 218

5 UniCredit Bank Austria Purchasing Managers' Index and components Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Ø since 2 UniCredit Bank Austria Purchasing Managers' Index Output New orders Employment Suppliers' delivery times (inverse) Stocks of purchases Stocks of finished goods 1) Backlog of work 1) New export orders 1) Quantity of purchases 1) Input prices 1) Output prices 1) New orders/stocks of finished goods 2) Future output 1) ) not in the overall index 2) own calculation Source: IHS Markit, UniCredit Research Note: PMI figures above the. mark indicate growth, readings below the. mark indicate contraction in the manufacturing sector compared to the previous month. The greater the divergence from., the greater the change signalled. This report contains the original data from the monthly survey among purchasing managers of industrial companies in Austria. The survey is sponsored by UniCredit Bank Austria and has been carried out by IHS Markit under the patronage of ÖPWZ, the Austrian Productivity and Efficiency Centre, since October UniCredit Research Page 5 November 218

6 AUSTRIAN INDUSTRY WITH ABOVE-AVERAGE GROWTH MOMENTUM IN INTERNATIONAL COMPARISON Purchasing Managers' Indices in comparison Austria Euro area Germany USA Global Purchasing Managers' Indices in comparison (last available value) ,1,5,7 51,1 57,4 51,5 51,6,7 49,2 51,8 54,9 The slowdown in the Austrian industrial sector, which started at the turn of the year, stopped in November. The UniCredit Bank Austria Purchasing Managers Index rose to 54.9 points. For two and a half years, the industry in Austria has been performing better than the European average. The preliminary PMI for the euro area fell in November and remains still significantly lower at points. IN NOVEMBER ALL COMPONENTS CONTRIBUTED TO THE RISE IN THE UNICREDIT PURCHASING MANAGERS INDEX (share of the sub-indices in the total value) Stocks of Purchases Delivery times Employment New orders Output Index, total UniCredit Bank Austria Purchasing Managers' Index For the first time since December 217 all five components made a positive contribution to the rise in the UniCredit Purchasing Managers Index. The acceleration of production expansion has had the biggest impact on the 1.1 percentage point increase in the overall index. The increase in stocks of purchases and the extension of the delivery time also made an above-average contribution. THE AUSTRIAN INDUSTRIAL COMPANIES HAVE ACCELERATED THE PACE OF EXPANDING THE PRODUCTION IN NOVEMBER UniCredit Bank Austria Purchasing Managers' Index (change over previous month, absolute) Stocks of purchases Employment Output Delivery times New orders Index. total UniCredit Bank Austria PMI and industrial production Output index PMI Industrial production (real, s.a., mom in %) 1, 1,,,8 Emplyoment (s.a., mom in %, 4-MMAV, manufacturing) Emplyoment index - right-hand scale,6,4,,2 -,, -1, In view of the continuing favourable order situation and the existing high order backlogs, the Austrian businesses have raised the pace of production expansion. The production index rose to 54.8 points. -,2 As a result of strong demand and increased production expansion, domestic industrial firms again accelerated the increase in employment compared with the previous month. The sub-index climbed to 56.4 points. Source: IHS Markit, Statistik Austria, UniCredit Research UniCredit Research Page 6 November 218

7 DOMESTIC DEMAND COMPENSATES FOR DECLINING EXPORT BUSINESS New orders, total Quantity of purchases New export orders Exports (s.a., mom in %, trend) - right-hand scale Compared to the development in the euro area, Austrian industry stands out above all due to the sustained strong growth in domestic new business. Thanks to increasing domestic orders, the order situation has improved slightly. PRICES ROSE SLIGHTLY AGAIN 75 Despite the dampening effect of lower oil prices, inflation picked up somewhat in November. The increase in input prices and the increase in output prices were essentially in balance. OPTIMISM DECLINES Input prices 75 Output prices Ratio new orders/stocks of finished goods - right-hand scale Future output (timeline: 12 months) The ratio between incoming orders and inventories has decreased slightly. In addition, the future output decreased significantly to 51.8 points. 75 2, 1,8 1,6 1,4 1,2 1,,8 Demand from abroad cools off. For the second month in succession, export orders fell in November. Stocks of purchases Stocks of finished goods In view of the higher order intake, Austrian industry also increased purchasing volumes again in November, thereby filling up the stocks of purchases more strongly. The stocks of finished goods also grew more strongly. GDP forecast based on UniCredit Bank Austria PMI GDP (change yoy in %, s.a.) GDP forecast (model) -1 1Q1 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 1Q18 The UniCredit Bank Austria Purchasing Manager Index signals weaker industrial growth for the coming months and currently correlates with a GDP growth of around 2.5% yoy for the Austrian economy as a whole. Source: IHS Markit, Statistik Austria, UniCredit Research -1 UniCredit Research Page 7 November 218

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