Austria‘s manufacturing sector reported a slight drop in output in June, after rising in May for the first time in three years, the latest UniCredit Bank Austria Manufacturing PMI report has found.
According to the report, which is compiled by S&P Global, the latest PMI stands at 47.0, down from 48.4 the previous month, indicating a deeper movement into negative territory.
Production drops
The decline was driven by both a renewed fall in production and sharper reductions in new orders and employment. While business expectations around future output remain positive, the degree of confidence has ticked down from the recent high reported in May.
‘Contributing to the decline in the headline index was a renewed drop in production. After rising – albeit only fractionally – for the first time in three years in May, output showed a slight decrease at the end of the second quarter,’ UniCredit Bank commented.
‘Reports from surveyed businesses attributed the downturn to weakness in underlying demand. This was underscored by a solid and accelerated reduction in intakes of new orders. […] Export sales likewise declined at a faster rate than the month before.’
Employment numbers
The drop off in orders, coupled with backlogs of work, led to a drop in employment numbers, with employment dropping at the fastest pace since March, reflecting efforts by businesses to streamline operations.
There were also efforts to scale back inventory levels during the month, as well as a ‘solid and accelerated reduction’ in stocks of purchases, and post-production goods.
Despite reduced purchasing activity, supplier delivery times lengthened for the first time since late 2022, largely due to shipping delays from Asia.
‘Looking ahead, goods producers in Austria continued to expect output levels to rise in the coming 12 months,’ UniCredit Bank noted. ‘This was partly linked to hopes of a pick-up in economic conditions. The degree of optimism remained above the long-run average, but it eased from May’s 11-month high to the weakest since March.’ Read more here.
