The manufacturing sector in Austria recorded its strongest expansion in more than four years in October, the latest UniCredit Bank Austria Manufacturing Purchasing Managers’ Index (PMI) has found.
According to the data, the headline PMI increased to 55.9 in October, up from 54.9 in September, putting it at its highest reading since May 2022.
‘Amid signs of capacity pressures building and positive expectations for production in the year ahead, goods producers upped their rate of hiring,’ UniCredit Bank noted. ‘At the same time, however, there was a further tightening of supply-side conditions as input price inflation intensified and delivery delays worsened.’
New order growth
The improvement was driven by new orders, with overall sales increasing for a third consecutive month and at the fastest rate since January 2022. Manufacturers reported stronger demand linked to increased investment spending both in Austria and abroad.
In addition, production expanded at its fastest pace in more than four and a half years. However, the increase in activity contributed to a ‘sustained backlog’ of outstanding work, indicating growing capacity pressures across the sector.
Job creation
Although job creation remained modest, the rate of employment growth was the fastest since March 2023.
‘Accordingly, goods producers took on additional staff for a third successive month as they reported efforts to better utilise capacity and keep up with rising demand,’ UniCredit Bank commented.
Purchasing activity also increased as manufacturers sought to meet production requirements, build safety stocks and secure supplies ahead of potential price rises. The rate of growth in purchasing was the strongest in more than four years. Stocks of raw materials and components increased for a seventh successive month, while inventories of finished goods recorded their fastest growth in six months.
Cost pressures
Cost pressures intensified during the month. Input price inflation accelerated for a third consecutive month to its highest level since June.
‘Reports from surveyed firms highlighted the influence of increased energy and transport costs, while there were also widespread mentions of higher prices paid for raw materials and electronic components,’ the report noted.
Shortages of the latter contributed to longer supplier delivery times, with supply chain bottlenecks reaching their worst level in three months.
Looking ahead, Austrian manufacturers remained optimistic about production over the next 12 months. Confidence ‘ticked up slightly’ from September, supported by growing order books and expectations of an improvement in market conditions. Read more here.
