The upturn in Austria’s goods-producing sector continued at the end of the third quarter, with rates of growth in output and new orders accelerating since the prior month.
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Stronger demand in turn encouraged manufacturers to raise their employment levels and increase their buying activity further. Nonetheless, fierce competition meant that companies had to reduce their selling prices in order to secure new business despite input costs rising marginally.
September data signalled ongoing economic growth in Austria’s manufacturing sector. This was highlighted by the seasonally adjusted Bank Austria Manufacturing PMI remaining above the neutral 50.0 threshold.
At 53.5, up from 52.1, the PMI was indicative of an acceleration in the rate of growth. Moreover, the average PMI reading over the quarter as a whole (53.0) was the best since the end of 2013. Latest survey results pointed to ongoing growth of new orders placed with Austrian manufacturers, with the pace of expansion accelerating since the previous month.
Part of the increase was attributed to a renewed rise in foreign demand. With new orders growing further, companies scaled up their production volumes during the month. Mirroring the trend for new business, the rate of increase accelerated. Sector data highlighted that growth was recorded in all three monitored categories.
The stronger increase in new business led to an accumulation of backlogs during September. The rate at which business outstanding accumulated was moderate.
Meanwhile, finished goods inventories fell further, as some companies used existing stock to satisfy client demand. Manufacturing employment rose to the greatest extent since mid-2011 during September, with nearly one-in-five companies adding to their payrolls.
September data pointed to a marginal increase in companies’ cost burdens, with input prices up slightly since August. Some panel members commented on higher prices for steel. Despite input costs rising, manufacturers lowered their selling prices in an attempt to secure new business amid fierce competition.
Despite companies raising their buying activity, stocks of purchases declined. Panellists linked this to stock optimisation efforts. Lastly, suppliers’ delivery times lengthened further, and at a faster pace than in August. ■