Austria's manufacturing sector remained firmly in contraction in November, with latest PMI data showing further solid decreases in output, new orders and employment.
Factory gate prices also fell, dropping for the fifth straight month, as firms reported strong competition for new work and a sustained decline in underlying input costs.
Encouragingly, however, expectations towards output in a year's time edged into positive territory – albeit only just – for the first time in five months.
The headline UniCredit Bank Austria Manufacturing PMI – a single-figure snapshot of overall business conditions, calculated from indicators of output, new orders, employment, suppliers' delivery times and stocks of purchases – registered 46.0 in November, up from 45.5 in October and its highest reading for three months.
However, despite the slight uptick, which reflected slower falls in employment and stocks of purchases as well as smaller improvement in supplier delivery times, the headline PMI remained at one of its lowest levels over the past seven years and well below its position one year ago.
A further solid decrease in output in November extended the current sequence of contraction to seven months.
The pace of decline was slightly quicker than in October, as faster falls in the production of both intermediate and investment goods offset a stronger rise in consumer goods output.
Similar to overall production, the total level of new orders received by Austrian manufacturers fell at a solid and slightly accelerated rate in November.
When explaining the latest decrease, surveyed firms commented on client hesitancy, weakness in the automotive sector and a general economic slowdown as some of the main factors.
Export sales were down markedly on the month, albeit with the rate of decline easing to the weakest since August.
The sustained reductions in output and new orders saw employment in the manufacturing sector fall for a fifth straight month.
Though easing from October, when it reached the fastest for almost ten years, the rate of job cuts remained solid by historical standards.
The fall in workforce numbers was consistent with signs of excess capacity, with goods producers noting a further steep drop in backlogs of work in November.
Manufacturers also scaled back their purchasing activity during the month, in some cases reflecting efforts to run down stocks.
The drop in demand for inputs contributed to a further (albeit weaker) improvement in vendor lead times and a reduction in average purchase prices, the sixth in as many months.
These cost savings were passed on in the form of lower output prices, which fell at a moderate rate that was slightly quicker than in October.
Lastly, November saw an improvement in business confidence towards output over the next 12 months.
After being in negative territory since July, expectations turned slightly positive, though remained subdued by historical standards. ■