Business conditions across the Austrian manufacturing sector worsened for the second month running in May, led by a further marked drop in new export orders.
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Notably, firms reported the first fall in output since early-2015.
With confidence towards future production also waning, job creation in the goods-producing sector slowed to its weakest in over three years.
The headline UniCredit Bank Austria Manufacturing PMI is a composite single-figure indicator of manufacturing performance.
It is derived from indicators for new orders, output, employment, suppliers’ delivery times and stocks of purchases.
Any figure above 50.0 indicates overall improvement of the sector.
Having fallen below the neutral 50.0 threshold for the first time in over four years in April (49.2), the PMI slipped further in May to 48.3 its lowest since March 2015.
All components of the index imparted a negative directional influence except new orders, which fell at a slightly slower rate than in April.
The main downward pressure on the PMI came from production, which fell modestly in May to end a sequence of growth stretching back over four years.
There were moderate decreases in output across each of the main industrial groupings – consumer, intermediate and capital goods.
New orders meanwhile decreased for a fifth straight month in May.
Though the rate of decline was slower than in April when it reached the quickest since late-2014 it was still marked by historical standards.
Part of the issue was another steep decrease in export sales, which fell for the eighth month in a row and at one of the quickest rates for over sixand-a-half years.
Panellists often linked lower new orders to client uncertainty and a downturn in the autos industry.
As well as showing a slowdown in job creation – with employment rising only slightly overall, the latest data indicated a notable paring back of buying levels across the manufacturing sector in May.
Purchasing activity fell to the greatest extent since March 2015, as firms adjusted to lower output requirements and made efforts to reduce input stocks, accordingly.
However, lower-than-expected sales meant that post-production inventories rose for the sixth time in the past seven months.
Lower demand for inputs was reflected in a third straight monthly improvement in supplier delivery times in May.
Purchase price inflation also remained subdued, as the cost of a number of key inputs, in particular steel and some electronic components, fell amid reports of excess supply in the market.
However, due in part to recent oil price rises, the overall rate of cost inflation ticked up slightly from April's 31-month low.
Average factory gate prices also increased at a faster rate in May, with the rate of inflation rebounding from a near twoand-a-half-year low in the previous survey period to the highest since January.
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