Austrian economic forecast clouded over | Markets | 11/22/2022
According to the industry climate analysis by Unicredit Bank Austria, the Austrian economy must expect significant growth losses by the end of the year. This is from a show. In industry and trade as well as in services, production and business expectations for the coming months have slipped into the red, they say.
The data shows the development of production and sales up to September 2022 compared to the economic survey results from October 2022. According to this, the production and business expectations in October are mostly optimistic only in the construction industry, the electronics and mechanical engineering industry and in some service sectors in the field of liberal professions remained.
The survey signals that economic output in Austria will fall slightly by the end of the year. “But since industry and construction still report above-average capacity utilization on average and a predominantly positive assessment of their order situation, the downturn should not be deep and only short,” says Unicredit Bank Austria economist Günter Wolf.
Shortage of personnel replaces material shortage
As a result, the topic of material shortages has become less explosive in industry: while 41 percent of companies still expected production disruptions in the second quarter, “only” 28 percent of companies expected this for the fourth quarter of 2022. At the same time, however, the lack of labor and demand problems have gained importance. The automotive, electronics and mechanical engineering sectors are still burdened above average by material concerns.
The electronics and mechanical engineering industries still have well-filled order books in October. At around 90 percent, capacity utilization in both sectors is also well above the pre-crisis level. The economic slowdown due to economic uncertainties and high energy prices will slow demand for new machines. However, Austria’s machine builders can partially compensate for European demand losses in non-European markets. In China and the USA, the economy is somewhat more robust. In all other major branches of industry, production expectations became more pessimistic in October.
The construction industry continues to work at a high level
From 2022 to September, construction output increased by an average of 14.7 percent, more than in the past two years. Construction activity has picked up somewhat since the third quarter, and capacity utilization has fallen slightly. At the same time, capacity utilization in the fourth quarter is still above the ten-year average. According to the economic survey, demand for new residential and commercial buildings has been growing more slowly than demand for modernization and expansion work for months. Approvals for new residential construction have been falling from a very high level for the past two years.
“The construction industry will lose momentum in 2022 compared to the previous year, but will end the year with a strong nominal plus,” says Wolf. Structural and civil engineering would benefit from subsidies for climate protection measures. With the slight slowdown in the construction industry since the middle of the year, the increase in construction costs has also been somewhat delayed and most recently reached 7.4 percent in September. As a result, the rise in construction prices is also likely to have lost momentum. (eml)