The economic situation Austria: The Austrian machine building Industry remains optimistic
Insecurity in Russia and Eastern Europe, hardly any impetus from the Euro zone: The Austrian economic situation cannot escape the environment it is in. The field of machine building is also experiencing this development.
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2014 was a mixed year for the Austrian machine building industry and manufacturers of hardware: According to the information by the trade association for machinery and hardware industry (FMMI) the turnovers of this branch have risen to just 0.1% to 39.782 billion Euros, the number of employees declined with a minus of 0.8 % to 167,963. The situation for incoming orders was even worse: In 2014 the orders decreased by 2.5 % and only achieved a volume of 35,221 billion Euros. The FMMI statistics comprises the product groups like metal products (25), machine building industry (28), other vehicle manufacturing (30) and repair and installation (33).
Within these product groups, machine building industry could defend its position best. The orders increased in 2014 by 0.2% to 18 billion Euros, the turnovers increased by 1.6% to 20.118 billion Euros. In the last year 72,934 people were working in the Austrian machine building industry, 0.5 % more than in 2013. In contrast, manufacturers of metal products registered a loss of 2.2% amounting to 11.968 billion Euros in terms of incoming orders and a loss of 0.7% amounting to 13.349 billion Euros in terms of the turnover. The number of employees decreased by 2.1% amounting to 63,995.
The machine building industry must accept the economic setback
In the current year the Austrian machine building industry especially faced a setback. In March 2015 (latest data available), the economic survey conducted by the economic research institute Wifo showed a recession with partially significant decline in production, reports FMMI. In the machine building industry as well as in hardware manufacturing a number of companies reported a decline in production. The machine building industry was able to maintain its position at the beginning of the year compared to the hardware industry, but slowly the production decreased in the machine building industry as well. In hardware manufacturing, the speed of decline slowed down a little but at the same time the production was less in comparison to February 2015. Due to the improved data provided by companies in the recent months, the FMMI expects the situation will ease in the next quarter.
The expectations for production in the second quarter are still slightly positive according to this economic survey. However, the upward trend of the recent months has not continued and the hopes for a real revival in the second quarter have been crushed again. The reason for this development is primarily a decline in the machine building industry, according to the information given by the association: The mood has clearly deteriorated there. The machine building industry had expected only a slight production decline in the second quarter.
Positive expectations for production despite drop in orders
Positive expectations for production in this case are actually surprising as the incoming orders show an opposite trend. In comparison to January the order backlog has improved slightly but it is still much below the long-term average. According to FMMI the order backlog clearly does not support a revival in the coming months.
The national economy of Austria without an upward momentum
Observers are not necessarily optimistic for the national economy either. After the low growth in 2014, the Austrian economy is likely to expand with great restraint even at the beginning of 2015, expects Wifo. The leading indicators have still not given any noteworthy indications for an economic recovery. In the first half of the year, the pre-requisites for a revival are little.
According to estimate of economic researchers, only in 2016 can we expect a somewhat favourable development. Besides the pickup in the global economy, the euro's weakness as well as the low prices of raw materials in the Austrian economy should provide an additional boost. Based on a growth of 0.3% in 2014 the BIP may increase by 0.5 % in 2015 and by 1.3 % in 2016.
Economic researchers don’t see any impetus for the Austrian economy
According to Wifo expansive impetus is missing at present in Austria as well as in other countries. Weakness of domestic demand and exports and the decline in value in the manufacturing and construction industry determined this development in the fourth quarter of 2014 itself. The combination of unfavourable order situation, decrease in domestic and foreign final demand and a gloomy economic atmosphere resulted in a lack of investments.
The Austrian economy is still highly dependent on foreign trade and particularly on Germany. According to the preliminary findings by the Austrian statistical office, the total value of imports last year was 0.8 % below the previous year’s value with 129.72 billion Euros, the exports of goods posted an increase of 1.7 % amounting to 127.90 billion Euros. The deficit of trade balance has thus more than halved in comparison to the last year and totalled to 1.83 billion Euros (the complete year 2013: 4.90 billion Euros).
The exports steadily increased in the last three financial years (compare 2012 with 2014: + 3.5 %), whereas the imports continued to decline (compare 2012 with 2014: -1.7 %) according to the report by the statisticians.
According to the Austrian statistical office, Germany and Italy were Austria’s most significant business partners even in the last year for imports as well as for exports. About 40 % of all imported goods came from Germany but there was a decline by 1.0 % amounting to 48.55 billion Euros, whereas the exports increased with + 0.5 % slightly amounting to 38.05 billion Euros. According to the report, the imports from Italy declined by 0.3 % amounting to 7.99 billion Euros, the exports remained almost the same (- 0.05 % amounting to 8.22 billion Euros).