Business Climate Index

Sentiment in industry continues to deteriorate

(Bild: Stiplovsek Dietmar)

The business climate index compiled by the Federation of Austrian Industries does not exactly give hope for a rapid economic recovery in Vorarlberg. On the contrary: pessimism has increased.

The business climate index for industry has been compiled quarterly since 2001 and is, to a certain extent, the economic barometer of the Vorarlberg economy. And this barometer is currently showing a low-pressure area that has washed itself out: The most recent survey resulted in an index of -9.40 points, meaning that the economic mood has once again deteriorated significantly - in the previous quarter, the value was +0.90 points, which gave rise to hopes that the worst was over.

This hope has been dashed, as the detailed results show: only five percent of companies rate the current business situation as "good" or "improving", while almost 90 percent see the current order backlog as "average" or "poor". The same applies to foreign orders, which 91% rate as "average" or "poor" at most. The assessment of the current earnings situation has also deteriorated further compared to the previous quarter and is now rated as "poor" or "declining" by 49% of companies.

No rapid improvement in sight
This is unlikely to change any time soon: 91% of industrial companies expect the business situation to remain "unchanged" in six months' time, seven percent anticipate a further deterioration and only two percent of companies expect the business situation to improve.

The response to the expected earnings situation in six months' time is even more disastrous: Not a single company expects profits to rise, 93 percent expect earnings to stagnate and seven percent fear further losses. Remarkably, the mood is poor in all sectors, with only the food and luxury food industry retaining a residual optimism.

Our industry has not emerged from the recession for two years now, which poses a major threat to Vorarlberg's long-term prosperity.

Simon Kampl, Geschäftsführer der IV Vorarlberg

Unemployment will probably continue to rise
The ongoing economic slump is also likely to have an impact on the labor market: 22% of companies expect to have to cut staff in the next three months, but 78% still expect employment levels to remain stable. Generally speaking, skilled workers are still in demand, while unskilled workers are in a bad position.

Call to action for politicians
In view of the sobering status quo, IVV Managing Director Simon Kampl sees an acute need for action from politicians: "Our industry has not emerged from the recession for two years, which poses a major threat to Vorarlberg's long-term prosperity. Tackling the symptoms to date is no longer enough, we need to tackle the causes in depth." Vorarlberg's industry has already set out its specific wishes for the future state government in the form of a list of demands - less bureaucracy, a reduction in non-wage labor costs, bold commitments in spatial planning, strengthening the research location and the expansion of infrastructure.