Bleak prospects

Industry does not make it out of the deep valley of tears

(Bild: Goodluz stock.adobe)

Industry in Austria is still far from growth - but at least there are a few positive signs.

In view of the further decline in production requirements and the existing uncertainty in demand, domestic industrial companies continued to cut staff at a rapid pace in February, writes Bank Austria. The employment index rose only minimally compared to the previous month to 41.4 points. The number of employees in Austrian industry has been falling for almost two years. During this period, around three percent of the 650,000 jobs in the manufacture of goods have been lost.

In addition, the number of temporary workers, many of whom also worked in industry, has also decreased since the beginning of 2023. The relatively sharpest reduction in the number of employees was in the clothing and textile industry and in glass production. The number of employees also fell at an above-average rate in metal production, car manufacturers and suppliers as well as in the wood and furniture industry. Only the food and pharmaceutical industries saw a notable increase in staff numbers during this period.

But there are also rays of hope
At least production expectations for the year as a whole are positive for the second time in a row in the latest Purchasing Manager Index published by UniCredit Bank Austria on Wednesday. The decline in production has also slowed slightly, but the pace of job losses has remained high.

The Purchasing Managers' Index reached its highest level for exactly two years. However, at 46.7 points in February, it remained well below the growth threshold of 50 points. However, production expectations for the year as a whole reached the positive range at 54.9 points, as in January. "That is at least a promise for the somewhat more distant future," commented Bank Austria's chief economist Stefan Bruckbauer.

Slightest decline in orders for almost three years
At 48.4 points, the production index in February was still well below the growth mark of 50 points, although not as low as before. "The decline in production weakened significantly again in February compared to the previous month and even rose to a 9-month high. The decline in production was slowed by smaller losses in new business. The index of new orders climbed to 48.1 points, the best value for almost three years," explained Bank Austria economist Walter Pudschedl via a press release.

Unemployment rate rises to 4.3 percent
The seasonally adjusted unemployment rate in the manufacturing industry in Austria has stood at 4.3 percent since the start of 2025. "There will be no sign of the recession in domestic industry easing on the labor market for the time being," says Pudschedl. "The upward trend in the unemployment rate in the sector is expected to continue in the coming months. After an average of four percent in 2024, the unemployment rate is likely to rise to up to 4.5 percent in 2025." However, despite higher momentum, the unemployment rate in industry in 2025 will remain significantly lower than in the economy as a whole at 7.3%.