Business Expectations Less Pessimistic

WIFO-Konjunkturtest of May 2020 – Economic Assessments Take the Crisis into Account
The mood among Austrian companies remains at crisis level after the historic slump of the previous month. Although the WIFO business climate index (seasonally adjusted) rose by 4.4 points, it remained in the range of its historic lows at –27.8 points. The demand for credit from companies increased significantly over the past 3 months. The COVID-19 crisis is keeping the Austrian economy under its grasp.

The index of current assessments of the overall economic situation fell by a further 7.1 points in May (excluding seasonal fluctuations) to –35.6 points. This is the lowest value ever measured. Declines are evident across all sectors. In the services sectors the index drops by 5.1 points to –39.8 points, the lowest level since the beginning of the evaluations. In the construction industry, it falls by 7.9 points, but at –19.4 points is still above its previous low. In the manufacturing sector, the situation index loses 10.2 points and at –34.0 points is close to its historical low.

The expectations of Austrian companies across all sectors are less negative than in the previous month. The index of business expectations increased by 16 points in May after the historic slump of the previous month but remains far in negative territory at –20.1 points. In the construction industry alone, the expectations index is recovering and, after a rise of 9.1 points, is now at –0.2 points, close to the zero line that separates negative from positive expectations. In the service sectors the expectations index also increased significantly (+19.5 points), but at –18.0 points it is still in negative territory. The expectations index for the manufacturing sector is also recovering significantly (+12.5 points), but at –29.6 points is still at the level last reached in the financial market and economic crisis of 2008-09. The majority of companies still expects the situation to remain difficult in the coming months.

Details on all sectors in the current economic survey can be found here.

Finalization: May 2020
Project partner Austrian Institute of Economic Research, Economic and Social Science Computing Center
Contractor project: European Commission
Specialist publication: WIFO-Konjunkturtest
Dr. Werner Hölzl
Industrial, Innovation and International Economics