Downturn in Industrial Activity Intensifies
While consumption continued to be a stable pillar of growth, investments recently lost momentum. The industrial economy also continued to weaken, while the construction industry and services, on the other hand, again delivered positive growth impulses.
Unadjusted GDP in the third quarter was 1.5 percent above the level of the previous year. Seasonally and working day adjusted (indicator according to Eurostat standard), the Austrian economy grew by 0.1 percent. This is weaker compared to the average of the EU 28 (+0.3 percent) and the euro area (+0.2 percent).
The economic slowdown is particularly evident in investments and foreign trade, while consumption continues to be a stable pillar of growth. The willingness of private households to spend remains good, consumer spending by private households (including private non-profit institutions serving households) rose with 0.3 percent only slightly less than recently. Public consumption expenditure increased by 0.2 percent. As in the previous two quarters, overall consumer demand thus rose by 0.3 percent.
On the other hand, investment activity by domestic companies weakened. Investment in machinery and equipment and weapon systems was reduced by 0.4 percent, with demand for both machinery and vehicles being curtailed. Investment in construction, on the other hand, continued to expand (+0.2 percent in the third quarter), although it also lost momentum after the boom in 2018.
Against the backdrop of the international economic slowdown, foreign trade also lost momentum. Growth in both exports and imports has slowed since mid-2018. In the third quarter, exports and imports expanded to a similar extent (+0.7 percent).
The industrial economy is still in a phase of weakness. Value added in manufacturing fell by 0.4 percent in the third quarter (second quarter ‑0,1 percent). This accelerated the decline, which replaces a six-year growth phase.
In the construction industry, on the other hand, value added continued to rise, albeit at a lower level (+0.1 percent after +0.3 percent in the second quarter). Market services also supported economic growth. In the accommodation and food service activities, value added expanded at a stable rate of 0.3 percent. The course of business in the wholesale and retail trade sector was also good, with value added rising by 0.5 percent.