Economic Expectations Cloud Over

WIFO-Konjunkturtest (Business Cycle Survey) of July 2022
The results of the WIFO-Konjunkturtest (business cycle survey) show a clear decline in economic dynamics in July. The WIFO Business Climate Index stood at 10.5 points (seasonally adjusted), 6.1 points below the value of the previous month (16.7 points). The results show a weakening in situation assessments and economic expectations. While the situation indicators still point to a positive economic environment, business expectations signal a weak economic outlook for companies. The unpredictability of gas supply and high energy prices have further increased business uncertainty. The majority of companies still expects to have to raise prices.

The current situation index lost 7.0 points in July but remained in positive territory at 16.9 points. The situation index in the manufacturing sector lost particularly significant ground (–9.7 points compared to the previous month), but at 16.3 points continues to indicate a slightly above-average economic situation. The decline in the construction industry was much weaker. The situation index lost 1.2 points and, at 28.6 points, continues to signal above-average construction activity. In the retail trade the situation index fell by 3.5 points and at –8.1 points is in the range of sceptical economic assessments. In the service sectors the index lost 7.3 points compared to the previous month but remained above average with a value of 20.0 points.

The business expectations index also lost momentum in July (–5.3 points) and stood at 4.2 points, close to the zero line that separates negative from positive economic expectations. In the retail sector, the expectations index lost 4.7 points and was clearly in negative territory at –18.3 points. The expectations index also lost further ground in the service sectors (–5.9 points), but still remained in positive territory at 4.6 points. In the construction industry the expectations index suffered only a slight decline (–1.0 points) and at 36.0 points continues to be in the optimistic range, which is probably due to the high price expectations. However, business situation expectations in the construction industry are now at negative levels. In the manufacturing sector, too, there was a marked decline in the expectations index (–6.0 points). The index was close to zero at 0.5 points.


Results of the WIFO-Konjunkturtest (Business Cycle Survey) of July 2022
Finalization: July 2022
Contractor project: European Commission
Specialist publication: WIFO-Konjunkturtest
Dr. Werner Hölzl
Industrial, Innovation and International Economics