Economic Situation Remains Strained

WIFO-Konjunkturtest (Business Cycle Survey) of January 2021
The second COVID-19 wave is keeping the Austrian economy in its grip. The mood among Austrian companies remains tense. The WIFO business climate index fell to –11.4 points in January 2021, after –11.0 points in December of the previous year.

Assessments of the current situation remain sceptical; companies' expectations are also somewhat more pessimistic than in December. The majority of companies still expect the COVID-19 crisis to shape the business situation in the coming months.

The index of current assessments for the overall economy remained almost unchanged in January (excluding seasonal fluctuations) compared to December (–0.1 points) and, at –13.9 points, was clearly below the zero line that separates negative from positive assessments. Despite minor changes, clear differences continued to emerge across the sectors. In the services sectors, which were heavily affected by the COVID-19 restrictions, the index remained stable (–0.1 points) at a very low level (–24.0 points). In the construction industry, the situation index rose by 0.5 points and was clearly in positive territory at 18.2 points, as in the previous months. In manufacturing the situation index lost 0.2 points and remained in sceptical territory at –8.1 points.

The expectations of Austrian companies deteriorated slightly compared to the previous month. The business expectations index lost 0.6 points in January and remained in the sceptical range at –8.8 points. Only in the construction industry the expectations index was above the zero line at 4.1 points, despite a decline of 3.7 points. In the service sector, the expectations index gained 1.3 points, but remained in the sceptical range at –12.2 points but remained in the pessimistic range. In the manufacturing industry, the expectations index lost momentum (–2.7 points) and remained more clearly in negative territory at –7.8 points. The majority of companies still expect the business situation to be shaped by the COVID 19 crisis in the coming months.

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

Dr. Werner Hölzl
Industrial, Innovation and International Economics