Economy Continues to Lose Momentum

WIFO-Konjunkturtest (Business Cycle Survey) of June 2022
The results of the WIFO-Konjunkturtest (business cycle survey) show a slight decline in economic momentum in June. At 16.8 points (seasonally adjusted), the WIFO Business Climate Index was 2.6 points below the value of the previous month (19.4 points). The results show a weakening in the situation assessments, which, however, continue to indicate a good economic environment. As a result of high business uncertainty and rising input prices, however, economic expectations lost further momentum. The majority of companies still expect to have to raise prices in the coming months.

The current situation index lost 2.4 points in June but remained clearly in positive territory at 24.0 points. In the construction industry the decline was more pronounced, the situation index lost 8.3 points, but at 30.3 points it still signals above-average construction activity. In the services sectors, the index lost 4.2 points compared to the previous month but remained confident with a value of 27.4 points. In retail trade, the situation index declined by 4.5 points and at –4.6 points is again in the range of sceptical economic assessments. In the manufacturing sector, on the other hand, the situation index gained 2.9 points compared to the previous month and, at 25.9 points, continues to indicate good economic activity.

The index of business expectations also lost momentum in June (–2.7 points), but at 9.7 points was still noticeably above the zero line separating negative from positive economic expectations. In the retail sector, the expectations index lost 4.7 points and was clearly in negative territory at –13.6 points. The expectations index also lost further ground in the service sectors (–3.9 points) but remained in positive territory at 10.5 points. In the construction industry the expectations index also declined (–1.4 points) but remained optimistic at 37.1 points. However, the business situation expectations in the construction industry have meanwhile clouded over considerably. In the manufacturing sector there was a comparatively small decline in the expectations index (–0.8 points). At 7.0 points, it was still above the zero line, but at a lower level than in previous months. Business uncertainty remained high as a consequence of the Ukraine war and the continuing supply bottlenecks.

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