Economy Loses Momentum

WIFO-Konjunkturtest (Business Cycle Survey) of August 2022
The results of the WIFO-Konjunkturtest (business cycle survey) show a further weakening of economic dynamics in August. At 8.4 points (seasonally adjusted), the WIFO Business Climate Index is 2.1 points below the value of the previous month (10.5 points) but still in positive territory.

While the situation indicators still point to a positive economic environment despite declines, business expectations signal a sceptical economic outlook. Demand for credit remains low in August. Companies view banks' willingness to lend more restrictively than in previous quarters. Business uncertainty remains high due to gas supply imbalances and high energy prices.

The current situation index lost 3.8 points in August but remained positive at 13.0 points. In the manufacturing sector, which is particularly sensitive to the economic situation, the situation index lost 4.5 points compared to the previous month, but at 11.5 points continues to indicate a slightly above-average economic situation. The decline in the construction industry was also significant. The situation index lost 5.9 points but remained above average at 22.7 points. In the service sectors, the index lost 3.5 points compared to the previous month but remained well above the zero line with a value of 16.4 points. In the retail sector, the situation index declined by 1.7 points and now stands at –9.9 points in the range of very sceptical economic assessments.

The index of business expectations also lost some momentum in August (–0.4 points). At 3.7 points, it was still in positive territory but close to the zero line that separates negative from positive economic expectations. In the retail sector the expectations index lost 1.8 points and was clearly negative at –15.0 points. In the service sectors the expectations index rose slightly (+0.4 points) and was positive at 4.8 points. In the construction industry the expectations index suffered a slight decline (–2.5 points) and at 33.8 points continues to be in the optimistic range, which is probably also due to the high price expectations. The business situation expectations in the construction industry have been at a negative level since May. In the manufacturing sector, too, there was a slight decline in the expectations index (–0.6 points). At –0.1 points, it was below the zero line for the first time since February 2021.


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