Employment dynamics also declined in the third quarter, although in some federal provinces the average employment growth in 2022 was stronger than in the previous year. This is partly due to regional differences in economic development by sector. WIFO expects Austria's economic output to stagnate in 2023.
Slowdown in the development of manufacturing activity with increasing upward pressure on prices
After the growth rates of manufacturing had been around 8 percent until the summer of 2022 following the recovery from the COVID-19 crisis, the production index in the third quarter of 2022 was only 5 percent higher than in the previous year. This corresponds to a growth in gross value added in manufacturing of only around 1 percent (in real terms). Due to high price increases, there was an uneven development of sales and employment: while the value of production sold increased in the third quarter by 14 percent throughout Austria (in the provinces the increase was between +7 percent in Tyrol and +21 percent in Burgenland), employment increased by only 2 percent (Salzburg +0.8 percent, Burgenland +3.8 percent). The basic sentiment of companies in the sector remains pessimistic according to the WIFO-Konjunkturtest (business cycle survey). A decline in real value added and goods exports is expected for 2023.
Price development leads to decline in real construction investments
In the third quarter of 2022, there was a decline in real construction investments, as in the previous quarter, according to the quarterly calculation of Statistics Austria. In addition to a (once again) significant decline in real residential construction investment, non-residential construction also recorded a real decline in construction investment for the first time. The decisive factor here continues to be an enormous increase in construction costs and construction prices. But the development of nominal construction production also lost momentum recently, whereby there are noticeable differences between the federal provinces. In Carinthia, for example, the dynamics of construction production even accelerated in the course of the year, while in Styria it remained comparatively stable. The development of incoming orders and the results of the business surveys point to a stabilisation of the construction industry towards the end of 2022.