Investment Plans of Manufacturing Industry Remain Strong in 1997. Results from the Fall 1996 WIFO Investment Survey
According to results from the latest WIFO business survey, which is carried out in cooperation with the EU and samples some 2,700 firms in the manufacturing and construction industries as well as public utilities, capital formation promises to be strong in 1997. The WIFO business cycle forecast of December 1996 anticipates investment in machinery and equipment for the whole economy to rise by 4.5 percent in volume in 1997. In 1996, Austrian manufacturing industry fared better than expected. The companies sampled report an aggregate 3.7 percent rise in sales and expect for 1997 a further 4.6 percent gain. The outturn for 1996 confirms a stabilization of the industrial cycle, following the weakness in the first semester as witnessed by the responses to the WIFO survey around mid-year. For the second half, firms report not only rising output expectations, but also rising orders, particularly from abroad. They see their own business situation now notably more positive than at the beginning of the year. Nevertheless, the percentage of firms expressing optimistic expectations remains below the long-term average. In other EU countries too, the industrial business climate has stabilized, with the relevant confidence indicator for the whole area heading upwards since last August. After a jump in industrial investment in 1996 of 23½ percent in value terms according to the latest survey (and barely revised downward from the previous survey round), industrial firms envisage a further increase in capital spending in 1997, by a nominal 9½ percent (to a level of ATS 69 billion), corresponding to a price-adjusted 8½ percent gain. Investment activity is driven by the basic goods industries with a planned nominal increase of 50.6 percent related to a number of large-scale projects, followed by the chemical industry (+7.3 percent) and the technical manufactures branch (+2.1 percent). Suppliers of building materials, on the other hand, intend to cut down on investment, because of the recession in the construction industry. Investment may also fall in the traditional consumer goods industries, which has been facing severe pressure for structural adjustment over the last years. As a consequence of the protracted weakness in construction demand, the building industry has cut sharply its investment in machinery and equipment. Thus, in 1996, gross fixed investment by the industry has fallen by an estimated 5 percent following a 16½ percent slump in 1995. With construction activity set to remain sluggish in 1997, investment in machinery and equipment is expected to drop by another 2 percent. While according to the survey results the falling trend in investment should flatten, overcapacities are likely to persist for some years. As in the previous years, Austrian electricity companies had to revise considerably downwards earlier investment plans for 1996. Based upon the assessment of pent-up demand, companies envisaged an increase in investment by 13.8 percent to a total of ATS 15.7 billion; however, actual spending stagnated at a level of ATS 13.8 billion. Ex-ante investment intentions are traditionally optimistic; the figure given for 1997 providing for an increase of 21 percent should, however, be interpreted in the light of frequent downward revisions in the past. Following up on the trend of the past couple of years, public transport and utility companies slightly reduced investment spending in 1996, by 0.8 percent to a total of ATS 9.7 billion (preliminary figure). A somewhat stronger fall (by 3.2 percent to a level of ATS 9.5 billion) had been expected on the basis of the spring 1996 survey results.
Auch 1997 optimistische Investitionspläne in der Industrie. Ergebnisse des WIFO-Investitionstests vom Herbst 1996; Investment Plans of Manufacturing Industry Remain Strong in 1997. Results from the Fall 1996 WIFO Investment Survey
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