English, Article edition: Industry Set to Recover Markus Marterbauer

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Physical Description
  • article
Language
  • English

Edition details

Title
  • Industry Set to Recover
Author
  • Markus Marterbauer
Physical Description
  • article
Notes
  • The WIFO business survey of October 1997 confirms that the industrial sector is manifestly recovering, its upswing carried along primarily by the strong growth of goods exports. Domestic demand is still muted. The two developments together have a beneficial impact on the current account. Inflation has come to a virtual standstill. The labor market shows signs of invigoration. Large parts of the exposed sectors of the Austrian economy find themselves borne along by a substantial recovery. Pushed by vigorous demand in the USA and a strong dollar, export industries all over Europe have revived markedly since the middle of 1996. In several EU countries, with the notable exceptions of Germany, France and Italy, the upswing crossed over to domestic demand. Austrian industries profit from the stronger growth of their main trading partners as much as from the improvement in price-determined factors of competitiveness: unit labor costs and the effective exchange rate for manufactures are declining. In the first half of 1997, Austrian exports grew by 12 percent over the previous year, thereby relieving the trade balance. The findings of the WIFO business survey for the fourth quarter of 1997 indicate an accelerated recovery driven by exports. Following the trend of the basic sector and chemical industry, technical processing companies have confirmed their positive evaluation of order book and production development. The good prospects seem to prompt companies to make large-scale investments. The export-driven upswing nevertheless has not yet been able to expand to the entire economy, so that its effect on employment remains muted. Major sectors of domestic demand have so far failed to recover. This applies in particular to private consumer purchases which are dampened by the moderate growth of disposable incomes. The wage bill per employee appears to be stagnant in real terms. Rising taxes and low growth of social transfers lead to a decline of net mass incomes. Retail sales in the year to date are markedly below the previous year's level in real terms (–1.3 percent) – also a consequence of the crisis in the tourism industry (overnight stays from January to September declined by 4.3 percent). Construction industry production stagnated in the summer after the housing boom had run its course and because of the continued investment reticence of the public sector. The recovery has a positive effect on the labor market. Employment (excluding parental leave and military service) has increased visibly, expecially in the last three months (+16,000 in October as compared to October 1996), with part-time jobs, primarily taken by women, growing at a particularly strong rate. Nevertheless, the labor market is still split in its development. Employment is growing in business-oriented services (including temporary work) and the public sector (including health and educational services), while sectors which depend greatly on domestic demand continue to be drained of jobs. Developments in the number of registered unemployed depend mostly on the administrative structure (expiry of special assistance, expansion of active labor market policies). The unemployment rate is slightly above its previous year's level. The most recent figure is 11 unemployed for each vacancy.
  • Industry Set to Recover
  • RePEc:wfo:monber:y:1997:i:11:p:633-634
Language
  • English
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