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Austrian Consumer Confidence Remains Low

James Boston
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Austrian Consumer Confidence Remains Low

The Austrian National Bank has just reported the latest Consumer Confidence figures for the month of October. The level remains at a medium term low of -24 for the second month in a row and the mild anticipation of an uptick didn’t manage to materialise. The record low of this indicator was -56 experienced in the height of the economic crises in 2009 but there had been a strong recovery from this low to peak at 33 in the middle of 2010, the indicator however has been in negative territory for much of the time since then and concerningly it has been in a clear downward trend for the last 12 months.

The negative trend in consumer confidence is also clearly endemic in the wider Austrian economy. Third quarter GDP growth figures demonstrated that the economy had stagnated at 0% expansion, this followed a 0.1% reading for the second quarter and a 0.2% measurement in Q1. Austria, which has very close economic ties to Germany and to a certain extent Italy, has been suffering a deteriorating trade balance over the past couple of quarters, loosely related to this has been persistently falling investment levels in many sectors, particularly however in the key industrial and manufacturing areas. The Industrial Production measurement has, like the rest of the economy, been on a consistent downward trajectory, as has the manufacturing Purchasing Managers Index (PMI) which is now in contractionary territory.

Austria’s deteriorating fundamentals are not particularly out of step with the rest of the core Eurozone economies. Although growth is lacking and potentially about to turn negative the Austrian economy is built on a strong base which puts it in an enviable position from which it can weather another soft economic cycle. Austria is in fact one of the richest economies in Europe, second only to Luxembourg.

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