Austria: Detailed breakdown of economic activity confirms marginal slowdown in Q1
The Austrian Institute of Economic Research (WIFO) released a detailed breakdown of national accounts data on 30 May, which confirmed that the economy slowed marginally from the fourth quarter; however, activity in the Austrian economy remained strong. The economy grew a robust 0.8% over the prior quarter, only marginally down from the 0.9% quarter-on-quarter expansion in the fourth quarter of last year.
Both domestic demand and foreign demand contributed positively to growth of the Austrian economy in the first quarter. Private consumption was revised upwards slightly from 0.3% to 0.4%, matching the previous three quarters’ readings. The continued strength of private consumption is reflected in very optimistic consumer confidence levels; in February, consumer sentiment reached an over one-decade high and remained at that level in March. Moreover, the continued positive labor market dynamics are also underpinning private consumption, as unemployment dropped in each of the three months of the first quarter in annual terms and reached a near multi-year low in March. Meanwhile, government consumption grew 0.3% over the prior quarter, which is slightly up from the fourth quarter’s 0.2% rate.
Growth in the final component of domestic demand, fixed investment, was revised upwards from 0.8% to 0.9% over a quarter ago. This is only a marginal slowdown from the fourth quarter’s revised 1.0% (previously reported: +0.9% quarter-on-quarter). The fractional moderation came on the back of a slight slowdown in equipment investment growth, with vehicle investments slowing notably. On a more positive note, investment in machinery and electrical appliances remained strong while construction investment also performed well.
Foreign demand remained robust in the first quarter, although export growth moderated markedly. In the first quarter, exports grew 0.9% over the quarter before, which is down from the fourth quarter’s revised 1.6% (previously reported: +1.7% qoq). Imports also moderated but at a slightly softer pace. In the January-March period, imports increased 0.6%, down from the previous quarter’s revised 1.1% (previously reported: 0.9% qoq).
Lastly, economic activity in year-on-year terms was revised upwards from 3.1% to 3.4%, picking up pace from the previous quarter’s 3.2%.
Looking ahead, strong economic momentum is likely to continue this year, thanks to strong private and government consumption growth, and a solid external sector. However, quarterly growth rates will likely slow somewhat from Q1’s stellar reading. Available survey-based data for the second quarter hints at a slight moderation, with the manufacturing PMI, consumer sentiment and business confidence dipping from recent highs.