Business climate index

Review and outlook: How Tyrol’s industry is doing

According to the IV, Tyrol's industry is still in recession.

(Bild: ©Kzenon - stock.adobe.com)

How is the local industry doing? The latest economic survey by the Federation of Austrian Industries Tyrol for the first quarter of 2024 shows that it is still in recession. "Despite a stagnating development of the business situation, there is also some positive news," it said on Monday.

With a minimal increase from 10 to 10.5 points, the IV Tirol business climate index would confirm the assessments of the major domestic economic research institutes WIFO and IHS at the start of the new economic year.

"Industry and the construction sector are still in a recession and are struggling with a number of challenges, such as continued weak (inter)national demand, high refinancing costs and a deterioration in competitiveness due to exploding wage costs as a result of last year's high collective wage agreements," it said in a press release.

Almost 40 percent rate the business situation as poor
The negative sentiment of the last quarter of 2023 would also continue in the first quarter of the year: According to the report, only 10 percent of Tyrolean industrial companies still rate the current business situation as good. In the fourth quarter of the previous year, this figure was 14%. 51% (Q4/23: 55%) rate it as average, 39% of respondents rate the business situation as poor, eight percent more than in the previous quarter!

41% of participating companies rate the current order situation as poor, an increase of 13% compared to Q4 2023.

IV Tirol

"Order backlogs deteriorated across the board"
It is "worrying" that the current order backlogs in Germany and abroad have "deteriorated across the board" since the last survey. While 67% of participating companies reported an average order backlog in the last quarter, only 47% did so in the current survey. 41% of participating companies would even rate the current order situation as poor, an increase of 13% compared to Q4 2023.

The outlook for the second half of the year is improving.

(Bild: APA/Hans Klaus Techt)

A similar picture emerged for foreign orders: 41% (Q4/23: 65%) reported an average level of foreign orders, while 44% (Q4/23: 29%) rated the development of orders from abroad as poor. However, not all Tyrolean industrial companies were affected by the negative trend. According to the IV, a small proportion of companies reported a good order situation: "12% (Q4/23: 5%) for domestic orders and 15% (Q4/23: 6%) for foreign orders", the press release continued.

More positive outlook for the second half of 2024
Tyrol's industrial companies have a more positive outlook for the (near) future than in the last survey - especially for this year's second half of the year. How will production activity develop over the next three months? 75% (Q4/23: 71%) answered this question with "average", 19% (Q4/23: 25%) rate their production activity in the next quarter as "poor" and 6% (Q4/23: 4%) expect good capacity utilization in the next three months.

Companies are also more optimistic when it comes to the business situation: 11% expect the business situation to be good, while 82% anticipate an average development.

IV Tirol President Christoph Swarovski

(Bild: Christian Forcher)

Tyrol's IV boss: "Politics still in default"
"Our current economic survey shows once again that measures must be initiated immediately to restore the competitiveness of our industrial companies if we do not want to lose prosperity and jobs," emphasizes IV Tirol President Christoph Swarovski. However, politicians are "still in default" and have not yet recognized "the seriousness of the situation".

Europe's bureaucratic jungle must be eliminated in order to make our companies capable of acting again.

IV-Tirol-Präsident Christoph Swarovski

"Instead of calling for the introduction of new taxes and repeatedly reigniting the discussion about reducing the working week to 32 hours with full wage compensation - both demands that further jeopardize the future of the already ailing industrial location - we need a relief offensive in the form of a significant reduction in the tax burden in Austria from 43 to at least 40 percent, which is currently far too high compared to the rest of Europe," Swarovski continued.