Business location

The economic skies are clearing only slightly

The business climate index for industry in Vorarlberg is back in positive territory. However, the situation remains tense and a rapid economic recovery is not in sight. 

The business climate index, introduced in 2001, is to a certain extent the barometer of industry in Vorarlberg. The quarterly survey averages the current business situation with that expected in six months' time and thus provides a realistic economic outlook for the entire province. Most recently, this outlook was very gloomy: In the third quarter of 2023, the second-worst result in history was even registered (-20.90 points), with the following two quarters bringing slight improvements at a low level (-18.30 and -7.90 points respectively). For the first time in many months, the index has now returned to positive territory (+0.90 points). Although this is good news, the fact remains that, measured against the 23-year history of the economic barometer, sentiment is still poor.

Looking to the future
This is also reflected in the detailed results: Seven out of ten companies surveyed rate the current business situation just as poorly as in the previous quarter, as do one in two with regard to orders on hand and foreign orders. At 57%, more than half of respondents also rate the earnings situation as just as bad as in the previous quarter. The view of the future is also characterized by pessimism: Nine out of ten respondents see the business and earnings situation remaining unchanged in six months' time, as do production activity and production capacities in three months' time. Only 18% of the companies surveyed expect sales prices to rise in three months' time.

Even though the economic downturn appears to have bottomed out, the current economic situation remains tense.

Elmar Hartmann, Präsident der IV Vorarlberg

The economic engine is still not really wanting to start up - and this is likely to have consequences for the labor market: Although 80 percent of companies assume that the number of employees will be unchanged in three months' time, 19 percent expect staff numbers to fall - and only a measly one percent expect staff numbers to rise. The bottom line is that unemployment in Vorarlberg is likely to continue to rise, albeit at a moderate level.

Demand for a "moderate" wage round
"Even though the economic downturn seems to have bottomed out, the current economic situation is still tense and there is no clear sign of any easing," warns Elmar Hartmann, President of IV Vorarlberg. The reasons for this are manifold: "Our location is struggling with significantly increased unit wage and labor costs. In addition, the general conditions for the business location have not improved and the order situation remains tense. Companies continue to groan under increasing bureaucracy. The slight easing of the situation is offset by massive price and volume competition."

Simon Kampl, the new Managing Director of Ländle-IV, derives one main demand from this analysis for politicians and social partners: after the recent high wage agreements, it is imperative that a healthy balance is maintained in the collective bargaining round in the fall - "it's about the location, jobs and prosperity in the state."