Domestic Industry: Slightly Improved Sentiment at the Beginning of the Year
However, the IV warns against premature optimism, primarily due to US tariff policies. Additionally, further job cuts in the industry are expected.
"For seventeen quarters, the industrial trend knew only one direction: downward," said IV chief economist Christian Helmenstein at a press conference on Thursday in Vienna. The current improvement does not mean that the "economic turnaround is imminent." The brightening is mainly due to a lower proportion of "pessimists," "while the number of optimists is hardly increasing."
The barometer for the current business situation remains negative with minus four points. But here too, the value improved for the first time since mid-2021. Expectations for the business situation in six months increased significantly to plus seven points.
Concerns About Euro Appreciation
On the positive side, Helmenstein also noted that the order backlog of the surveyed companies has not further deteriorated on average but has remained stable, albeit at an "extremely low and for many companies insufficient level."
The IV also warned that the data was collected before the recent tariff announcements by the US government under President Donald Trump. The negative effects of the current "significant euro appreciation" are concerning, Helmenstein said. Its impacts will only be felt with a delay. A strong euro makes European goods relatively more expensive in other currency areas and thus tends to be less competitive.
The idea launched by the EU Commission of complete tariff freedom between the USA and Europe as a solution to the trade conflict is highly appreciated by the industry representative. This would be "positive for everyone" and would provide planning security for companies.
Further Increase in Unemployment Expected
The IV economist initially also expects a further increase in unemployment in the domestic industry. "First, the order backlog must stabilize, then production expectations must rise, and only then will there be an improvement in employment."
IV Secretary General Christoph Neumayer also sees the study result as a mandate for politics. In the short term, accelerated depreciation should be enabled to stimulate investments. Here, he sees the plans of the German federal government in Berlin as a model.
In the medium term, a "smart budget consolidation" is needed, where further funds are provided for "investments in the future." Additionally, reducing bureaucracy, lowering unit labor costs, and reducing energy prices are also part of the IV's list of demands.
For the study, the IV surveyed 382 companies on whether they assess the business situation and outlook as positive, neutral, or negative. The respective index is derived from the balance of positive and negative responses.
(APA/Red)
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