WKÖ Economic Barometer: Trend Reversal in Sight, but Investment Willingness Remains Subdued

The WKÖ speaks of a trend reversal in several areas compared with previous surveys. More than a third of companies forecast rising revenues, while 21 percent expect declining earnings. In the manufacturing sector, expectations regarding the order situation have improved significantly. Retail and the services sector also show positive developments, particularly with regard to employment and investments.

Employment as a Pillar of Recovery

With respect to employment, around one fifth of the surveyed businesses plan to hire additional staff. This development marks a noticeable brightening on the labor market. Nevertheless, the investment appetite of domestic companies remains overall modest.

Investments: Obstacles Outweigh Drivers

As the WKÖ emphasizes in a press release, around 23 percent of businesses plan to expand their investment volume, while more than a third expect a decline. Almost one quarter of companies intend to make no investments at all in the next twelve months. A fundamental investment upturn is therefore not in sight, according to the WKÖ.

The most important investment motive cited by businesses remains the renewal of existing equipment. The greatest investment obstacles are insufficient sales and market outlooks (41 percent), general economic uncertainty (44 percent), and unclear political and regulatory framework conditions (25 percent).

Smaller Businesses Remain Cautious

A differentiated picture emerges when looking at company size. Larger businesses with more than 250 employees are particularly confident, especially with regard to revenue and capacity utilization. Smaller firms, by contrast, are more cautious and assess their development more conservatively.

Construction Industry as a Drag

An exception to the positive overall trend is the construction sector. According to the WKÖ, it shows negative expectation values across all areas and does not participate in the trend reversal observed in other sectors.

Overall, the Economic Barometer paints a picture of cautious recovery: sentiment has brightened after a prolonged phase of stagnation, but the structural braking factors – particularly the subdued investment dynamics – remain in place.

For the coming months, the WKÖ expects the positive tendencies in orders and employment to further consolidate, provided that the economic framework conditions do not deteriorate. The investment hesitancy could therefore only dissipate once the uncertainty about the economic outlook and the political framework conditions decreases.

The WKÖ's findings are consistent with the picture of an economy that is slowly emerging from a multi-year period of weakness but has not yet regained its former dynamism. The trend reversal is therefore less an upswing than a glimmer of hope.