November 2017 results for the construction industry
The economic assessment of Austria's construction companies in November 2017 remained at a high level of 27.0. This confirms the ongoing good business sentiment of Austria's construction companies.Nevertheless, the seasonally adjusted index value in November declined by 1.1 points compared to October 2017. This minor downward movement is based on a slight decline of several sub-indicators. The assessment of the construction activity in the past three month shrank in November 2017 by one point compared to the previous month to a value of 18. At the same time the share of companies who reported an at least sufficient stock of orders declined by one percentage point and it is now at level of 84%. Additionally the share of companies who did not report production barriers declined from 48% to 45%. These production barriers cover several areas. The currently strongest restriction results from a lack of labour. 28% of the responding construction companies reported this as an issue. Weather conditions were also less favourable. 12% of the interviewed companies reported that weather was a hindering factor. This reflects an increase by 2 pp in this area compared to the previous month. Also a lack of orders was stated by 9% of the construction companies as a production constraint (increase by 1 pp compared to previous month).
The gains of business expectations in October 2017 had to be corrected additionally. The index lost in November 2017 the three points which it gained in October and is now located at a level of 13.9 points (balance). The current degradation of the index is mainly based on the declining price expectations. Nevertheless, the majority of the respondent companies expect rising construction prices in the next 3 month, but the balance declined from 21 points in October to 16 points in November. Labour expectations of the interviews construction companies only declined slightly by one point (total 12 points).
Based on the current economic framework conditions a further but slowed growth is expected for the upcoming growth.

Background-Information: Joint Harmonised EU-Programme of Business and Consumer Surveys
Since 1996 WIFO takes part on the Joint Harmonised EU Programme of Business and Consumer Surveys which is coordinated by the European Commission - Directorate-General for Economic and Financial Affairs.

Concept of the survey
The main idea of the WIFO business survey is to identify reliable and profound theoretical indicators – which can be carried out by companies as fast and as easy as possible – to derive the status of the economic cycle. A simple survey design assures a low burden for the participating companies. The target was to develop a question¬naire which should be answered by a skilled person in less than 5 minutes.

In most cases the evaluation is performed by calculating balances. This means that the share of positive answers of a question will be subtracted by the share of negative answers.

Q: In the next three month our production will …
1) grow  2) be nearly constant  3)  decline

If 300 construction companies out 1.000 answer the question above with "grow" and 500 assume a "nearly constant" development and 200 state a "decline" then the result will be a positive balance of 10 percentage points (30%-20%).

There are some exceptions from this evaluation concept with balances. This mainly encounters with questions which do not fit to this general three staged survey concept. These questions are for example about capacity utilisation or the stock of orders. In the case of capacity utilisation the arithmetic mean in % will be derived, in the case of the stock of orders the share of companies (in %) which have a sufficient or more than sufficient stock of orders.

Seasonal adjustment
A further "speciality" is the occurrence of so called seasonal effects. These are patterns in the results of the business survey, which occur on an annual basis. It is known that companies' production expectations decline in autumn every year and revive towards the end of the year. These changes are not related to the economic cycle and therefore these special effects will be discounted. WIFO uses, in accordance with the European Commission, the DAINTIES method to make these seasonal adjustments.

Michael Klien


Mr. Michael Klien
WIFO - Austrian Institute of Economic Research