Cyclical Recovery Continuing

Production expectations in Austrian manufacturing are stabilising, and cautious optimism is confirming the business cycle recovery. Construction activity has recently been lacking strength, although firms' judgements on their order levels point to a rebound in the months to come. Retail sales are still held back by weak consumer confidence, but here too a tentative pick-up has become visible at the end of the first quarter. In May, the year-on-year increase in unemployment narrowed for the first time, with the number of young and of older people out of work even declining. Since employment expanded, the rate of unemployment remained unchanged from one year ago. The rate of inflation (HICP) stayed constant at 1.5 percent in April, but higher energy prices are likely to push the index up in May.