Cycle Remaining Upward Bound

While the international business cycle has lost momentum the latest indicators for Austria have resumed their upward trend. Domestic demand is lending powerful support to production, spurred by considerable income gains of households and the unabated rise in employment. Purchases of consumer durables posted strong increases in autumn and Christmas sales have probably given a further boost. Industrial output, still 5 percent higher than a year earlier, remained flat in October and November, but the flow of orders was pointing upwards. Foreign orders are up by one-fifth year-on-year suggesting further lively expansion of exports even if world trade growth is slowing down and Austria's unit labour costs no longer add to price competitiveness. The good profit situation particularly in manufacturing had an impact on the autumn wage round, with per capita wages and salaries likely to rise by more than 6 percent in 1990. Price rises have so far remained modest; the annual inflation rate for 1989 was 2.5 percent.