Austria's Economy Continues Its Steady Recovery Amid Mixed Signals

Austria's economy maintained its gradual recovery in the third quarter of 2025, with new data from the national statistics authority indicating a real GDP increase of 0.4% compared to the previous quarter. On an annual basis, GDP stood 0.9% higher than the same period last year, representing the strongest quarterly growth observed this year. Despite this progress, economic experts caution that the recovery remains moderate and far from a sustained growth phase.

Private Consumption Sluggish, Job Market Shows Contrasts

Recent economic forecasts had anticipated a more modest upturn, with previous estimates suggesting a quarterly GDP gain of just 0.1%. While the actual figures surpassed these projections, analysts note that positive momentum is not yet broad-based. Private household consumption, an essential driver of economic activity, decreased by 0.3%, counteracting gains from other sectors. Meanwhile, Austria's export and construction industries experienced declines, with exports dropping 1.6% and construction output falling by 0.5%.

In contrast, public sector spending offered support, as government consumption increased by 0.7%. This helped to offset weaker private demand, resulting in overall consumption stagnating during the quarter. Investment activity also slowed, particularly in residential construction, which contracted by 1.3%. However, other areas of investment, such as vehicle acquisitions and non-residential construction, posted modest improvements.

Sectoral Performance Reveals Divergent Trends

Analysis by industry shows the manufacturing sector, including energy and water supply, achieved a small 0.4% increase from the previous quarter. More robust growth was observed in the housing sector, which expanded by 1.8%, and in public administration, education, and healthcare, which collectively grew by 0.7%. Conversely, the hospitality sector saw activity decline by 0.9%, extending its subdued performance, while construction continued to contract.

Inventory Accumulation and Trade Weakness

Part of the GDP growth was attributed to an accumulation of inventories, indicating that some industrial businesses are expanding stock rather than immediately increasing sales. The downturn in external trade, marked by decreased exports and imports, reflects ongoing uncertainties in the global market environment.

Employment Developments Remain Mixed

Labour market indicators present a complex picture. While total employee compensation in current prices rose by 0.9% compared to the previous quarter, the number of employed persons declined by 0.3%. The reduction was more pronounced among self-employed individuals, whose numbers fell by 1.5%. However, the total hours worked by employees saw a slight increase of 0.3%, suggesting a partial recovery after declines earlier in the year.

Recovery Path Remains Uneven

The latest quarterly figures confirm a gradual improvement in Austria's economic climate. Following a 0.1% growth in the first quarter and stagnation in the second, the third quarter's 0.4% gain marks a step forward. Nevertheless, the recovery is uneven across sectors, with private consumption and export activity remaining subdued, while the public sector and select industries provide stability. The outlook is tempered by ongoing global market uncertainties and cautious consumer spending, indicating that a robust and sustained expansion has yet to emerge.