Revised Estimates for the Cash-Flow in Austrian Manufacturing

In 1994 earnings in Austrian manufacturing recovered markedly according to the revised methods used by the Austrian Institute of Economic Research to compile cash-flow statistics. Cash-flow rose by 12 percent; the ratio between cash-flow and turnover increased from 9 percent to almost 10 percent. Preliminary estimates for 1995 indicate that this favorable development will continue. A growth rate in the cash-flow of 15 percent and a ratio of cash-flow to turnover exceeding 10 percent are very likely. The revised cash-flow statistics are based on balance sheet data as collected by the Austrian National Bank (OeNB). The OeNB's balance sheet statistics provide the basis for Austria's collaboration with the OECD and the EU Commission in the area of balance sheet analysis for macroeconomic purposes. The main advantage of the new cash-flow concept is that it has been worked out jointly with all important producers and users of balance sheet data, and is compatible with the principles of the EU standard. Thus the new concept ensures a high degree of national as well as international comparability of equity resources in Austria's manufacturing sector at the micro and macro levels. Earnings were high in almost all branches of manufacturing in 1994. The basic goods producing sector benefited the most from the economic recovery. The relation between cash-flow and turnover surged from 6.4 percent to 8.5 percent. Markedly higher earnings were also recorded for the chemical industry (9.5 percent compared to 8 percent in 1993). In the processing and engineering industries the relation between cash-flow and turnover rose from 9 percent in 1993 to 9.8 percent in 1994. In the branches producing building materials this ratio increased from 13.5 percent to 14 percent; thus, these industries had by far the highest potential of financing investment out of equity resources. The opening of the border to the East and structural deficits continued to be the main factors standing in the way of an improvement in earnings in the traditional consumer industries; the relation between cash-flow and turnover stagnated at last year's level of 9.5 percent.