Austria’s service sector significantly contributed to economic recovery with a 1% increase, according to preliminary calculations from Statistics Austria. Public administration, education, and healthcare saw a particularly strong rise of 2.8%.
The combined performance of the trade, transport, and hospitality sectors amounted to a modest gain of only 0.1%. Business services negatively impacted economic output, declining by 1.2%.
Private Consumption Saw Slight Increase
Within the manufacturing sector, the production of goods stood out with a growth rate of 1.2%. Investment activity and consumer spending also increased notably. However, a 2.9% decline in the construction industry tempered overall progress.
the manufacturing sector experienced a decrease of 1.2%. Consumer spending contributed significantly to the slight economic upturn last year, with Statistics Austria reporting real growth of 1%, driven by a 0.5% increase in private consumption. Investment activity also showed a positive trend, rising by 1.4%.
Average Wage Increase of 3.8%
Austria’s foreign trade had a dampening effect due to a significant increase in imports last year: while exports rose by 0.3% in real terms, imports increased by 1.7%.
Throughout the year, the average wages of employees increased by 3.8%. Simultaneously, worked hours also rose by 0.5%. While the number of employed individuals remained stable, the self-employed population increased by 0.4% compared to the previous year.
Hospitality Sector Rebounded in the Last Quarter
Despite economic performance stagnating in the final three months of 2025 compared to the previous quarter, certain sectors showed strength. Accommodation and gastronomy grew by 3.3% in the fourth quarter, and agriculture and forestry saw a 2.6% increase. Declining gross fixed capital formation (down 2.1%) and a 0.8% decrease in manufacturing output weighed on the overall development.
Flash Estimate: Inflation Slightly Increased
According to a flash estimate from Statistics Austria, inflation rose to 2.2% in February compared to the same month last year. This is higher than the 2.0% rate recorded at the beginning of the year in January, exceeding expert expectations of 1.7%.
The higher rate of inflation was driven by energy prices, which provided less of a dampening effect than in January. Services were once again the strongest driver of inflation, increasing by 4.0% compared to 3.8% in January.
Statistics Austria: Cigarettes Significantly More Expensive
Prices for food, tobacco, and alcohol rose by 3.0%, a stronger increase than the previous month. Specifically, cigarettes became considerably more expensive in February, following increases in Austria’s tobacco tax. Providers such as Japan Tobacco International (JTI) and Philip Morris have adjusted their prices upwards.
Industrial goods prices increased by 0.7% in February. Core inflation, which includes only services and industrial goods, was 2.8%. Compared to the previous month of January, inflation rose by 0.8%.
Uncertainty Due to Middle East Conflict
While energy prices are currently moderating inflation, developments in the Middle East are creating uncertainty, according to the Oesterreichische Nationalbank (OeNB). “Rising oil and gas prices and disruptions to global supply chains could negatively impact both inflation, investment dynamics, and economic growth in the near future,” said OeNB Governor Martin Kocher in a statement.
Across the Eurozone, inflation rose by an average of 1.9%, as reported by the EU statistics agency Eurostat in a first estimate on Monday. Within the Eurozone, services (up 3.4%) were the main driver of price increases, while energy prices fell by 3.2%.
A prolonged conflict in the Middle East could fuel inflation and slow economic growth in the Eurozone, according to European Central Bank (ECB) chief economist Philip Lane. The European Central Bank is aiming for an inflation rate of 2.0%, considered optimal for the currency area’s economy.
