Economic Slowdown and Uncertainty Continue to Shape the Austrian Labour Market

In 2025, Austria recorded a modest recovery following two years of recession, with inflation-adjusted GDP expanding by 0.6 percent. Growth was uneven throughout the year, with periods of expansion alternating with phases of stagnation. Export activity and industrial output gained momentum, while the contraction in the construction sector moderated relative to the preceding year. Inflation remained elevated at 3.6 percent, exerting downward pressure on real household incomes. As in 2024, the lingering effects of the recession constrained employment growth to just 0.2 percent. While the pace of increase in unemployment decelerated somewhat in the second half of 2025, the unemployment rate rose once again on an annual average. The number of job vacancies continued to decline. In spring 2026, employment growth accelerated relative to the previous year. Although the rise in unemployment has recently moderated, the uncertainty stemming from the war with Iran poses a risk to the sustainable stabilisation of the labour market.