(Bloomberg) -- The senior party in Austria’s ruling coalition lost votes to right-wing nationalists in a key provincial election, signaling that support for Chancellor Karl Nehammer’s government may be fading.

The Austrian People’s Party lost its absolute majority in Lower Austria, forcing it to seek a provincial coalition for the first time in two decades. Early returns broadcast by public-ORF television showed the anti-immigrant Freedom Party surged to second place with 25.4% and the Social Democrats came in third with 20.7%. Despite winning some 10 percentage-point fewer votes since the last election, the People’s Party still came in first at 39.7%. 

Lower Austria, an eastern province surrounding the capital, Vienna, is the country’s second-most populous region and is considered a stronghold for the center-right People’s Party. Its mixed agrarian and industrial economy has struggled to adjust to soaring energy prices. Austria’s production of goods and services is expected to stagnate this year, with growth of just 0.3%.

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