Swiss industry remains in a slump
Published: Monday, Jul 1st 2024, 11:10
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The recovery in Swiss industry is still a long time coming. This is signaled by two leading indicators.
Those who had hoped for a rapid upturn in industry are disappointed. In June, sentiment indicators for Swiss industry and the Swiss SME sector showed a downward trend.
The so-called Industrial Purchasing Managers' Index (PMI), which is published by the major bank UBS, fell from 46.4 to 43.9 points. Raiffeisen's SME Industry PMI fell from 50.5 to 48.8 points. For both indices, values above 50 points indicate growth and values below 50 points indicate a decline.
Long dry spell
The industrial PMI thus remained below the growth threshold of 50 points for the eighteenth month in a row. Only during the dot-com recession did the index remain below this level for longer, UBS commented on the current value. However, the index levels at that time tended to be higher than in the current crisis.
The SME PMI, which is traditionally relatively volatile, does not look much better. According to the data, the PMI averaged 47.3 points over the past six months, slightly lower than in the second half of last year (47.8). The comparison with the average for the first half of 2023 (49.7) is even more sobering. The industry is therefore still stuck, it concludes.
No rapid recovery
According to the UBS experts, a rapid recovery is not in sight. In their opinion, an important prerequisite would be a recovery in the eurozone. However, the first estimate of the industrial PMI in the eurozone for June shows that it is likely to have fallen to its lowest level in 2024.
It sounds similar at Raiffeisen. The SMEs surveyed reported a slight increase in orders on hand for the second time in a row. Overall, however, there are still few signs of a rapid recovery. This is because the order backlogs in most European countries are still declining. Demand from non-European markets has also slowed recently.
Services back in the black
The overall economic situation looks somewhat better. Sentiment in the service sector brightened somewhat in June. The services PMI rose by 3.2 points to 52.0 points. As a result, it managed to jump above the growth threshold.
According to the experts at UBS, this index is characterized by high volatility. However, a look at the last few months confirms that the sector is on a moderate growth path.
It is particularly pleasing that the employment component has risen above the 50-point mark again. As the majority of employees in this country work in the service sector, a longer phase with an employment component in contraction would also pose a risk to the economy as a whole, according to the UBS economists.
The KOF economic barometer, which was published last Friday and is regarded as the second important leading indicator alongside the PMI, also fits in with this. It remained slightly above average in June, indicating a slight improvement.
However, this was not the case for the industry indicator either. This sector of the economy showed a sideways movement, according to the report.
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