Sentiment among tech SMEs worse than it has been for a long time
Published: Wednesday, Nov 20th 2024, 09:40
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The mood among SMEs in the Swiss mechanical, electrical and metal engineering industries (MEM) has deteriorated further. Companies are plagued by a further decline in orders, low margins and low capacity utilization. More and more jobs have been cut.
The business climate index of the industry association Swissmechanic deteriorated significantly in the third quarter of 2024 compared to the first quarter of the year, falling from -22 to -32 points. It thus remained in negative territory for the sixth time in a row.
The index thus slipped in October 2024 to its lowest level since January 2021, as the umbrella organization of SME MEM companies, Swissmechanic, announced on Wednesday. Only 1% of companies described the current business climate as very favorable. In contrast, 74% rated it as somewhat to very unfavorable.
The biggest challenge remains the lack of orders, followed by the negative impact of the strong Swiss franc. According to the association, around 60 percent of SMEs recorded a slump in sales and falling margins. Capacity utilization is only just over 80% overall.
One third of companies cut jobs
For almost a third of the SMEs surveyed, production was only secured for a maximum period of four weeks. Accordingly, a third of companies have cut jobs compared to the previous year. According to Swissmechanic, a quarter of companies lack the funds to invest.
There is no rapid improvement in sight: SME MEMs are generally pessimistic about the fourth quarter. Demand from abroad remains the biggest challenge. The signs of a possible economic recovery in the coming year at least give rise to cautious hopes for 2025. Support is coming from falling energy prices and lower interest rates.
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