Do., Feb. 1st 2024
Small Business in Switzerland sees a significant slump in sentiment, with the industrial sector facing a challenging order situation, resulting in increased short-time work and layoffs.
Small Businesses in Switzerland, particularly in the industrial sector, have had a noticeable downturn in mood. The issue’s core lies in the consistently weak order situation, pushing an increasing number of SMEs towards short-time work arrangements or even employee layoffs.
This concerning trend is underscored by the latest Raiffeisen SME PMI data for January 2024. Revealing a substantial decline of 10.2 points, bringing the index down to 40.7 points. This drop is significant, as all index components have fallen below the 50-point threshold, indicating a shift from growth to contraction in business activity among SMEs.
The situation is further compounded by a gloomy outlook on orders, with no immediate signs of recovery in sight. The PMI component for orders on hand has plummeted to 37.2 points, marking a sharp descent into contraction territory. This downturn is exacerbated by the slowdown in new business from international clients, leaving Swiss industrial companies with a worryingly low order backlog.
Moreover, over 40% of surveyed SMEs report a decrease in production volume, with only 15% noting an increase. As a result, the production component of the PMI has dramatically dropped from 56.1 to 37.7 points, indicating that the previous month’s surge in production was merely a temporary spike rather than a sustained trend.
The repercussions of these challenges are also felt in the labor market, with the index’s employment component declining to 45.9 points in January. The impact is particularly pronounced among export-oriented SMEs in more miniature textiles, paper, and printing sectors. Additionally, companies in major sectors such as mechanical, electrical, and metal industries are also trending to short-time work to cope with the downturn.
This scenario paints a stark picture for Small Businesses in Switzerland, highlighting the urgent need for strategies to navigate these turbulent times and stabilize the industrial sector’s outlook.
©Keystone/SDA
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