Swiss industry remains at a low
Published: Friday, Aug 2nd 2024, 10:20
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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 July, 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 slightly to 43.5 from 43.9 points. Raiffeisen's SME Industry PMI fell to 46.8 points from 48.8. For both indices, values above 50 points indicate growth and values below 50 points indicate a decline.
Switzerland experiences a weak phase
The PMI for industry thus remained below the growth threshold of 50 points for the nineteenth month in a row. The Swiss economy is going through a weak phase in the middle of the year, UBS commented on the current value. However, the declining values in production were primarily due to seasonal effects, while inventories were assessed somewhat more positively than in the previous month.
The SME PMI situation also remained tense. "Weak demand from the eurozone remains the biggest drag", according to the experts at Raiffeisen. As there are still no signs of a turnaround in European industry, the environment is likely to remain difficult for export-oriented small businesses in Switzerland.
Services also under pressure
The mood in Germany also deteriorated in the service sector. The services PMI fell by 7.3 points to 44.7 points. It thus fell well below the growth threshold again.
The services PMI has been unstable of late. Since January, the index has been above the growth threshold four times and below it three times. According to the UBS economists, developments should therefore be assessed with caution.
However, business activity as well as new orders and the order backlog declined in this sector. As a result, the employment rate also fell, which, according to UBS, poses a risk to the economy as a whole. This is because the majority of employees in Switzerland work in the service sector.
This overall trend is also reflected in the KOF Economic Barometer, which was published this Tuesday and is considered the second most important leading indicator alongside the PMI. Although it remained slightly above average in July, indicating a slight improvement, it fell in comparison to the previous month. "Above all, the outlook for both foreign demand and consumer demand is deteriorating," it said.
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