Mood in Swiss industry subdued at the end of the year
Published: Wednesday, Jan 3rd 2024, 09:50
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The mood in Swiss industry remained subdued at the end of the year. Although the Purchasing Managers' Index (PMI) improved slightly in December, it remained below the growth threshold for the twelfth month.
The PMI for industry rose by 0.9 points to 43.0 points in December, as UBS announced on Wednesday. It calculates the index together with the Swiss purchasing and supply management association Procure.ch. Economists surveyed by the news agency AWP had forecast values in the range of 42.5 to 44.0 points.
In July, the manufacturing PMI plummeted to its lowest level since 2009 at 38.5 points. PMI values above 50 points indicate growth and are therefore positive. Values below 50 points signal a decline.
Among other things, order backlogs improved only slightly and fell short of the growth threshold for the twelfth month in a row, indicating that order books are continuing to shrink. In addition, companies in the industrial sector have further reduced their purchases. In view of these figures, a rapid recovery in production activity in Switzerland seems unlikely.
Meanwhile, the employment sub-component rose to 49.2 points after 46.0 points in November, but was also unable to overcome the growth threshold. Overall, the publication of the data for December marks the end of a complicated year for the industrial sector.
Services sector in positive territory
On the other hand, the situation in the service sector, which is more focused on domestic consumption, remained better than in manufacturing. There, the PMI rose by 3.3 points to 56.9 points in December. It was above the growth threshold for the fifth time in a row and reached its highest level since June 2022.
Overall, the growth momentum between the industrial and service sectors "could hardly be more different". In the service sector, all four components achieved growth, including new orders at 61.6 points, a new high since March 2022.
In contrast to the industrial sector, there is still a certain amount of inflationary pressure in the service sector. However, the sales price component has declined somewhat. Overall, the good results of the PMI services at the end of the year gave confidence that private consumption in Switzerland should remain solid and the risk of recession in the country should remain low, UBS economists concluded
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