Sentiment in Swiss industry clouds over again
Published: Thursday, May 2nd 2024, 09:50
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The mood in Swiss industry has deteriorated. After three months of growth, the Purchasing Managers' Index (PMI) fell again in April. However, the PMI for services is back above the growth threshold.
The seasonally adjusted PMI for industry weakened by 3.8 points to 41.4 points in April, remaining below the growth threshold of 50 for the sixteenth consecutive month, UBS reported on Tuesday. It calculates the index together with the Swiss purchasing and supply management association Procure.ch.
Economists surveyed by the news agency AWP had forecast the index in the range of 45.0 to 47.0 points. PMI values above 50 points indicate growth and values below 50 points indicate a decline in the economy.
The low point in the current cycle was in July 2023 at 38.5 points, when it plummeted to its lowest level since 2009. It has now been in contraction territory for longer than during the major financial crisis.
Long-lasting depth
"No spring awakening for industry", say the economists at UBS. The current level is the lowest since October 2023, and only during the great financial crisis of 2008 has the PMI fallen more sharply than in the current downturn. The fact that the index is still trading in a range of 40 to 45 points one year after the start of the industrial recession points to a strong and prolonged downturn in industry.
The decline was also broad-based, with production contributing the most to the downturn with a drop of 8.0 points to below 40 points. The order backlog, delivery times and employment were also assessed as significantly weaker in April.
Overall, the hope that the contraction in industry will soon come to an end has been severely dampened. Other industrial PMIs in Europe, which have been on a downward trend for months, also contributed to this.
Things are looking better for services
The picture of a divided industry at the end of 2023 has not changed at the start of the year. According to UBS and Procure.ch, the weak industry is offset by robust service providers.
The corresponding index improved by a full 8 points to 55.6 points compared to March thanks to the contribution of all sub-components. According to the press release, the improved order situation was the decisive factor. Economists' estimates ranged from 48 to 49.5 points.
The strong rise in April suggests that the fall in the services PMI in March below the growth threshold was an outlier, the authors of the study concluded.
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