Swiss SME PMI dips below growth threshold in October
Published: Wednesday, Nov 1st 2023, 10:01
Updated At: Thursday, Nov 2nd 2023, 00:54
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The outlook for small and medium-sized enterprises (SMEs) in Switzerland deteriorated markedly in October. The main concern is the weak economy in the euro zone, but the strength of the Swiss franc is also a burden.
The SME Purchasing Managers' Index (SME PMI) calculated by Raiffeisen for the month of October fell by 5.9 points to the level of 45.2 index points and is thus once again clearly below the growth threshold of 50 points.
The ongoing industrial recession in the eurozone is having a massive impact on new business, Raiffeisen announced on Wednesday. The SMEs surveyed reported a sharp drop in production volume for October. In addition, the order cushion also decreased significantly - which shows how few new orders are currently received by the companies.
Bottom not yet reached
At a low 43.6 points, the highest-weighted component on order backlog also sent a clear warning signal that Swiss industry is unlikely to have bottomed out yet.
Meanwhile, the strength of the Swiss franc is once again becoming an issue for more and more SMEs, and the trend is also pointing upward due to the escalation in the Middle East conflict. Should the flight of international investors to safe havens accelerate, Swiss industry would be threatened with even more misfortune at the worst possible time, according to the experts.
In the eurozone, the negative effects of high inflation and interest rate hikes were also increasingly felt in the service sector. According to Raiffeisen, this increases the risk that the poor global environment will also be increasingly reflected in Swiss industrial employment. In October, however, employment remained largely stable.
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