Switzerland: Downturn in manufacturing sector softens in February; activity in service sector moderates notably
March 2, 2020
The manufacturing Purchasing Managers’ Index (PMI) produced by Credit Suisse and procure.ch reached 49.5 in February, up from 47.8 in January and marking the best result in nearly a year. Nevertheless, the index remained below the 50-threshold that separates contraction from expansion in the manufacturing sector.
February’s rebound was flattered by longer supplier delivery times, which were exacerbated by the coronavirus outbreak in China. Meanwhile, output was little changed in the month while new orders weakened slightly.
According to Claude Maurer, head of swiss macro analysis and strategy at Procure.ch: “longer delivery times normally point to higher capacity utilisation […] However, in the current situation, supply disruptions stemming from measures to contain the spread of coronavirus are more likely to be responsible […] than capacity utilisation levels. Problems are evidently beginning to surface in the supply chains.”
In contrast, the services PMI fell sharply from 57.3 in January to 51.9 in February. The decline was driven by a sharp decrease in new orders, while business activity moderated notably. However, it should be noted that the services PMI index experiences high month-to-month volatility, so it is difficult to gauge the strength of the sector from a single month’s reading.
Author: Lindsey Ice, Economist