Switzerland: Manufacturing and services PMIs both rebound in August
The manufacturing Purchasing Managers’ Index (PMI) produced by Credit Suisse and procure.ch rose to 47.2 in August from 44.7 in July, marking the first uptick in nearly a year. Nevertheless, the index remained below the 50-point threshold that separates contraction from expansion in the manufacturing sector.
The slight improvement in industrial activity in August was due to a weaker decline in production as well as output. Moreover, purchasing activity fell at a softer rate in August, while stocks of raw materials also shrank less rapidly than in July. On a drearier note, jobs were cut for only the second time since July 2016, suggesting firms could be preparing to downsize in light of persistently weak demand and a more adverse external backdrop.
Despite August’s uptick in the headline PMI, the outlook for the manufacturing sector remains downbeat, and Claude Maurer, head of Swiss macro analysis and strategy, noted, “the general context marked by the strength of the CHF against the EUR, the strong uncertainties and the economic weakness of the market countries of Swiss industrial producers does not augur any further rapid reversal of the trend.”
The services sector returned to expansionary territory in August after its momentary contraction in July. The services PMI rebounded to 55.3 in August from 48.2 in July, driven by a robust increase in commercial activity as well as new business inflows. This led to a sharp rise in order backlogs, while employment increased in the month.