Switzerland: Manufacturing downturn softens in October; services sector activity weakens
November 1, 2019
The manufacturing Purchasing Managers’ Index (PMI) produced by Credit Suisse and procure.ch rose to 49.4 in October from 44.6 in September, representing a seven-month high. Notwithstanding, the index remained slightly below the 50-threshold that separates contraction from expansion in the manufacturing sector.
The improvement in operating conditions in October was relatively broad based. Order books contracted at a weaker rate, while output returned to growth in the month. This fed through to employment, which also continued to grow in October, albeit at a softer pace. Moreover, quantity of purchases fell at slower pace than in September, while inventories continued to decline, albeit more slowly. On the supply side, deliver times were reduced in October.
Turning to the services sector, growth slowed slightly with the industry-specific PMI clocking in at 54.8, down from 56.4 in September. This was driven by a slowdown in business activity and new orders. On the bright side, employment strengthened.
Commenting on October’s results, Claude Maurer, head of Swiss macro analysis and strategy at Credit Suisse, noted that:
“Until now the weakness in the manufacturing sector has had relatively little impact on services companies, which are more focused on the domestic economy and consumption, and the stabilisation in industry identified in the reporting month further reduces the risk of contagion. The latest PMI survey therefore supports our view that the Swiss economy will continue to grow, though momentum is likely to be weak on the whole.”
Author: Stephen Vogado, Economist