Switzerland: Manufacturing PMI remains mired in contractionary territory in May; services PMI ticks down
The manufacturing Purchasing Managers’ Index (PMI) produced by Credit Suisse and procure.ch inched up to 48.6 points in May from a near four-year low of 48.5 points in April. Consequently, the index remained below the 50-point threshold that separates expansion from contraction in the manufacturing sector.
Operating conditions in the Swiss manufacturing sector continued to deteriorate in May as new business inflows and production continued to decline, albeit at a softer pace than in April. Moreover, employment fell in May and firms’ purchasing activity slowed slightly. Meanwhile, supplier delivery times were broadly stable in the month, whereas stocks of raw materials rose higher in May and inventories of finished goods were broadly unchanged.
Turning to the services sector, the PMI dropped to 51.2 points in May from April’s near one-year high of 61.8 points. The drop was primarily due to slightly weaker commercial activity. Nevertheless, new business orders picked up in the month, and firms continued to hire new staff, albeit at a weaker rate. Slower activity allowed companies to work through backlogs of work.
Commenting on the services sector’s labor market, Claude Maurer, Head of Swiss Macro Analysis & Strategy, noted: “The still favorable labor market situation in the services sector reflects a certain degree of business confidence and forms a solid basis for a sustainable economic upswing in Switzerland.”