Switzerland: Manufacturing PMI tumbles in March on weaker output, capacity utilization likely remains high
The manufacturing Purchasing Managers’ Index (PMI) produced by Credit Suisse and procure.ch fell sharply in March to 60.3 points, down from 65.5 in February. The reading surprised analysts, who had expected a much softer fall to 64.3 points. Indeed, March saw the sharpest one-month drop in the index in almost two years, bringing it to its lowest level since last July. Nevertheless, it remained well above the critical 50-point threshold that separates expansion from contraction in manufacturing output, as well as above the series’ long-term average—signaling that the manufacturing-driven recovery likely still has some momentum.
March’s freefall resulted from a nearly broad-based decline across subindices, although all remained at or above the 50-point threshold in the month. In particular, the subindices for output and backlogs of orders registered steep contractions from February. That said, supplier delivery times declined only modestly, suggesting still-high capacity utilization rates among firms. Moreover, broadly stable stocks of both purchases and finished goods in the month signaled that firms were not taken by surprise by a shock in demand. Employment metrics were again the main source of positive news in March, with the subindex climbing to a more than seven-year high, indicating a further broad-based improvement in the labor market.
Discounting the abysmal reading somewhat, Claude Maurer, Head of Swiss Macro Analysis & Strategy at Credit Suisse, noted that:
“In general, the PMI tends to exhibit downward swings in spring that are not balanced out by seasonal adjustments. Thus, not too much should be read into the individual monthly figures.”