Switzerland: Manufacturing sector contracts at sharpest pace in a decade in July; service sector slumps for first time since 2016
The manufacturing Purchasing Managers’ Index (PMI) produced by Credit Suisse and procure.ch fell to 44.7 in July from 47.7 in June, marking the lowest reading since July 2009. Consequently, the index fell further below the 50-point threshold that separates expansion from contraction in the manufacturing sector.
The fourth consecutive decline in industrial activity came on the back of a sharper drop in new order books, accompanied by a corresponding slump in production. Amid feeble demand, firms continued to scale back purchasing activity, leading to shorter supplier delivery times for the fifth month in a row. While stocks of raw materials shrank quite sharply, inventories of finished goods increased noticeably, indicating that manufacturers were having trouble selling all of their production. On a brighter note, job creation picked up in July.
The services sector also contracted for the first time since October 2016, with the PMI falling from 52.2 in June to 48.2. Nevertheless, commercial activity as well as new business inflows slowed but remained in expansionary territory. On the other hand, the employment sub-index further fell below the 50-point threshold—though this does not necessarily indicate job shedding in the month—and order backlogs also shrank.