Switzerland: Services sector dealt massive blow in March; manufacturing sector continues to contract
The manufacturing Purchasing Managers’ Index (PMI) produced by Credit Suisse and procure.ch sank to 43.7 in March from 49.5 in February. The result marked the worst performance since July 2009. Consequently, the index was entrenched below the 50-threshold that separates contraction from expansion in the manufacturing sector.
Falling output and declining backlogs of work were largely behind the sharp drop in March’s manufacturing PMI. Moreover, the labor market suffered as demand for workers was diminished by the pandemic and stalled activity. Anecdotes from the survey suggest many goods producers have temporarily furloughed employees. Supplier delivery times lengthened notably again in March amid disrupted supply chains. Respondents cited Italy, Germany and China as the main countries affecting Swiss producers’ ability to receive goods.
Meanwhile, the relatively more labor-intensive services sector was hammered by the lockdown, with the sector’s PMI falling to a record low of 28.1 in March from 51.9 in February. Business activity and new orders both plummeted in the month, while demand for staff also declined, with more than a quarter of companies deploying short-time working measures.
Regarding the government’s stimulus measures to safeguard the economy, companies welcomed the short-time working measures and efforts to boost liquidity through loans. That said, services providers saw potential for more government support, particularly regarding international trade.