The PMI signalled another contraction in economic activity at the start of the current quarter. A 47.9 headline reading matched the March outturn and was the fourth consecutive print below the 50 growth threshold.
Output (52.9) and quantity of purchases (51.7) actually rose on the month but backlogs (46.7) and employment (42.1) fell again and at a faster pace than in March. Indeed, headcount was down at its sharpest pace since the financial crisis in 2009.
Purchase prices (38.0) were predictably weak but still posted their smallest decline so far this year.
Overall the results are in line with some stabilisation in the economy as it continues to adjust to the sharply higher level of the CHF and the attendant loss of competitiveness. That said, the acceleration in the rate at which backlogs are falling hardly holds out much hope of any real improvement this quarter. 2016 is going to be a very difficult year for Swiss businesses.
The SVME Purchasing Managers Index (PMI) tracks trends in Swiss manufacturing. Around 200 Swiss industrial companies are surveyed.
The PMI is very sensitive to the business cycle and tends to match growth or decline in the economy as a whole. To construct the PMI the Swiss Association of Purchasing and Materials Management conducts monthly surveys of purchasing executives on their performance in the current month versus the previous period. Because the amount of materials ordered by purchasing managers parallels the level of manufacturing production, the PMI is a gauge of production growth. The results are indexed with a centerline of 50; values above 50 indicate expectations of expansion and values below 50 indicate expectations of contraction for the manufacturing sector.
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