The goods producing sector continued to contract in May but at a significantly slower rate than in April. At 49.4 the PMI was again below the 50 growth threshold as it has been every month since January but May's reading was at least up 1.5 points versus April and, moreover, the strongest reading over the period.
Amongst the components, output (51.7) rose further, albeit at a reduced pace, and orders backlog (51.4) moved back above 50 for the first time since December. Quantity of purchases (52.5) expanded for a second successive month. Stocks of purchases (49.6) were broadly stable but the decline in stocks of finished goods (47.1) accelerated somewhat and employment (40.7) fell more quickly than in any month since the financial crisis in 2009.
Today's results are thus rather mixed but overall suggest that the economy is starting to find its feet again after the shock change in SNB FX policy in January. Nonetheless, the outlook for the second quarter remains very subdued.
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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