June's PMI posted 50.0, a 0.6 point increase versus May and its first non-negative growth reading since December last year. The outturn was in line with market expectations.
Promisingly, output (54.8) was up 3.1 points from mid-quarter and at its highest mark so far this year but backlogs expanded more slowly (51.1 after 51.4) as did quantity of purchases (50.3 after 52.5). Moreover, stocks of purchases (49.5) contracted yet again and employment (41.6) continued to fall sharply. Meantime, the prices paid index (43.2) was well off its February low (12.9) but still signalled ongoing and significant deflationary pressure.
Following the drop in the KOF's June leading economic indicator announced yesterday the latest PMI results should come as something of a relief to the SNB. Even so, the details are hardly bullish and there is little here to suggest that GDP will stage any meaningful rebound near-term. Indeed, with the labour market so soft, the risk is that household consumption starts to fall away at the expense of any would-be recovery.
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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