The industrial economy moved back into positive growth territory in December according to the latest PMI survey. At 52.1, the headline index was up 2.4 points versus its November reading and at its highest level since August.
Production was particularly robust, the sub-index gaining more than 8 points to 57.6, and quantity of purchases rose 3.2 points to 54.9. However, backlogs were only flat at 51.4 and employment edged just 0.8 points firmer to 44.7, signalling another sizeable jobs shakeout that could further undermine consumer confidence. Purchase prices (36.8) fell even faster than they did in November.
Overall today's results are mixed. Deflation remains the major worry and the ongoing weakness of the labour market points to a difficult time ahead for retailers. GDP growth is likely to be little more than zero over the next quarter or so keeping additional monetary easing from the SNB firmly on the table.
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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