CH: SVME Purchasing Managers' Index

Wed Aug 02 02:30:00 CDT 2017

Consensus Actual Previous
Level 58.8 60.9 60.1

July's PMI pointed to a surprisingly good month for business activity. At a heady 60.9, the headline index was up 1.8 points from an already very firm June reading and comfortably above both the 50 growth threshold and its long-run average (53.8). The latest outturn was also the highest in more than six years.

The improvement was largely down to bulging order books and the backlogs sub-index climbed 5.3 points to 65.2, its best print since 2010. Output (up 0.4 points at 63.8) was similarly very robust as was the quantity of purchases measure (up 3.4 points at 63.1). Nonetheless, within an otherwise exceptionally upbeat report, employment was relatively soft and the sub-index here actually fell 3.5 points to 54.6. The demand for labour may be growing but it seems that companies are still wary about adding aggressively to headcount.

Meantime, inflation pressure picked up a little with the purchase prices yardstick (up 0.7 points at 55.0) posting its first rise in 2017.

With its service sector equivalent weighing in at 58.9, the July PMI report suggests that the Swiss economy got off to a very good start this quarter. However, the survey has tended to be overly optimistic in recent months and the boom conditions signalled have yet to materialise in the hard data.

The Association for Purchasing and Supply Management's Purchasing Managers' Index (PMI) is produced in conjunction with Credit Suisse. The PMI provides an estimate of manufacturing business activity for the preceding month by using information obtained from a representative sector of purchasing managers. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting).

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.