CH: SVME Purchasing Managers' Index

Fri Sep 01 02:30:00 CDT 2017

Consensus Actual Previous
Level 60.5 61.2 60.9

The PMI signalled another very healthy month for Swiss businesses in August. In fact, at 61.2, the headline index pointed to even faster growth than in July and again exceeded market expectations. The new reading was the highest since February 2011.

The latest bullish reading reflected a further acceleration in output to its highest mark since July 2010 (up 2.3 points at 66.1) and sustained strength in backlogs (61.8) and quantity of purchases (61.5). Pressure on capacity was highlighted by a sharp lengthening in vendor delivery times (up 7.1 points at 70.1). However, employment growth stuttered (down 1.7 points at 52.9) which raises a question mark about firms' confidence in the economic outlook.

The August PMI continues to signal solid growth of Swiss business activity but recent readings have been overly optimistic leading indicators of 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.