CH: SVME Purchasing Managers' Index

Wed Nov 01 03:30:00 CDT 2017

Consensus Actual Previous
Level 61.5 62.0 61.7

Swiss industry began the new quarter on a very bullish note according to the latest PMI survey. At 62.0, the headline index was again stronger than the market consensus and easily far enough above the 50 growth threshold to indicate another very good month for business activity.

Output (up 2.1 points at 60.6) was very robust and, despite falls in both backlogs (2.3 points to 63.7) and quantity of purchases (1.2 points to 60.7), looks well placed for a good November too. Pressure on capacity was highlighted once more by another increase in supplier delivery times (3.0 points to 74.3 and record high) and the general improvement in business conditions ensured a larger increase in employment (up 1.3 points at 56.6). Purchase prices (up 8.2 points at 73.2) also touched a new peak, in part due to CHF weakness.

With the service sector PMI weighing in at a healthy 60.8, the overall PMI results are impressive. However, note that their correlation with real GDP has not been good in recent quarters.

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.