CH: SVME Purchasing Managers' Index

Fri Dec 01 02:30:00 CST 2017

Consensus Actual Previous
Level 62.6 65.1 62.0

Manufacturing was again very strong in December according to the latest PMI survey. Indeed, at 65.1, the headline index was more than 3 points stronger than its already very robust October mark and at its highest level since 2010.

November's rise was led by output where the sub-index jumped 7.1 points to 67.7. Backlogs (up 5.6 points at 69.3) were equally robust and a fall in stocks of finished goods (down 3.8 points at 46.6) despite a higher quantity of purchases (up 4.4 points at 65.1) similarly bodes well. Another increase in employment (54.8) rounds of a generally very sound picture of business activity.

There was also good news on the service sector PMI which rose 0.7 points to 61.5. Combined with its manufacturing counterpart, this should equate with another good quarter for overall Swiss economic activity. That said, the PMIs have tended to overstate the strength of the recovery in GDP for some time.

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.