Manufacturing activity contracted in January for the first time since July 2020. At 49.3, the SVME PMI was down nearly 5 points versus its year-end reading and well short of the market consensus. Production, orders, and purchasing volumes all posted outright contractions while employment growth remained positive but still slowed.

Taken at face value, the latest outturn points to a difficult start to 2023. That said, today's report also leaves both the Swiss ECDI (minus 8) and ECDI-P (minus 3) only just below zero and so indicative of very modest underperformance in overall economic activity versus market expectations.

The headline index is seen at 53.2, down from December's 54.1.

The SVME (Schweizerischer Verband für Materialwirtschaft und Einkauf) 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.