Manufacturing activity continued to contract in April and at a faster pace than in March. At a lowly 45.3, the SVME PMI was nearly 2 points short of its quarter-end print and also well below the market consensus. This was its worst reading since June 2020.

The PMI is not especially well correlated with GDP but the recent run of sub-50 readings must increase the likelihood of a weak first half to the year. Indeed, today's update leaves both the Swiss ECDI (minus 29) and ECDI-P (minus 33) deep in negative surprise territory. In other words, overall economic activity is falling significantly behind the forecasters' predictions.

The PMI is expected to slip to 46.3 after 47.0 in March.

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.