| Consensus | Actual | Previous | |
|---|---|---|---|
| Index | 44.5 | 43.2 | 45.3 |
Highlights
Manufacturing activity contracted sharply and more quickly than expected in May. At 43.2, the SVME PMI was more than 2 points below its April print and 1.3 points short the market consensus. The headline index has fallen every month so far in 2023 and the latest reading was the weakest since June 2020. All components bar prices posted fresh declines.
The PMI is not especially well correlated with GDP but the widening gap between it and the 50-expansion threshold cannot bode well for growth this quarter. Indeed, today's disappointingly soft update leaves both the Swiss ECDI (minus 24) and ECDI-P (minus 18) in negative surprise territory. Economic activity in general continues to lag the forecasters' predictions.
The PMI is not especially well correlated with GDP but the widening gap between it and the 50-expansion threshold cannot bode well for growth this quarter. Indeed, today's disappointingly soft update leaves both the Swiss ECDI (minus 24) and ECDI-P (minus 18) in negative surprise territory. Economic activity in general continues to lag the forecasters' predictions.
Market Consensus Before Announcement
The PMI is seen falling from April's lowly 45.3 to an even weaker 44.5.
Definition
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).
Description
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.
