Manufacturing remained in the doldrums in July. At 43.5, the SVME PMI was down from June's 43.9, well below the market consensus and more than six points short of the 50-expansion threshold. The latest reading was also a 3-month low.

Weakness in manufacturing continues to weigh on the economy in general and, at minus 23 and minus 19 respectively, the Swiss RPI and RPI-P show overall economic activity still running some way behind market expectations.

The July PMI is expected to move up from June's 43.9 to a still very subdued 44.6.

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.