Manufacturing activity held up much better than expected in August. At 49.0, the SVME PMI was more than 5 points above the market consensus and up some 5.5 points versus its July level. This was its strongest reading since January 2023 and, taken at face value, suggests that, having contracted every month since the start of last year, the sector essentially stagnated in mid-quarter.

August's surprisingly firm results lift the Swiss RPI to 14 and the RPI-P to 21, the former's best mark so far in 2024. That said, overall economic activity is still only running quite modestly ahead of market expectations.

The SVME PMI is expected to come in at 43.7 in August, up only marginally from July's 43.5.

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.