The PMI pulled back in July to 48.8 from 49.6 in June, seasonally adjusted, remaining below the expansionary benchmark of 50 since January 2023 with order books the main drag, having fallen 6.5 points to 43.9.

Around half of the businesses surveyed expect increased protectionary measures in the coming twelve months, which is lower than the roughly 60 percent in June. A third reported an increase over the past year. Switzerland which is subject to 39 percent tariffs on its products in the US starting August 7, has yet to reach a trade deal with the Trump administration.

On the positive side, delivery times improved as did inventories on both the selling and purchasing side of the ledger. For the latter, anecdotal evidence from other indicators suggests that businesses were accumulating inventory ahead of the imposition of the tariffs.

While the industrial PMI was relatively stable, that is not the case for services which fell to a seasonally adjusted 41.8 in July from 48.5 in June, and a sharp decline from the 56.3 seen in May. To be sure, there is inherent volatility in the numbers, yet new orders and inventories were down 8.4 and 10.3 points, respectively, to 38.8 and 36.2.

Although below 50, the relative stability of the industry component of the PMI suggests that Swiss businesses are cautiously optimistic a trade deal will be reached with the US, which will at least give some clarity for planning.

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.