Although remaining below 50, the PMI was resilient in August in the face of 39 percent tariffs imposed by the US on Swiss exports, rising 0.2 points to 49.0.

Some 40 percent of Swiss industrial companies said they were affected by protectionist measures in August, 10 percentage points more than in July. Even so, the production sub-component increased to 55.4 in August from 49.6 in July, the first time the measure has been above the expansionary mark of 50 since October of last year.

The index for delivery times fell to 51.4 in August from 59.2 in July, the sharpest drop since May 2020 when delivery times started recovering from pandemic-related disruptions.

The services component which saw sharp declines in June and July, stabilized at 43.9 in August, seasonally adjusted compared to 41.8 in July.

Other indicators support the view that tariffs are hurting the Swiss economy, most recently today's retail sales for July, which declined on a month-on-month comparison. Notable were the June results which were revised higher, showing consumers accelerating purchases ahead of the imposition of the Tariffs last month.

The tariff issue is winding its way through the US court system, but until that is resolved one way or another, it remains difficult for businesses and consumers to plan properly and subsequently will remain cautious.

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.