| Actual | Previous | |
| Index | 47.4 | 48.8 |
Highlights
The manufacturing sector contracted further in February, with the PMI falling to 47.4 from 48.8, seasonally adjusted, marking the 38th consecutive month of contraction.
Order books contracted further with the index down 0.8 points to 46.9, which is a problem not only in Switzerland but other major European economies.
Businesses are also reporting higher purchasing prices, with the reading for rising 4.3 points to 55.8, the highest reading in three years. Increases were particularly acute for electronic components, industrial metals, and materials.
In contrast, the services sector is performing much better, with the seasonally-adjusted index expanding for the third consecutive month to 54.2 in February from 53.8 in January. The result is the highest since 55.3 in May of last year.
Around 22 percent of companies expect an increase in protectionist measures in the coming twelve months, which is a slight pullback from January. Around six percent expect a decrease. With the US Supreme Court declaring many of the tariffs imposed by Donald Trump to be illegal, there is still a level of uncertainty about trade policy.
Swiss industry continues to be in a challenging environment, and higher prices are adding further headwinds. For the most part, inflation has been subdued, but this could become a concern should this persist.
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.