Switzerland's manufacturing sector is slipping deeper into recession, a fall in the Swiss Purchasing Managers' Index (PMI) to a record low in January showed on Monday. The Credit Suisse/SVME PMI dipped to 35.0 points in January from a downwardly revised 36.5 the previous month, Credit Suisse said, coming below the median forecast in a Reuters economists poll of 35.8 points.
"Swiss industrial activity continues to decline: the index has fallen short of the 50-point threshold that separates growth and contraction for five successive months now," Credit Suisse said in a statement. "The PMI has plummeted farther and more abruptly since September 2008 than at any time since the survey began in 1995," it said. The PMI decline echoes the drop in the country's leading KOF growth barometer, which also hit a record low in January.
"The PMI results are overall a pretty sad story," said UBS analyst Reto Huenerwadel. "Orders are not the fastest falling component any more. That might hint to a stabilisation coming sooner or later," he said. "But other than that, everything still points clearly downwards." The PMI survey showed weakness across the board, with the pace of falls in output, order backlog and employment accelerating.
Swiss manufacturers such as car parts and textile machinery makers Oerlikonand Rieterhave announced plans in recent weeks to cut thousands of jobs as global demand for Swiss exports fades fast. The Swiss National Bank sees the economy contracting by between 0.5 and 1.0 percent this year and has slashed interest rates to close to zero to mitigate the impact of the global downturn.
But more and more economists are lowering their growth forecasts further as news from Switzerland's key trading partners in the euro zone turns increasingly dire. SNB Chairman Jean-Pierre Roth said last week that there were no signs of a recovery yet. Central bank officials have pointed out recently the SNB still has a number of options to help the economy, including interventions to weaken the franc and the purchase of bonds.
Credit Suisse said there was a glimmer of hope that the PMI would stabilise now at a low level. "January's 1.5-point fall is well below the average in the current slowdown, and much less than between September and November last year, when the index dropped a total of 15.5 points," it said. "The downturn in order intake has also eased."