"The PMI and most of the sub-indices came in close to their average historical levels in August, which is a sign of a certain degree of normalisation"
- Swiss SVME purchasing managers' association and Credit Suisse
Activity at Swiss manufacturing sector expanded for a fifth consecutive month in August, albeit at a slower pace, due to a drop in production and stocks, suggesting a modest recovery is underway. A survey by Credit Suisse and procure.ch revealed on Monday a gauge of manufacturing activity fell to 54.6 last month, down from 57.4 a month earlier and below analysts' expectations of a 55.9 figure. Still, the indicator is much higher than the 50 threshold, which indicates expansion of the sector. Meanwhile, production decelerated as the corresponding index tumbled to 53.2 in August, while the indicator for backlog of orders dropped to 59 compared with 61.6 in July. The only component which surprised market participants to the upside was the measure of purchasing prices, which moved into positive territory for a first time in nine months, recovering to 51.4 from July's 47.
Resilient domestic demand was on the main pillars of the economy so far, however, its fortunes are closely tied to the Eurozone, which is only starting to recover. Hence shipments from the Alpine country fell in July as demand in Europe, Swiss largest trading partner, remained weak. Nevertheless, the survey's authors are claiming the higher-than-average order backlog reflects a positive tendency in confidence, suggesting production should increase in the future.
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