Swiss Manufacturing Contracts for Fourth Month on Global Slump
Swiss manufacturing contracted for a fourth month in December as stalling global growth hurt demand.
The SVME purchasing managers’ index rose to 36.9 from 35.2 in November, Credit Suisse Group AG said today. A reading below 50 signifies contraction. Economists expected the index to drop to 35.0, the median of 11 forecasts in a Bloomberg survey showed.
“The index rose slightly, but it’s still a very low figure,” said Claude Maurer, an economist at Credit Suisse in Zurich who is responsible for the survey. “Today’s release shows that the sudden drop in November wasn’t just a one-month plunge. Industrial activity came down sharply in the last two months of the year.”
Switzerland’s industrial sector may contract further in the coming months as recessions in Europe and the U.S. eat into purchases of products like chemicals and auto parts. Dierikon, Switzerland-based Komax Holding AG, the world’s largest maker of wire-processing machines, is cutting working hours as weaker demand from car makers pushes orders down by as much as 30 percent, the company said Dec. 9.
“Uncertainty is poison for investments,” Maurer said. “Equipment investments are going to be negative this year no fax cash advance.”
Swiss leading indicators dropped to the lowest level in more than five years last month and unemployment increased. Bobst Group AG, the world’s biggest packaging machinery maker, said last month that orders had fallen by 40 percent since September and the company may post a loss for the first half of this year.
Watches, Machinery
Contractions in countries including Germany, the U.K. and the U.S. led to an 11.4 percent decline in exports in November as shipments of watches and machinery declined. Exports will probably shrink by 2.6 percent next year, the government said Dec. 16.
After lowering its benchmark interest rate to 0.5 percent last month, the Swiss National Bank may have limited means to jolt the economy back to life. SNB Governing Board member Thomas Jordan said Dec. 11 the bank may eventually resort to buying bonds or intervening in currency markets to stimulate growth. Switzerland’s economy probably will probably contract between 0.5 percent and 1 percent this year, the SNB said on Dec. 11.
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