Swiss Manufacturing PMI Strongest Since 2011

Switzerland’s manufacturers posted their strongest growth in more than six years for July, figures on Wednesday showed, pointing towards a sustained upswing for the sector that has been battered by the highly-valued Swiss franc.

The manufacturing purchasing managers index reached 60.9 points during July, its highest level since February 2011, and well above the growth threshold of 50 points and the long term average of 53.8 points, Reuters reported.

The improvement was attributed to “bulging order books” with the corresponding backlog of orders rising to its highest level since 2010. “This pleasing development points toward dynamic industrial output in the months to come,” said Credit Suisse, which compiles the index together with the Swiss SVME purchasing managers’ association.

Growth in Switzerland, where manufacturing makes up around 18% of the economy, has been supported by solid PMI developments in neighboring European countries.

French manufacturing activity held close to a six-year high in July helped by political uncertainty dissipating after the presidential election, a survey showed on Tuesday. The eurozone’s factories showed a buoyant start to the second half of 2017.

Other encouraging data on Wednesday showed improving sentiment in the Swiss economy which had been rocked by soaring value of the franc after the country’s central bank ditched a cap on the currency versus the euro in January 2015.

Swiss retail sales rose 1.5% in calendar-adjusted real terms in June versus the year-earlier month, the Federal Statistics Office said.

Swiss shops had suffered as a result of customers using their more highly valued currency to go shopping across the border in neighboring France and Germany.

The Swiss consumer index also improved to -3 points during the third quarter from a reading of -8 in the second quarter, with a balance of respondents seeing brighter economic outlook than earlier this year.

With 200 companies across all sectors surveyed, the PMI results showed the improvement appeared to be broad-based and not just limited to pharmaceutical and chemical companies which had been supporting Swiss exports in recent months, said Credit Suisse economist Maxime Botteron.

The recent weakening of the franc, which has dropped from 1.08 francs to the euro to 1.14 in recent weeks, has also lifted some of the pressure on Swiss companies which have cut costs to remain competitive as the currency made their products more expensive.