Switzerland’s manufacturing output steadied in April suggesting companies are coping with the stronger franc and that the country may avoid an economic recession.
The Swiss Purchasing Managers’ Index was unchanged in April from March at a seasonally-adjusted 47.9 points, data released Monday showed. The April reading was slightly above an economists’ average forecast of 47.7, Dow Jones reported.
The Swiss index though is still near its lowest since October 2012 and remains below the 50-point level, which signals a contraction in industrial output.
Manufacturing fell sharply in the immediate wake of the Swiss National Bank’s decision Jan. 15 to scrap its 3 1/2-year policy of limiting its gains to 1.20 per euro, the currency of Switzerland’s biggest export market.
Since its drop in January, the index has steadied around 48 points and “although such a PMI value points towards decreasing industrial activity, an overall economic recession is unlikely,” said analysts at Credit Suisse Group AG, which co-compiled the index.
The Swiss currency held above 1.05 to the euro through most of April, although it has weakened in recent days, and was last at around 1.0470 per euro.
The latest PMI is broadly in line with the Swiss KOF leading economic indicator, a forecast for the development of the Swiss economy over a six-month period, which edged slightly lower last month.
Zurich-based KOF said in March that the Alpine country’s economy could avoid a recession as long as the franc steadies around levels of 1.05 to the euro, but forecasts anemic growth of just 0.2% this year.
Data last week showed Swiss exports gained in March, suggesting the economy is proving more resilient to the fallout from the strong franc than many had feared.
The franc’s appreciation – since it was allowed to float free of its ties to the euro – could trigger a technical recession, or two successive quarters of contraction, but the economy should avoid a full-year recession, according to the KOF and BAKBasel economic institutes.
