Clouded prospects Switzerland: Industrial sector is losing momentum
According to the Swissmechanic economic barometer, the MEM sector is continuing to lose momentum. Only half of enterprises consider the current business climate positive – three months ago, two thirds shared this view.
According to the economic barometer of the Swissmechanic industrial association, the machine, electrical and metal industry (MEM) is continuing to lose momentum. Only half of enterprises consider the current business climate positive – three months ago, two thirds shared this view. Further prospects, too, are viewed more sceptically than they were in April.
Demand for investment goods this year is clearly weaker than it was in the boom year 2018, reveals a quarterly survey by Swissmechanic. Fifty one percent of the respondent enterprises said that orders in Q2 2019 were lower than last year. Only 16 percent reported an increase. Thus, the situation with orders has again clouded since Q1 2019. A view of the customer side of the member enterprises confirms this picture: According to the PMI (Purchasing Manager Index), moods among industrial procurement managers at home and abroad have fallen from optimistic to pessimistic since the end of 2018.
The Swissmechanic member enterprises are divided in their assessment of the current business climate. Half of them (53 percent) consider the business climate good, the remainder (47 percent) consider it unfavourable. Three months ago, almost two thirds (64 percent) of enterprises viewed the situation as positive. Furthermore, more firms expect a fall in orders in the third quarter than an increase.
Continuing shortage of specialists
Apart from the poor situation with orders, the MEM sector is still struggling to find employees with the right qualifications. Such employees are needed particularly in such economically challenging times in order to survive the tougher competitive environment. Despite the economic weakening, the MEM sector has boosted employment in the first half of this year. According to the results of the Swissmechanic survey, this trend will reverse in Q3 2019.
Numerous (political) uncertainties
The weakening of the Swiss MEM sector in 2019 can be attributed primarily to political factors. Numerous uncertainties at home and abroad (the U.S. China trade war, Brexit and EU-CH relations) are staunching investments by companies and strengthening the Swiss franc against the euro. However, the economic research and consultancy institute BAK Economics expects these uncertainties to subside next year, resulting in suitably positive impulses for the MEM sector.