ZURICH (Reuters) - Switzerland’s manufacturing sector has started to overcome the problems triggered by the coronavirus shutdown, data published on Monday showed, although the road ahead will be tough.
The July Purchasing Managers Index (PMI) for manufacturing rose to 49.2 points in July, according to the data compiled by procure.ch and Credit Suisse, up from 41.9 points in June.
The reading shows the industrial sector close to February’s level, before the outbreak hit the country, and near the growth threshold of 50 points.
Positive signals included a fall in the take up of short-time working - where the government pays a portion of furloughed workers’ wages - to around 16% of the manufacturing workforce in July, down from 27% in June and 28% in May.
Demand for manufactured products is also increasing, said Credit Suisse economist Claude Maurer.
“More than one-third of businesses surveyed are buying more from Switzerland and the European Union as a result of the coronavirus crisis, while almost half of companies are planning to do so in future,” Maurer said.
Companies have also adapted their supply chains, buying more products domestically to avoid disruptions.
Still, the recovery in the services sector is starting to slow, the survey showed. Separately, the KOF Employment Indicator said the outlook in the industrial and hospitality sectors remained bleak, adding it expected further job cuts.
The government’s scientific advisers have said they think restrictions should be tightened again to flatten a recent spike in COVID-19 cases.
Credit Suisse’s Maurer said the recovery from the supply shock, where supply chains had been disrupted, had been relatively quick, while an improvement in demand would take longer.
“This latest data is encouraging, but now is not the time to signal the all-clear,” he said.
Reporting by John Revill; Editing by Michael Shields
Our Standards: The Thomson Reuters Trust Principles.