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Swiss manufacturing activity plummets

Manufacturing activity in Switzerland dropped sharply at the beginning of the third quarter, according to data released Wednesday. Equity markets have continued to fall since rating agency Fitch downgraded the top credit rating of the US government on Tuesday.

Shane Strowmatt, LGT
Reading time
5 minutes
Made in Switzerland tag
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The procure.ch Purchasing Managers’ Index for Switzerland fell to 38.5 points in July, its lowest level since April 2009. June’s value was 44.9 points. Production is falling across industries and order backlogs are falling. On a somewhat more positive note for the Swiss economy, Swiss consumers were looking more confident during the month. The SECO Swiss Consumer Sentiment Index increased to -27 points in July, which is still far below the average value of -6 points. High prices were continuing to put pressure of household budgets, according to the Swiss State Secretariat for Economic Affairs. Inflation is much lower in Switzerland – projected by economists to be around 2.3% in 2023 – than in neighbouring EU countries. The Swiss SMI equity index dropped 0.85% on Wednesday but fared better than its European counterparts with the Euro Stoxx 50 losing 1.61%.

In New York, stock indices were still suffering from Fitch’s downgrade of the US government’s credit rating from Tuesday. A positive ADP national Employment Report failed to boost sentiment, even as it showed US private sector employment was up by 324,000 jobs in July and pay increased 6.2% on the year. The report supports the soft-landing scenario for the US economy with pay hikes cooling without widespread job losses materialising. The Dow Jones Industrial lost 0.98 % to finish the day at 35,282.52 points and the S&P 500 lost 1.38% to close at 4513.39 points. The tech-heavy Nasdaq-100 took the heaviest losses, dropping 2.21% to 15,370.74 points.

In Asia, stock markets continued their losses from the previous day. In Tokyo, the Nikkei 225 was trading down 1.4 % and in South Korea, the Kospi lost 0.57%. In Australia, the S&P/ASX 200 was down 0.7%. Hong Kong's Hang Seng Index slipped 0.2%, while the Shanghai Composite was trading roughly flat after China’s services activity expanded in July. The Services Purchasing Managers’ Index rose to 54.1 in July from 53.9 the previous month. It was the seventh consecutive month of expansion, which is indicated by a value over 50.

Corporate news in focus: Quarterly and half-year earnings figures from Adecco, Anheuser-Busch InBev, Infineon, Lufthansa, Merck KGaA, Swisscom, Adidas, BMW, Conoco Phillips, Kellogg, Amazon, Apple.

Economic data in focus: Services Purchasing Managers’ Index from several countries throughout the day, German trade balance (08:00 CET), Swiss Consumer Price Index (08:30), Bank of England interest rate decision (13:00), US weekly initial jobless claims (14:30).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.

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