In May, the Raiffeisen SME PMI index rose from 44.8 to 50.5 points, thus falling above the growth threshold of 50 points, for only the second time in a year.
Industrial SMEs surveyed by Raiffeisen report an improvement in commercial activity, particularly on the basis of better order books. However, this is not enough for a reversal of the trend, because demand from abroad, which is important for exports, is still recovering only slowly.
In May, the Raiffeisen SME PMI index rose from 44.8 to 50.5 points, thus falling above the growth threshold of 50 points, for only the second time in a year. The five components of the PMI contributed to this better result, in particular the order volume component which, with 30%, takes up the lion’s share in the overall index. In April, 36% of SMEs surveyed still reported a decline in the level of orders and only 25% an increase. In May, on the other hand, the share of SMEs with larger order books predominated. As a result, the component rose from 44.5 to 51.3 points.
For the first time in a long time, the employment component also exceeded the growth threshold, reaching 50.7 points compared to 45.9 previously. At the start of the year, announcements of partial unemployment or even job cuts had further increased in the industrial sector. Overall, however, employment continued to grow in the first quarter, as recent figures from the Federal Statistical Office show. At the end of March, the manufacturing industry employed 701,700 people, a rate of 0.4% higher than at the end of the year. However, employment fell in some sectors for the second consecutive quarter, particularly in those where export turnover fell, such as in the textile industry, plastics manufacturing or metallurgy.
Around 60% of employment in industry comes from SMEs. However, it is not known how many new positions were created by small and medium-sized businesses in the first quarter. The employment component of the procure.ch PMI has in any case also been continuously below the growth threshold of 50 points in recent months. Unlike the Raiffeisen SME PMI, the procure.ch purchasing managers index rather reflects the situation of large companies. The latter are particularly dependent on demand from abroad and as this is currently very weak, large companies report poorer business developments than SMEs.
Stocks rise for the first time in a long time
The component relating to merchandise stocks also exceeded the 50 point mark for the first time in a long time (52.8 against 45.1). Due to significant supply chain problems two years ago, inventories were initially increased but were then phased out again as the industrial recession began. According to the Swiss National Bank, some industrial companies are currently observing that destocking seems to be coming to an end among their buyers, which would be positive for the development of demand. The clear increase in the merchandise inventory component of the Raiffeisen SME PMI confirms this observation.
However, the outlook for order levels has still not improved recently. Indeed, European industry continues to tread water as shown by the recent purchasing managers’ index. The PMI for the manufacturing industry in the euro zone certainly rose in May from 45.7 to 47.4 points, but thus remained below the growth threshold for the 23rd consecutive month.
This is why it is highly likely that the utilization of production capacities of Swiss SMEs will remain below normal levels until further notice and will not recover so quickly. Thus, the SMEs surveyed reported a further decline in production in May, even if it was no longer as significant as in the previous month. The corresponding component increased from 44.4 to 49.0 points, but thus remained below the growth threshold.
