ZURICH (Reuters) - Switzerland’s manufacturing and service sectors saw further falls in output and business activity in April, Purchasing Managers Index (PMI) data showed on Monday, hit by the coronavirus crisis and lockdown restrictions.
Supply problems were cited as a big factor for companies as the manufacturing index fell to its lowest level since May 2009 during the global financial crash. [S8N2B200X]
A measure below 50 indicates shrinking output.
“The situation is going to be difficult for many companies and we are forecasting a recession for this year,” said Claude Maurer, an economist at Credit Suisse, which compiles the survey with the purchasing managers’ association procure.ch.
“The big problem for companies is delivery times,” said Maurer. “The suppliers are not operating fully, transport is difficult and border controls are more complicated.”
The forward-looking indicator is the latest gloomy reading for the Swiss economy, which is beginning to emerge from six weeks of shutdown.
The KOF Economic Institute last week said the economy was in crisis mode as its barometer posted a record-setting drop in April.
The government has forecast the export-led economy will shrink by 6.7% this year, its worst recession since 1975.
Auto-Schweiz, the association of Swiss car importers, reported a 67% drop in new vehicle registrations in April to their lowest monthly level since the 1970s, It expects a 23% downturn for the year as a whole.
The manufacturing component of Monday’s PMI study dropped to 40.7 points from 43.7 in March, while the service component fell to 21.4 from 28.1 points.
Although the decline has slowed, the authors said it had now become more difficult for companies to get hold of materials.
Borders have been closed to prevent the spread of the new coronavirus, which has so killed nearly 1,500 people in Switzerland, but getting materials within Switzerland was also increasingly difficult, they said.
Supplies from Italy and Germany were also cited as problems, with 80% of companies saying they were finding it more difficult to get components.
One glimmer of hope was that 14% of respondents said the supply situation from China was improving.
Maurer thought the situation would get better, although service companies would still struggle.
“We think the readings will improve in the next few months as the restrictions are relaxed, but it’s from a very low base,” he said. “There will be a recovery, but I don’t think we will be going back to the good old days.”
Reporting by John Revill; Editing by Michael Shields