Job risk in the industrial sector
(20.09.2023) The economic outlook remains bleak for Swiss industrial companies. Raiffeisen Bank's PMI SME index remained stagnant at 46.3 in August, staying below the expansion threshold and causing experts to worry about employment trends.
Following a notable decline in July, the "production" (+3.5 points) and "order books" (+3.6 points) components showed signs of improvement in August, while remaining within contraction territory.
Conversely, the condition of merchandise stocks appeared to deteriorate significantly between July and August (-9.3 points / 45.3). Similarly, delivery times had previously edged just above the 50-point threshold in July but experienced a further decline (-2.8 points), pushing them back into contraction territory (47.2).
Moreover, the sluggishness of the global economy is taking a toll on Swiss merchandise exports. Even domestic-market-focused SMEs are feeling the impact of reduced international demand, as many of them also supply larger companies operating in global markets.
The repercussions of this economic downturn are especially pertinent for employment, as the employment index dropped from 48.5 in July to 45.3 in August (-3.2 points), marking its lowest level since the Omicron wave between late 2021 and early 2022.
The actual extent of job losses remains uncertain, as the shortage of skilled labor is likely to serve as a deterrent to layoffs. Nevertheless, according to a survey conducted by the KOF Swiss Economic Institute at ETH Zurich, the majority of Swiss industrial companies are heading towards downsizing their workforce.