While high supply costs are weighing on the margins of Swiss small and medium-sized enterprises (SMEs), massive inflation in neighboring countries is now also affecting new business.
The Raiffeisen PMI SME index published on Friday posted a significant decline in June, to 52.3 points, after 59.1 points the previous month, its lowest level since the omicron wave of the coronavirus in January. The economists of the banking cooperative see in this the increase in economic risks.
Many of the companies surveyed attributed the slowdown mainly to rising consumer and producer prices in the euro zone. ‘The high inflation affecting the eurozone is weighing on consumer and business demand, which is also affecting new business for Swiss SMEs’, explain the authors of the study.
During the month under review, the order books and the production volume recorded only a slight increase, contrasting with the strong momentum of the previous months. In this context, the significantly lower inflation experienced by Switzerland compared to its neighbors is only ‘small consolation for exporting SMEs’.
Given the risks to growth, companies are now reluctant to hire. The corresponding sub-component fell from 57.4 to 49.5 points, falling below the growth threshold for the first time since January, Raiffeisen experts note.
The inventory sub-component is also below 50 points, due to the build-up of inventories in recent months to alleviate production and delivery problems.
The authors of the study believe that an imminent easing on the inflation front in the euro zone is unlikely and underline the strong pressure under which the European Central Bank (ECB) finds itself to quickly raise rates, with the key to new economic risks.
/ATS