ZURICH: Swiss manufacturing shrank for a fourth straight month in April, as the strong Swiss franc hit industrial workforces and order books, but the economy should avoid a recession, data showed on Monday.
The Swiss Purchasing Manager's Index (PMI) was unchanged at a seasonally adjusted 47.9 points in April, below the 50.0 point threshold that separates expansion from contraction.
The index is compiled by the Swiss SVME purchasing managers' association and Credit Suisse.
The Swiss National Bank (SNB) abandoned its cap of 1.20 francs per euro on Jan. 15, exposing the export-reliant economy to a surge in the franc, which makes Swiss exports more expensive. "Although such a PMI value points towards decreasing industrial activity, an overall economic recession is unlikely," the report said.
The index tracking orders, a sign of future production, fell by 1.3 points to a reading of 46.7, suggesting orders evaporated at a faster pace in April and future production may slow.
The subindex for employment fell 42.1 points, its lowest level since the 2009 financial crisis, the report said.
"Such a subindex level suggests that an increase of 20,000 to 30,000 in the number of employees affected by short-time work can be expected in the coming months," it said.
The reading chimes with other recent economic reports.
The removal of the cap forced Swiss companies to cut prices to maintain their competitiveness, the KOF Swiss Economic Institute said last week.
However, the KOF raised its growth forecasts for Switzerland in March and expects the economy to eke out some growth in 2015 after dipping into a mild recession for part of the year.
Switzerland's government has also said it does not expect the strong franc to trigger a serious economic crisis.
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