The business situation of Swiss industry and service providers is starting to collapse

Swiss economy suffering under lockdown

This Swiss economy is groaning under the strain caused by measures to combat the coronavirus. As a result of the lockdown, the business situation for Swiss industry and many companies in the service sector is growing darker. However, government support measures can help in this time of crisis.

Worsening outlook for Swiss industry

The coronavirus lockdown is hitting the Swiss economy hard. Future prospects for many sectors are looking gloomier than ever. The Purchasing Managers' Index (PMI) for industry, as determined by and Credit Suisse, fell by 5.9 points in March 2020 to just 43.7. That is well below the growth threshold of 50 points, and its lowest level since July 2009.

In addition to production and order volume, the situation on the labor market has also deteriorated significantly. The employment subindex shed 8.4 points and indicates reduced demand for labor at the current level of 42.5. More than a quarter of participating industrial firms have already applied for short-time working, affecting around 13%of all employees on average.

Swiss industry PMI slips below growth threshold

Swiss industry PMI slips below growth threshold

Development of PMI industry
Source:, Credit Suisse

Supply bottlenecks an additional burden to Swiss industry

Swiss industrial companies are finding purchasing increasingly difficult. Availability has shrunk, especially when it comes to goods from Italy, but also for goods from Germany and China. This leads to longer delivery times than in preceding months.

Longer delivery times normally point to higher capacity utilization. However, in the current situation, supply disruptions stemming from measures to contain the spread of coronavirus are more likely to be responsible for the extended delivery times than capacity utilization levels. Despite supply bottlenecks, purchase prices and inventories have not changed significantly. The price level is continuing to fall moderately while stocks of purchases are slightly higher.

Swiss industry must grapple with longer delivery times

Swiss industry must grapple with longer delivery times

Development of delivery times for Swiss industry
Source:, Credit Suisse

The business situation is particularly uncomfortable for service providers

The service sector is suffering from these measures even more than industry. The PMI for the service sector slumped in March, shedding 23.8 points month over month to its current level of 28.1. This makes clear that the immediate impact of the lockdown is more severe for service providers than manufacturing companies as various services can no longer be provided. As a result, business activities have stalled, and new orders and order backlogs have also shrunk.

This also impacts staffing needs. As in the manufacturing sector, the instrument of short-time working is a welcome move and is widely used. More than a quarter of companies are now deploying this measure, affecting 17% of employees. However, service providers seem to require more help on the procurement front than manufacturing companies, especially with regard to international trade. Supply chain difficulties and weak demand are reflected by the movements in prices: while purchase prices are rising, sale prices are trending down.

The coronavirus crisis is causing the business climate for service providers to collapse

The coronavirus crisis is causing the business climate for service providers to collapse

Development of the service PMI
Source:, Credit Suisse

Government measures are effectively supporting the Swiss economy

Industrial companies and service providers have one thing in common: It is very important for both of them to take full advantage of government support measures to tackle the coronavirus crisis. In addition to short-time working, which has already been broadly applied, tools to secure liquidity, such as the loans that have recently been made available, are also receiving good marks. In particular, the fact that the measures were implemented so quickly and simply is especially important for many Swiss companies.

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