Corporate Press Release
SME Export Indicator Q3 2013: Export Sentiment at Highest Level in Two Years
The Credit Suisse export barometer, which records foreign demand for Swiss products, cur-rently stands at a level of 0.62. Export prospects have therefore continued to improve on a quarter-on-quarter basis (Q2 2013: 0.45). The growth threshold of the export barometer is 0. Nevertheless, current export prospects remain below the long-term average of 1.
The SME export prospects survey conducted by Switzerland Global Enterprise (formerly Osec) has once again improved on a quarter-on-quarter basis: It currently stands at 63.4 points, compared with 60.4 points at the start of the second quarter and 56.3 points at the beginning of the year. This is the highest figure for two years. The figure is calculated from the export sentiment of SMEs for the third quarter of 2013, as well as effective exports in the preceding quarter. On this scale from 0 to 100, values of over 50 indicate a rise in exports. 39% of the companies surveyed expect exports to grow during the coming quarter, 53% an-ticipate stagnation, while only 8% fear declining exports.
Fillip Due to Improved Economic Situation in Euroland
According to the Credit Suisse export barometer, there are signs of growth in exports across a broad front. The strongest boost to demand is expected from the UK, Japan, and the US, as well as Eastern Europe and the major non-Asian emerging-market countries. This contrasts with the Asian emerging-market nations, where export prospects deteriorated during the last quarter and are now slightly negative.
As for the euro zone, there are gathering signs of a stabilization. Although export prospects are still in slightly negative territory, they remain at a 16-month high. Should this trend con-tinue, Swiss industry can expect a fillip from the euro zone once again in the fourth quarter of 2013. Export prospects have improved in Italy and Spain in particular. The situation is worst in Greece and France.
The fillip from the improved economic situation in the euro zone is clearly reaching Swiss SMEs: 95% of firms surveyed by Switzerland Global Enterprise intend to export to Europe over the coming six months. Once again, this represents an increase versus the previous quarter's figure of 91% (multiple answers possible). The most important European export market is still Germany: 75% of the SMEs surveyed will export their goods or services to this country, followed by France and Austria, both with 54%. The UK, which is expected to be a source of growing demand according to Credit Suisse, is mentioned by 32% of firms.
55% of Swiss SMEs will export to the Asia-Pacific region in the next six months, compared with 57% in the preceding period. Foremost among the Asian export destinations is China with 34% of mentions, ahead of Japan with 26%, and India with 24%. 42% of SMEs are likely to export to North America in the coming six months (45%), 34% to the Middle East/Africa region (31%), and 20% to South America (23%).
Optimism in All Sectors
According to the SME export prospects survey conducted by Switzerland Global Enterprise, all sectors are optimistic at the start of the third quarter of 2013. As in the preceding quarter, the list is headed by companies from the electrical engineering sector. The metals, chemi-cals/pharmaceuticals, machinery, precision instruments, and service sectors likewise expect solid growth in exports in the third quarter of 2013. Companies in the paper products sector are slightly more cautious, while manufacturers of consumer goods expect only slight growth.
54% of the SMEs predicting growth in their exports ascribe this to product innovation (multiple answers possible). This factor has therefore gained significance on a quarter-on-quarter basis. At 44%, increased marketing efforts are the second most important factor mentioned by companies. 29% mention the "recovery in the economic environment" factor.
Currency Hedging Growing in Importance
70% of the SMEs responding to the SME export prospects survey stated that the strong franc was adversely affecting their profit margins, compared with 72% in the preceding quarter. Pressure on margins was also especially pronounced in the metals (87%), precision in-struments (84%), chemicals/pharmaceuticals (82%), and electrical engineering industries (81%). 40% of SMEs indicate that they conduct hedging operations to reduce the negative currency impact on their profit margins. Only 26% did this at the start of the second quarter of 2013.
Methodology of the Credit Suisse Export Barometer
The Credit Suisse Export Barometer takes as its basis the dependence of Swiss exports on foreign export mar-kets. In constructing the export barometer, we have drawn together important leading industry indicators in Switzerland's 28 most important export countries. These indicators generally have a forecast horizon of approximately one to two quarters. The values of these leading indicators are weighted on the basis of the share of exports that goes to each country. The export barometer consolidates this information to produce a single indicator. Since the values in question are standardized, the export barometer is calibrated in standard deviations. The zero line corresponds to the growth threshold. The long-term average growth of Swiss exports of approximately 5% is 1.
For more detailed information: Credit Suisse (2009), External Trade Switzerland – Facts and Trends, Swiss Issues: Industries, available at www.credit-suisse.com/research.
Methodology of the SME Export Outlook Indicator of Switzerland Global Enterprise
The SME export outlook indicator is based on the quarterly survey of a fixed panel of more than 200 Swiss SMEs representing the pharmaceuticals/chemicals industry, machinery, consumer goods, the metals industry, paper, electrical engineering, the precision instruments industry, as well as services. SMEs indicate whether they expect growth, stagnation or a decline in exports for the current quarter as well as the coming one. To emphasize the forecast nature of the SME export indicator, expected export activity in the following quarter is weighted at 60% with exports in the current quarter being weighted at 40%. The SME export indicator can range from 0 to 100, whereby figures between 0 and 50 signal an expected decline in exports and figures of 50 to 100 an expected rise in exports. Participants provide further information on export volumes, for instance the reasons for a change in their export volume, export markets, etc. This information gives an accurate picture of the export activities of Swiss SMEs.