MEM companies: Order intake weakened in the course of the year
According to the Swissmechanic economic barometer, over 70 percent of MEM companies assess the current situation as unfavorable. Order intake has declined steadily over the course of the year.
According to the quarterly survey of Swissmechanic, the leading association of Swiss SMEs in the MEM sector, more than 70% of its members assessed the current situation as unfavorable in October - compared with fewer than 50% in July. "The main reason is incoming orders from abroad and in Switzerland, which have continuously deteriorated since the beginning of the year," explains Michael Grass, a member of BAK Economic's Executive Board. BAK compiles the economic barometer quarterly on behalf of Swissmechanic. However, there are also (cautiously) positive signals: "Companies do not expect any further deterioration in order momentum in the fourth quarter. Purchasing managers' sentiment (PMI) is also only just negative in October and has thus recovered somewhat since its low in July."
Cause: Global political uncertainties
Behind the slowdown in the MEM economy in 2019 are primarily political uncertainties at home and abroad - from the trade war between the USA and China, to the unresolved Brexit, to the open chances of success of the institutional agreement (InstA). These uncertainties are hampering demand for capital goods. Weak growth in the EU and upward pressure on the Swiss franc are doing the rest. BAK expects the uncertainties to remain high next year, but to tend to ease. A strong recovery is therefore realistic for the MEM sector by 2021 at the latest.
MEM companies invest anyway
"Our economic barometer shows that MEM companies are continuing to invest despite the tense situation, albeit cautiously," Jürg Marti, Director of Swissmechanic, notes. One third of the companies are planning to expand production capacities in 2020. In addition, around 30 percent of investments in the current year went into modernizing the production infrastructure. However, slightly more than a quarter of the companies (28%) reported that there were financial restrictions on future investments. A lack of equity is cited much more frequently as an obstacle than insufficient access to outside capital.
Source: Swissmechanic
