Switzerland CPI (Sep.), Manufacturing PMIs (Sep.) - Capital Economics
Nordic & Swiss Economics

Switzerland CPI (Sep.), Manufacturing PMIs (Sep.)

Nordic & Swiss Data Response
Written by David Oxley
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While Swiss inflation has risen since reaching a trough in June, it is likely to stay very weak in the near term. Meanwhile, the positive set of September manufacturing PMIs from Switzerland and Sweden indicate that the industrial rebounds remain in full swing, with order books filling up.

Rising order backlogs to sustain industrial rebounds

  • While Swiss inflation has risen since reaching a trough in June, it is likely to stay very weak in the near term. Meanwhile, the positive set of September manufacturing PMIs from Switzerland and Sweden indicate that the industrial rebounds remain in full swing, with order books filling up.
  • The tick-up in the headline inflation rate in Switzerland in September, from -0.9% in August to -0.8%, was in line with the consensus but a bit smaller than our forecast (-0.7%). The increase was driven by a pick-up in the core rate, to -0.3%, which partly reflected the fading deflationary impact of previous rises in the franc. Looking ahead, the drag from the exchange rate will ease further in the coming months (see Chart 1), but the current period of deflation in Switzerland is likely to persist during much of H1 2021.
  • In other data released this morning, the rise in the Swiss manufacturing PMI in September echoed the pick-up in the KOF Economic Barometer (see Chart 2) and the surge in the German equivalent in the same month. As in August, the rise in the PMI was driven by increases in the production and orders components, and the risks to our forecast of a 5% q/q increase in Swiss GDP in Q3 are on the upside.
  • Encouragingly, the further increase in the Swedish manufacturing PMI in September, from an upwardly-revised 53.8 in August to a 22-month high of 55.3, was also driven by the production and orders components. All told, with the services PMI, due for release on Monday, set to have remained well above the 50-mark, the Swedish economy looks to have gathered pace going into Q4. (See Chart 3.)
  • Finally, the fact that the Norwegian manufacturing PMI rose above the 50-mark in September, for the first time since February (see Chart 4), offers encouragement that the industrial sector there is finding its feet, despite headwinds from cuts to energy investment.

Chart 1: Swiss Francs per Euro &
Imported Products Inflation (% y/y)

Chart 2: Switzerland KOF Economic Barometer & Manufacturing PMI

Chart 3: Sweden PMIs & GDP

Chart 4: Norway PMI & Mainland GDP

Sources: Refinitiv, Markit, Capital Economics


David Oxley, Senior Europe Economist, david.oxley@capitaleconomics.com