Swiss industry struggles during first quarter, expects worse to come

(C) Reuters.

ZURICH (Reuters) – Switzerland’s engineering sector struggled with falling orders, sales and exports during the first quarter of 2020, their association Swissmem said on Monday, with a bigger hit from the coronavirus expected to come in the next six months.

Order intake fell 2%, sales were down 5.7% and exports were 8.4% lower in the three months to the end of March, the association said in its quarterly study.

But the full impact of the new coronavirus pandemic was still not evident in the figures, said the organisation which represents the machinery, electrical and metal (MEM) engineering industries.

With forward-looking indicators like the Purchasing Managers Index dropping to long-term lows, the prospects looked grim for the rest of the year, Swissmem said.

Almost three quarters of member companies surveyed expect a fall in new orders from abroad, while nearly half have seen orders cancelled due to the pandemic.

These problems meant 80% of companies in the sector had applied for short-time working, a scheme where the government pays part of the wages of staff not working 100%, Swissmem said.

“The situation in the MEM companies deteriorated significantly in April,” Swissmem President Hans Hess said.

“All leading indicators point to a massive drop in sales from the second quarter of 2020 onwards,” he added. “At the moment, it is completely open as to when things will start to pick up again.”

Switzerland has started to ease its restrictions, opening shops and schools on Monday after earlier reopening beauty salons and doctors’ surgeries.

Swissmem said it wants the government to relax travel restrictions, extend the time that companies can apply for bridging loans and increase the period of short-term working compensation entitlement to 18 months from 12 months now.