Industrial motor starts to splutter

The leather and shoe industry is doing better than most sectors Keystone

Swiss industry in the first quarter has been feeling the effects of the sluggish economy, with production and orders falling compared with the same period last year.

For the first time in almost two years, production fell by 0.3 per cent and orders by 1.5 per cent.

Orders to industry are considered an indicator of future industrial production.

The figures of the first quarter 2005 show a slight slowdown in Swiss industry, said the Federal Statistics Office in a statement on Monday.

However, it added that industrial sales had increased by 0.6 per cent and orders in hand had risen by 1.3 per cent.

Stagnation

Economists say the declining figures had been expected against the background of economic stagnation.

Martin Neff at Credit Suisse said there was now some doubt whether there would be a strong economic performance in the second half.

The figures confirm a study in February by UBS, Switzerland’s largest bank, which said that the cyclical upswing in the industrial sector had reached its peak and there would be a moderate slowdown in growth in the first quarter.

The quarterly UBS survey of around 300 industrial companies provides an indication of short-term trends in the Swiss economy.

It added that the growth drivers were shifting towards those industrial sectors with a stronger domestic bias.

While export sectors such as machinery, electrical engineering and chemicals and pharmaceuticals were expecting to see a marked slowdown in growth, the food, timber, furniture, paper, printing and graphics industries were all hoping for a major acceleration in the pace of business.

Rates unchanged

Four days ago, the Swiss National Bank kept short-term interest rates unchanged and signalled it was in no rush to raise them until it saw firm signs of recovery in the export-dependent economy.

The bank’s president, Jean-Pierre Roth, spoke of “lacklustre economic activity” but there were no signs of any cyclical downturn.

In its regular quarterly review, the bank said it now expected the economy to grow by one per cent this year, below its previous forecast of around 1.5 per cent, but added that it saw growth accelerating in the second half of the year.

swissinfo with agencies

Key facts

In the first quarter, industrial sales went up by 0.6 per cent compared with the same period last year.
Industrial production went down by 0.3 per cent, while orders contracted by 1.5 per cent.
Swiss industrial production in 2004 rose by 4.3 per cent compared with the previous year.