At the beginning of the year most companies in the Swiss mechanical and electrical engineering industries (MEM industries) were hoping for their first really good business year since 2007. After strong sales growth of 9.2 percent in the first three months of 2014, there has been practically no growth in sales at all in the second quarter compared to the same period in the previous year (0.1%). For the first half of 2014 as a whole, sales rose by 4.4 percent. The development in exports followed a similar pattern: all in all, exports stagnated in the first half of the year (0.4%). In the second quarter, exports of the MEM industries even declined by 2.3 percent compared with the prior-year period. That said, developments across geographical markets were uneven. Exports to the EU, the MEM industries' largest market, fell by 0.2 percent. By contrast, exports to Asia (+4.6%) and the USA (+1.6%) picked up slightly.
At first glance, the 11.2 percent increase in new orders in the second quarter of 2014 appears to be at odds with the overall picture. This strong rise is deceptive, however: order intake in the previous quarter had been very weak, and the recent increase in new orders reflects this low baseline. The new orders index for the second quarter of 2014 is six percent below its level in the first three months of the year. For the first half of 2014 as a whole, new orders rose by 10.9 percent. Capacity utilization in the sector stood at 86.8 percent in the second quarter of 2014 (first quarter: 88.1%), which is slightly above the long-term average of 86.1 percent. The latest KOF Swiss Economic Institute survey indicates that capacity utilization increased marginally to 88.0 percent in July.
The general sentiment in the industry is correspondingly gloomier. Whereas at the beginning of the year 54.1 percent of companies surveyed by Swissmem expected new orders to rise in 2014, now only 38.7 percent think that the level of new orders will pick up in the coming 12 months. Currently, most companies (51.6%) expect little change in the present level of business.
Overall, the situation of the MEM industries in the first half of the year can be viewed as satisfactory. However, the figures for the second quarter indicate that the dynamic growth which started in the second half of 2013 has weakened considerably. The reasons for this lie in the crises in the Ukraine and the Middle East. Developments in the performance of the MEM industries in the second half of the year are likely to depend on whether solutions are found to these conflicts or not.
For further information please contact:
Ivo Zimmermann, Head of Communications
Tel.: +41 (0)44 384 48 50 / mobile: +41 (0)79 580 04 84
Philippe Cordonier, Contact for French-speaking Switzerland
Tel.: +41 (0)21 613 35 85 / mobile: +41 (0)79 644 46 77