For the first time in five quarters, the MEM industries reported a slight rise in order intake (+0.6%). Unfortunately, this gain was attributable to the exceptionally low level of orders in the year-back quarter (base effect), rather than to a trend reversal. Over the entire nine months of the current year, new orders received by Swissmem reporting companies declined by 7.8% on the same period in 2011.
It is therefore unsurprising that capacity utilization in the MEM industries has fallen below the longstanding average of 86.3% during the course of the year. Utilization remained at a strong 89.9% in the first quarter of 2012, but declined to 85.3% in the second quarter and remained there in the third. The latest figures for the month of October indicate capacity utilization of only 83.7%.
Sharp decline in exports
Goods exports fell by 5.9% in the first nine months compared to the year-back period. The decline affected all major MEM industry product categories (mechanical engineering: -12.8%, metals: -8.2%, electrical engineering and electronics: -4.1%, precision instruments: -0.2%). Exports by region also fell almost across the board. The MEM industries’ exports to the EU dropped by 6.4%, with above-average downturns in the major markets of Italy (-15.9%) and France (-9.6%). The Asian market is also losing its buttressing role. Exports to Asia shrank by 13.8%, with the 36.8% drop registered in China having an especially severe impact. Only shipments to the United States, the MEM industries’ second-largest export market, rose by 4.4%. Nevertheless, the negative trend in exports appears to be tapering off (Q1: -6.4%, Q2: -7.6%, Q3: -3.6%).
By contrast, revenues in the MEM industries rose 1.8% during the first three quarters, including a gain of 2.8% in the third quarter alone. Official Swiss federal export statistics only include goods exports, whereas MEM sales also include all forms of services. This accounts for the significant difference between the export and revenues trends. In particular, the services provided by the MEM industries include maintenance and repairs, which have grown in importance for the MEM sector and are generally less cyclical.
Since the 2008 slump, revenues have stagnated and remain at 2006 levels. The index that measures new orders among Swissmem reporting companies is very low. Moreover, the Swiss franc remains overvalued, and the economic outlook in the MEM industries’ main markets does not appear encouraging. There are no discernible growth stimuli at present. Although there is no reason to expect a collapse either, the situation facing the MEM industries remains difficult.
As a result, the companies in the MEM industries are modest in their expectations for the coming twelve months. 28.2% expect new orders from abroad to deteriorate, while 46.5% expect no change. Only 25.3% expect a recovery
Zurich, 13 November 2012
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Ivo Zimmermann, Head of Communications
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