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Supply problems beset Swiss manufacturing - PMI data

·1-min read
A worker uses a machine to shape heated wood to runners for a Davos type sled at Swiss sled manufacturer 3R AG in Sulgen

ZURICH (Reuters) - Rising purchase prices and longer delivery times are still posing major challenges for the Swiss manufacturing sector, data from the procure.ch Purchasing Managers' Index (PMI) showed on Monday.

The seasonally adjusted manufacturing PMI slipped to 65.4 points in October from 68.1 in September but remained well within growth territory.

"Procurement problems are likely to be among the factors

contributing to a slowdown in output. Suppliers' delivery times

are still rising, albeit somewhat less broadly than in the previous months. Moreover, purchase prices are widely increasing, with 82% of the respondents facing higher costs for input materials," said economist Claude Maurer at Credit Suisse, which helps compile the index.

Procurement uncertainties have prompted businesses to

replenish inventories, with stocks of finished goods now

being topped up as well as stocks of purchases, he added.

"Higher inventories are something of a double-edged sword for companies, as while they allow goods to be dispatched quickly when demand rises, they become a burden when demand drops. Given the generally positive momentum at present, the trend in inventories is probably a favourable sign for the time being," Maurer said.

The pace of workforce expansion was relatively muted despite solid levels of capacity utilisation and widespread scarcity problems. Only a quarter of businesses were recruiting staff.

The service sector PMI, which is more focused on domestic

consumption, also edged lower in October, but momentum remained higher than average and prices were climbing on a broad scale.

(Reporting by Michael Shields; Editing by Toby Chopra)

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