Gloomy prospects for the tech industry

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As the Federal Statistical Office announced on Monday, total output in the secondary sector of the economy, namely industry and construction, increased by 2.9 percent from January to March 2023 compared to the same period last year. In fact, sales increased by 6.1 percent. This means that the increase in both production and sales has been uninterrupted since the first quarter of 2021.

The industry association Swissmem, which represents SMEs and large companies in the Swiss technology industry and therefore many companies from the secondary sector, is pleased with this growth. “We are currently living off the high order workload being processed,” Jean-Philippe Kohl, head of industry association economic policy, told AWP news agency.

However, if you look at the situation in detail, the sub-sectors developed in opposite directions. While the industry has grown significantly, construction has seen a decline.

Industrial production increased by 3.4 percent in the first quarter. Sales increased even more significantly. It increased by 6.4 percent. In the construction sector, production decreased by 1.4 percent in the first quarter. Contrary to production, the turnover in the construction sector also increased considerably. It increased 4.3 percent.

Looking ahead, the situation has deteriorated overall, according to Swissmem. The number of orders received by companies decreased. In addition, so-called purchasing managers indices in all major sales markets are currently below the growth threshold of 50. “This points to contractions,” Kohl said.

The association sees three risks here: First, the weakening of the economic situation. Swissmem, for example, expects further rate hikes from major central banks around the world to slow demand.

Second, Swissmem is concerned about geopolitical risks. “If the Ukraine war escalates, there may be problems with energy supply and price increases,” Kohl said. Third, there is a subsidy race between the EU and the USA. This led companies to move production to North America.

(SDA)

Source :Blick