Industrial Production Recovers in March: Strong Franc Digested?

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George Dorgan
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The sector that got hit most by the sudden appreciation of the Swiss franc, was industrial production. They must compete with Germany, that benefits of the weak euro. The newest data from March show that this sector recovered. This opens the question again, if the Swiss franc is really overvalued. Certainly not against the dollar, other sectors like pharmaceuticals and chemicals export at lot to the United States.

Further explanations on this press release:

The secondary sector consists of

• construction: building of houses and facilities and civil engineering. It is hence focused on the local economy
• industrial production : industry, e.g. machinery and electronics: Strong focus on exports.

Turnover (i.e. quantities of industrial production multiplied with nominal prices in CHF) is in nominal terms.
It is not upwards adjusted by the negative inflation or the strong franc. Even if turnover in CHF terms has fallen against 2015, it has strongly increased in euro terms.

Production, orders and turnover statistics of the secondary sector in the 1st quarter 2016

Renewed increase in Swiss secondary sector production

Neuchâtel, 26.05.2016 (FSO) – Industrial production in the secondary sector (industry and construction) rose by 1.0% in 1st quarter 2016 in comparison with the same quarter a year earlier. This is the first increase since 4th quarter 2014.

Turnover (i.e. quantities of industrial production multiplied with nominal prices in CHF) fell by 1.5%. This is shown by provisional results from the Federal Statistical Office (FSO).

In comparison with the previous year industrial production declined in January by 3.5%. It registered an increase in February of 0.7% and in March of 6.2%.

For the whole of 1st quarter 2016 production increased by 1.0% in comparison with the same quarter a year earlier.

The “Manufacture of refined petroleum and chemical products” sector reported an unusual development (+20.9%).

Construction increases:  +1% against Q1/2015

Construction production increased by 1.0% in 1st quarter 2016 in comparison with the same quarter a year earlier. Production declined by 2.5% in building, civil engineering in contrast registered an increase (+9.6%). Lastly, specialized construction activities registered an increase of 0.2% in their production.

Decline in secondary sector turnover

Industrial turnover in January fell by 6.2% in comparison with the previous year, and in February (-2.5%) and rose in March (+3.0%). For the whole of 1st quarter 2016 in comparison with the same quarter a year earlier, turnover registered a decline of 2.0%.

Construction turnover rose by 1.1% in 1st quarter 2016 in comparison with the same quarter a year earlier. Turnover fell by 2.2% in building, Civil engineering registered an increase of 9.5%, specialised construction activities an increase of 0.4%.

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