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Swiss industrial activity in full swing

Zurich / Basel | | Media Releases Switzerland

Activity in the Swiss industrial sector is continuing to run at full speed. According to the latest UBS survey, business accelerated again in the second quarter and the optimistic mood remains intact for the months ahead.

The results of the quarterly UBS business survey of around 330 industrial companies in June confirm that the strong expansion continued through the second quarter of 2006. The companies responding to the survey estimate that momentum may have reached its peak, but their optimism for the third quarter is virtually undaunted.

UBS Business Cycle Indicator peaking
The strength of the economy is reflected in the UBS Business Cycle Indicator, which is calculated from the quarterly survey data and gives a very reliable signal as to Switzerland's near-term economic performance. As a trend barometer for gross domestic product (GDP) it is forecasting year-on-year growth of around 3.5% for the second and third quarters.

Marked surge in second quarter
Companies reported improvements - some of them quite marked - in all aspects covered by the UBS survey for the second quarter, and especially in production, export orders and order backlogs. Total sales grew apace, as in the previous quarter, whereas earnings, although better across the board, could not quite keep pace with volume growth.

Hiring requirements becoming more urgent
Utilization, at 88.7% of technical production capacity, is extremely high and prompted 33% of the companies polled to take on more staff in the second quarter. Only 21% were forced to reduce headcount. The resulting positive net figure of 12% of companies with growing headcounts could even increase further to 14% in the third quarter, to judge by respondents' statements.

Continuing confidence
For the third quarter firms expect business activity to continue strong but then gradually slacken off. Sales and order backlogs will expand at a faster pace, while production and orders should slow somewhat. The small to medium-sized businesses surveyed were marginally more cautious in their assessments than the larger companies.


UBS Business Cycle Indicator and GDP
(Year-on-year change in %)


Data (in %):

Contacts

Alexander Kobler

Wealth Management Research

Tel. +41 44 234 59 43

Karin Schefer

Swiss Economic Research

Tel. +41 44 234 43 94

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