Swiss PMI plummeted to 35.2 in November from 47.0 last month

In November, the Swiss PMI (sa) fell sharply to 35.2 from 47.0 reported earlier, a much stronger drop than expected by the market and BarCap. All PMI subcomponents were down m/m.

Output plummeted to 27.7 from 49.0 earlier, while purchasing prices dropped to 34.8, down from 44.3 reported for last month.

Also, the quantity of purchases declined to 26.1 from 37.5 earlier, while stock of finished goods fell to 52.5 from 56.0 earlier, suggesting that firms are scaling back their business activities.

Finally, the employment component fell to 46.0 from 49.3, suggesting that the dismal business cycle outlook is about to feed into the labor market sooner or later.

Against the backdrop of plummeting business cycle indicators across the board (note that the KOF index fell 0.33 points m/m in November) and declining CPI headline inflation, we expect the SNB to slash rates further by 50bp in December.

Thorsten Polleit wrote in a Barclays Capital Research report.