Industry sector feels pinch of strong franc

Swissmem, the umbrella group of electrical and mechanical engineering companies, says orders fell in the second quarter for the first time in 15 months.

This corresponded to a drop of 2.6 per cent compared with the same period in 2010, Swissmem said in a statement on Wednesday.

Nevertheless, the 27.3 per cent growth seen between January and March 2011 meant the overall figure for the first half year was a plus of 11.6 per cent.

The association said pressure was increasing on export prices as a result of the strength of the franc, pointing out that in the second quarter alone prices had sunk by an average of 4.9 per cent.

It added that in the short term only a weakening of the franc – currently approaching parity with the euro and trading at record lows against the dollar – would help.

To this end, Swissmem welcomed the Swiss National Bank’s decision last week to flood another SFr80 billion ($100 billion) into the markets.

The safe haven currency has increased in value since the financial sector meltdown as investors look for less risky places to stash their money. The unresolved debt crises in Europe and the United States have added to the franc’s allure.