ZURICH--Switzerland's manufacturing output rose in May suggesting companies are coping with the stronger franc and the country may avoid an economic recession.
The Swiss Purchasing Managers' Index rose 1.5 points to a seasonally-adjusted 49.4 points from 47.9 points in April, data released Monday showed. The May reading was above an economists' average forecast of 48.1.
The Swiss index remains below the 50-point level, which signals a contraction in industrial output.
But the figures for May showed that "industrial momentum appears to have only marginally slowed," said analysts at Credit Suisse Group AG, which co-compiled the index.
The survey showed the backlog of orders increased for the first time since the Swiss National Bank scrapped its 3 1/2-year policy of limiting its gains to 1.20 per euro, the currency of Switzerland's biggest export market.
Manufacturing fell sharply in the aftermath of the Swiss National Bank's decision Jan. 15, and has steadied around 48 points.
The Swiss currency is still around 14% stronger than before the repeal of the franc's cap, and was last at around 1.033 per euro.
The latest PMI is broadly in line with the Swiss KOF leading economic indicator, a forecast for the development of the Swiss economy over a six-month period, which edged higher last month.
Zurich-based KOF said in March that the Alpine country's economy could avoid a recession as long as the franc steadies around levels of 1.05 to the euro, but forecasts anemic growth of just 0.2% this year.
Data last week showed the Swiss economy shrank in the first three months of the year after 13 straight quarters of growth. The 0.2% contraction was attributed largely to the negative impact of the franc on demand for Switzerland's pharmaceuticals, chemicals and machinery goods.
The franc's appreciation--since it was allowed to float free of its ties to the euro--could trigger a technical recession, or two successive quarters of contraction, but the economy should avoid a full-year recession, according to the KOF and BAKBasel economic institutes.
