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Swiss GDP Surges 1.5% in Q2 as Industry Drives Growth
Swiss economy accelerated sharply in Q2, with sport-event-adjusted real GDP growth rising from 0.4% to an estimated 1.5% q/q, according to SECO’s flash estimate. That would mark strongest quarterly expansion since 2021 based on current series. SECO said industrial sector made largest contribution to growth, driven particularly by chemicals and pharmaceuticals, while services also expanded overall.
Strength extends rebound already visible in Q1, when manufacturing grew 1.5% q/q after contracting 3.0% in Q4. But Q2 flash provides no detailed sector breakdown beyond SECO’s broad assessment, so it is too early to judge how widely expansion spread beyond chemicals and pharmaceuticals. Flash estimate is also based partly on estimated inputs and may be revised when full quarterly GDP data are released.
Still, headline result points to considerably stronger Swiss growth momentum than previously evident. A 1.5% quarterly expansion led by industry reduces concern that economy is being materially constrained by current financial conditions and gives SNB less reason to respond to growth weakness. Key question for final release will be whether exceptional industrial contribution was accompanied by broad gains elsewhere or whether Q2 strength was concentrated in a narrow group of export-heavy sectors.
Key Takeaways
- Swiss sport-event-adjusted GDP growth accelerated from 0.4% to an estimated 1.5% q/q in Q2, potentially strongest quarterly expansion since 2021.
- Industry made largest contribution, led especially by chemicals and pharmaceuticals, while services also expanded.
- Q2 strength builds on manufacturing rebound already seen in Q1, when output rose 1.5% after a 3.0% contraction in Q4.
- Flash estimate is based on incomplete early data and may be revised, while detailed sector breakdown is not yet available.
- Headline result points to a much stronger Swiss growth backdrop, reducing concern that economy is being materially constrained by current financial conditions.
- For SNB, stronger growth lowers urgency to respond to economic weakness, though final policy implications depend on whether expansion proves broad based rather than concentrated in pharma-led industry.
NZ PMI Manufacturing Cools to 54.3 After June Surge, Expansion Holds
New Zealand manufacturing remained firmly in expansion in July, though momentum moderated after June’s exceptional surge. BusinessNZ PMI Manufacturing fell from 60.1 to 54.3, still comfortably above 50 expansion threshold and long-term average of 52.5. All five sub-indices remained above 50, with Production easing from 59.2 to 57.3, Deliveries from 57.6 to 55.8, Employment from 55.6 to 52.8, and Finished Stocks from 56.9 to 53.2.
Most notable slowdown came from New Orders, which dropped sharply from 64.1 to 53.3, suggesting forward demand normalized much faster than current production. Business sentiment was also considerably less upbeat than headline PMI, with 57% of respondent comments negative. Manufacturers continued to cite Middle East conflict, high fuel and raw-material costs, weak customer spending and election uncertainty as concerns, although steady order books and stronger export sales provided some offset.
Overall, July reading looks more like normalization from an unusually strong June than a renewed downturn. As BNZ Senior Economist Doug Steel noted, month-to-month volatility is common and 54.3 is “not an immediate cause for concern.” Still, sharp retreat in New Orders and deterioration in sentiment warrant attention, particularly if cost pressures stay elevated. For RBNZ, data continue to point to an expanding manufacturing sector, but with enough moderation to avoid adding materially to already hawkish policy expectations.
Data Summary
| Component | Current | Previous | Trend |
|---|---|---|---|
| PMI Manufacturing | 54.3 | 60.1 | Slower expansion |
| Production | 57.3 | 59.2 | Slower expansion |
| Employment | 52.8 | 55.6 | Slower expansion |
| New Orders | 53.3 | 64.1 | Sharp moderation |
| Finished Stocks | 53.2 | 56.9 | Slower expansion |
| Deliveries | 55.8 | 57.6 | Slower expansion |
Key Takeaways
- New Zealand PMI Manufacturing fell from 60.1 to 54.3 in July, but stayed above both 50 expansion threshold and long-term average of 52.5.
- Every major sub-index remained in expansion, indicating broad activity stayed positive despite slowdown from June’s exceptional reading.
- New Orders fell most sharply, from 64.1 to 53.3, pointing to much softer forward demand momentum.
- Production remained strongest component at 57.3, while Employment was weakest at 52.8.
- Sentiment was less encouraging than activity data, with 57% of respondent comments negative amid high fuel, freight and raw-material costs, Middle East tensions and cautious customer spending.
- July is best read as normalization rather than a renewed downturn, but weaker New Orders make upcoming surveys important for confirming whether expansion can hold.
Fed’s Goolsbee Sees “Golden Path” Back to 2% as Inflation Data Improve
Chicago Fed President Austan Goolsbee said recent US inflation data have been “a little better,” raising hope that price growth can resume its decline toward Fed’s 2% target as effects of tariffs and Iran-war oil shock fade. Speaking Thursday in an interview with Fox News, Goolsbee said, “If we can get some of this stuff into the rearview mirror then I think we get back on what I was calling the golden path, which is inflation heading back to 2%.” He nevertheless stressed that inflation around 3% remains “too high” even as latest readings provide some encouragement.
Goolsbee acknowledged that disinflation had previously stalled and even started moving in wrong direction, but said recent data may be changing that picture. “For a couple of months, we’ve been getting a little bit better readings and hopefully that will continue,” he said. July CPI and PPI both came in relatively benign this week, reinforcing possibility that earlier tariff and energy shocks are fading rather than becoming embedded in broader price pressures.
For policy, Goolsbee’s remarks support patience while Fed determines whether improvement is durable. He described economy as “fairly stable” and said policymakers are “mostly watching the inflation component,” suggesting there is little urgency to change rates while incoming price data continue to improve. His “golden path” therefore depends on temporary shocks moving into rearview mirror and inflation continuing toward 2% without renewed deterioration.
Key Takeaways
- Chicago Fed President Austan Goolsbee said recent inflation data have been “a little better,” raising hope that disinflation can resume.
- He sees potential return to Fed’s “golden path” if tariff effects and higher oil prices from Iran war move into rearview mirror.
- Goolsbee stressed inflation around 3% is still “too high”, so recent improvement does not amount to an all-clear.
- He acknowledged inflation progress had previously “stalled out a little bit and was going the wrong way,” making latest two months of better readings more significant.
- Broader economy still feels “fairly stable,” leaving Fed primarily focused on whether inflation continues to improve.
- His message supports policy patience: if temporary shocks fade and disinflation persists, Fed can keep rates steady while inflation moves back toward 2%.