ZURICH. Switzerland's machine builders have recorded a third consecutive quarter of order growth, the clearest signal yet that the industry's long destocking slump is over. The recovery remains uneven and fragile, but order books that sat below production for two years have finally crossed into positive territory, giving factory owners from Solothurn to St Gallen grounds for cautious hiring.
Order intake across the mechanical and electrical engineering industries rose 6.8 per cent in the second quarter compared with a year earlier, following gains of 4.1 and 5.3 per cent in the prior two quarters. Capacity utilisation has climbed back to 86 per cent, still below the pre-pandemic norm but comfortably above the trough. Employment in the sector has stabilised at around 320,000.
The turnaround ends a punishing stretch. When supply chains normalised after the pandemic, customers discovered they had double-ordered and stopped buying; high interest rates then chilled investment in new equipment across Europe. Swiss firms, with their concentration in precision machinery, packaging lines and medtech tooling, felt the downturn later than German peers but almost as deeply.
The recovery's geography is distinctive. Orders from Asia, particularly India and Southeast Asia, are growing fastest, while demand from Germany, the sector's largest single market, is only now turning positive. Firms supplying the watch corridor of the Jura arc report steadier schedules after two volatile years, and makers of equipment for battery and semiconductor plants describe pipelines that stretch into next year. Export managers describe a two-speed market in which Asian customers order quickly while European committees deliberate.
Component suppliers and the service businesses that maintain installed machines are gaining first, since customers resume maintenance before committing to new lines. The squeeze persists for builders of standard machines competing on price against Asian rivals, and for suppliers tied to the European car industry, whose electrification pause has stranded investments on both sides. Hiring, where it happens, is concentrated in controls engineering and software rather than on the assembly floor.
The industry association has welcomed the numbers while refusing to declare victory. Swissmem notes that order levels remain below their 2022 peak and that the strong franc erodes the franc value of euro-denominated contracts. Its quarterly survey shows a majority of members planning to hold staffing steady rather than expand, a stance that speaks to scars from the last downturn.
“Our members believe the order books, not the headlines,” said a spokesperson for Swissmem. “Three good quarters repair a balance sheet; they do not yet justify a new hall.”
Policy support has been modest by design. The sector benefits from export risk insurance and trade missions rather than subsidies, and its main requests of Bern concern energy costs and the smooth implementation of agreements with the European Union, on which much of its supply chain depends. The franc's strength has revived quiet calls for the central bank to lean against appreciation, calls the industry makes more in hope than expectation.
The next quarterly survey, due in October, will show whether the summer lull interrupted the trend. Economists will also watch the purchasing managers' indices in Germany and China, which lead Swiss orders by several months, and the investment intentions of the pharmaceutical industry, whose construction boom has become an important source of domestic demand for precision equipment. A further strengthening of the franc, however, could flatten the curve faster than any demand shock.
Machine building is Switzerland's largest industrial employer and a bellwether for the Mittelland economy. When its order books grow, so do the order books of the steel traders, logistics firms and software houses around it. The sector's recovery, if it holds, would remove the main remaining drag on an otherwise solid labour market.
Three quarters of growth do not make a boom, and nobody in the industry is using that word. But after two years of contraction, the direction has finally changed, and the companies that kept their apprentices and their engineers through the trough are now being rewarded with the first pick of the recovery's orders.