Germany? Actually no.
Based on PMI indices, German manufacturing is indeed expanding faster than most of the world, notching a 58.4 reading in June according to the Wall Street Journal, and we’ve seen this outperformance attract blame from other European nations for the Eurozone’s problems.
Greece, for example continues to experience a manufacturing contraction, even as most of the world is expanding to some degree. French manufacturing is expanding, but at a slower pace, achieving a PMI of 54.8 in June. China’s PMI was 52.1 and America’s was 56.2. Greece’s PMI was 42.2.
Yet one nation who isn’t jealous of Germany’s manufacturing strength is Switzerland, which is showing itself competitive in more than banking.
Switzerland, nestled at the centre of crisis-struck Europe, achieved a PMI of 65.7 in June, which indicates the most rapid expansion of any major economy in the world, even if this reading fell slightly from 66.4 in May.
Moreover, Switzerland’s performance is particularly impressive considering that the Swiss franc has strengthened against both the euro and the dollar over the last month, making Swiss products more expensive abroad. The franc has been strengthening over the long term against these currencies as well. You can’t blame the euro for Switzerland’s strong performance, as can be done with Germany vs. weaker Eurozone nations.
Perhaps Switzerland offers proof of how a country can have competitive manufacturing without a weak currency or armies of low paid workers.
(Euro/Swiss Franc chart above)