Gloomy outlook for the luxury goods industry

Despite a 6.9% increase in watch exports (in francs) in August, Swiss luxury companies are still forecasting a weakening in demand for the rest of the year.

Exports were buoyed by the most expensive watches (in the category above 3,000 francs, by production value), which rose by 5% in volume and 15% in value. Conversely, exports of watches with a producer price of less than 3,000 francs fell by 11% in volume and 14% in value. Overall, exports fell by -10% in number of watches.

The sharp drop is due to the slowdown of the Chinese consumer, the second largest market for watch manufacturers behind the USA. Exports to China are down -6%, and those to Hong Kong are down -11%.

The Swiss watchmaking federation has called on the SNB to take measures to weaken the Swiss franc, even if this does not fundamentally solve the problem of weak Asian demand. In return, some manufacturers are cutting costs and resorting to short time working for a minority of their employees.