Swiss watch shipments slide more than 20% Swiss exports recover

Geneva: Swiss watch exports posted their seventh consecutive monthly drop of more than 20 per cent in July as the recession-induced luxury-goods slump persisted in the US and Hong Kong, the two biggest markets.

July exports slid 26 per cent to $1.1 billion (Dh4 billion) last month, the Federation of the Swiss Watch Industry said. Shipments tumbled 32 per cent in June, the biggest monthly decline in at least two decades.

Exports began declining in November, after the collapses of Lehman Brothers Holdings and Bear Stearns spooked bankers into paring their spending. Shipments to Hong Kong, whose mainland-Chinese visitors make the city the world's biggest watch market, fell 32 per cent in July, a seventh consecutive drop.

There are some signs the market has turned since then, with Swatch Group last week saying that sales show signs of recovery. Nick Hayek, chief executive of Swatch, the world's biggest watchmaker, last week called the current timepiece market "the biggest headache" and a "big opportunity."

"Swiss watch industry trends will remain weak for another few months," Citigroup analyst Thomas Chauvet wrote yesterday, adding that the fourth quarter may bring a "potential recovery" as economic growth improves. He forecast the export drop will ease to 15 per cent for the full year as comparisons to year earlier periods become more flattering.

In the US, the second-largest market, yesterday's figures show that exports tumbled by 39 per cent, though that was the smallest decline since January.

The US watch and jewellery market has had bankruptcies in the past year. Finlay Enterprises, the New York-based jewellery retailer filed for court protection earlier this month and will hold an auction to sell its business and assets.

Geneva (Bloomberg) Swiss exports rose and investor confidence jumped to a three-year high, adding to recent signs from the euro area and US economies that the worst of the global recession may have passed.

Sales abroad, adjusted for seasonal swings and inflation, increased 4.1 per cent in July from the previous month, when they fell 1.4 per cent, the Federal Customs Office said. Imports fell 1.7 per cent. The trade surplus widened to 2.35 billion francs ($2.2 billion).

The economy of the euro region, the biggest buyer of Swiss products, barely contracted in the second quarter as Germany and France unexpectedly returned to growth.

Nestle SA, the world's largest food company, on Aug. 12 said it expects "organic" sales growth to accelerate in the second half of the year.

"The stimulus from the global economy seems to have an impact on Switzerland," said Alessandro Bee, an economist at Bank Sarasin in Zurich. "It looks like a stabilization on a low level."

An index of investor and analyst expectations for Switzerland's economy in the next six months jumped to 18.6 from zero in July, the ZEW Center for European Economic Research and Credit Suisse Group AG said in a separate report. The August reading is the highest since July 2006.

Switzerland's economy contracted at the fastest pace in almost 17 years in the first quarter as exports plunged 5.4 percent. Foreign sales account for about half of Swiss gross domestic product. The Swiss central bank forecasts the economy will shrink as much as 3 percent this year.