The watch industry in Switzerland is sending mixed signals, reflecting concerns about a slowdown in key markets.
Swiss watch exports trended upward in August as the demand for timepieces in China and Hong Kong continues to worsen, Bloomberg reported. Last month, shipments increased 6.9 percent by value compared to last year to 2 billion Swiss francs ($2.4 billion), the Federation of the Swiss Watch Industry said on Thursday. While that was more than the 1.6 percent rise recorded in July, the Federation warned that the “outlook for the rest of the year” is “still negative.”
“Despite the increase, which brings the total for the first eight months to 17.1 billion francs ($20.2 billion), the trend is still negative, as is the outlook for the rest of the year,” the report said. “Firms in the sector are lamenting the lack of visibility in the medium term, which is prompting them to be more cautious going forward or even, in some cases, cutting back.”
The latest data showed that shipments to the U.S. jumped 8 percent while exports to China, the second-largest market following America, plummeted 6 percent. Similarly, Hong Kong suffered a whopping 11 percent decline in August. According to the Federation, the mid- and entry-level-priced watch market has been affected the most. For example, watches with an export price below 3,000 francs, or $3,538, dropped 14 percent by value and 11 percent by volume. However, shipments of more expensive timepieces, specifically ones made of precious metals, achieved better results, climbing nearly 5 percent by volume and 15 percent by value.
“The high end of the watch sector continues to do well,” Vontobel analyst Jean-Philippe Bertschy told Bloomberg. “For the other brands, 2024 represents a sharp reset and normalization of growth after the post-Covid boom.”
In an effort curb the strength of the country’s currency, which is currently hurting exporters, the Federation, along with Swiss watchmakers, are turning to the central bank of Switzerland to help weaken the franc. By the end of last year, the franc hit its strongest level against the U.S. dollar since 2015. High-end watch brands including Girard-Perregaux and Ulysse Nardin have also been using a government-backed short-time work program, which pays a portion of the wages for furloughed workers, to prevent job losses amid waning demand.
Swiss watch exports have been up and down in 2024, with the sector seeing its biggest monthly decline in four years this past March—though it generated a record $31 billion in 2023. Only time will tell if the last part of 2024 will be as bleak as predicted.
Authors
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Abby Montanez