Switzerland's industry is struggling with a drop in demand and sales, and the strong franc is causing extra difficulties for exporters, surveys showed today.

The sale of Swiss industrial products fell in the first nine months of this year by 4.2 percent, while exports decreased by 3.6 percent, the association Swissmem announced.

The mood is bad at smaller manufacturing companies and the business climate index has fallen to its lowest level since the start of 2021, according to a separate study by the association Swissmechanic.

Almost three quarters of companies consider the business environment unfavorable and only one percent positive, according to Swissmechanic research in the third quarter.

Capacity utilization at small manufacturing firms now stands at 81 percent and is also at its lowest level since January 2021.

Manufacturing is the cornerstone of the Swiss economy, accounting for 18 percent of gross domestic product. Swiss companies are also worried about escalating trade tensions.

"Companies are quite pessimistic at the moment," said Swiss mechanics director Juerg Marti, adding that about a third of small industrial companies have already cut jobs and that others may follow suit.

"The strong franc is causing them difficulties and the decline of the German economy has also damaged them. Geopolitical uncertainty is very pronounced, which further worsens the situation", he added.

The Swissmem report shows a slight improvement in the third quarter, but this does not mean recovery as it shows a comparison with the weak third quarter of 2023.

"At best, we can expect stabilization in the coming year," said Swissmem director Stefan Brupbacher, adding that Switzerland's export-oriented technology sector could also suffer in an eventual trade war between the US, China and the EU.