Swiss watch exports rise

PARIS — Exports of Swiss watches rose 5.3 percent in June, the Federation of the Swiss Watch Industry said on Thursday.

Sales of Swiss timepieces totaled 1.7 billion Swiss francs, lifted by a 4.6 percent rise in Hong Kong, the industry’s largest market. The Hong Kong figures show that market’s recovery is strengthening as it approaches the global average, the federation said.

Considered a barometer for the luxury industry, Swiss watch sales are eyed closely for clues about the appetite for other high-end goods. Optimism has increased since the beginning of the year, following a near-10 percent drop in Swiss watch exports last year.

The federation said first-half figures showed the worst had passed.

“Although Swiss watch industry exports are not equally dynamic everywhere, their overall trend has stabilized, spelling the end of the downturn,” it said, referring to the first six months of the year. This stabilization had not been expected before the end of the year, the federation added.

However, analysts including Thomas Chauvet at Citi sounded a cautious note.

“The June data is likely to be taken positively near-term but we question whether trends are sustainable,” Chauvet wrote in a research note.

Barclays analysts said in a note that the June growth rate of 5.3 percent was “slightly disappointing” after 9 percent growth in May, despite an extra trading day at that time.

Sales in the United Kingdom jumped 35.6 percent in June, benefiting from its weak currency rate. Other important markets, China and Italy, also registered gains, at 11.5 percent and 16.5 percent, respectively.

The U.S. continued to lag other regions, with sales falling 1.3 percent. Weakness in the U.S. in the first half, with exports down 5.9 percent, showed there had been no improvement for more than a year, the federation said, adding there was no reason to expect an uptick there soon.

The federation cited the weakness in U.S. exports, along with ongoing readjustments in European and Asian markets, as reasons for maintaining its overall forecast of “prudent optimism” for 2017 as a whole.

Global growth was led by watches in the 200 to 500 Swiss franc range, which rose 8.5 percent in value terms. Sales of less expensive timepieces fell 3.7 percent.

“The decline in volumes and values of the entry price category could be a testimony of the threat of smartwatches,” Luca Solca, who heads luxury goods research at Exane BNP Paribas, said in a note.

Growth in the higher ranges was brisker, with exports of timepieces priced between 500 Swiss francs and 3,000 Swiss francs range growing 4.8 percent, and watches costing more than 3,000 Swiss francs growing 5.6 percent.

Growth in sales of timepieces made with precious metal advanced 12.6 percent in value, outpacing a 4.7 percent gain in steel pieces, which accounted for more than half of global exports. Bi-metallic watch sales slipped 3.7 percent, and revenues from pieces made with other metals dropped 4.8 percent.

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