(Adds details, analysts' comments, background)
By Sven Egenter
ZURICH, March 2 (Reuters) - Switzerland's manufacturing sector slid deeper into recession in February as output shrank and firms axed jobs at a faster rate, a fall in the country's PMI to a new all-time low showed on Monday.
The recent slew of dire economic news adds pressure on the Swiss National Bank to take unconventional measures to support the economy as interest rates are close to zero, with the focus on a speech by SNB chairman Jean-Pierre Roth on Monday evening.
The Credit Suisse/SVME purchasing managers' index dropped to
32.6 in February from 35.0 the previous month, Credit Suisse
said, below the median forecast in a Reuters economists' poll of
34.5 points.
"It has been out of the growth zone, which starts at the 50-point mark, for six months now," the Credit Suisse economists said. "What's more, the downturn has now definitely reached the labour market, as illustrated by a 6.4 point fall in the employment component to 35.7 points," the economists said.
"This is its biggest drop since April 1996, as well as its lowest ever level since the survey began in 1995."
The drop in the PMI echoes the KOF growth barometer, which also hit a record low in February, adding to signs that the Swiss economy faces a much deeper recession than anticipated only a couple of months ago.
"Swiss manufacturing has clearly been hit sharply by the crisis, and production is trending down," said Sarasin analyst Jan Poser. "At some point we might also start worrying about deflation."
SNB board member Thomas Jordan said last month that the central bank may have to cut its forecast from December when it predicted a decline in gross domestic product of up to 1 percent. [ID:nN16323669]
Exporters are suffering heavily from a deepening recession in key markets such as the United States and Germany, and the country's large banks have been hit hard by the credit crisis.
"The PMI extends the view that Q1 is set to post a further sharp fall in GDP, following on from a Q4 GDP contraction which we expect at -0.6 percent quarter-on-quarter," 4Cast analyst Saara Tuuli said.
"The SNB have emphasised 'unconventional measures' such as FX intervention and quantitative easing, yet a further rate cut in March cannot be ruled out," she said.
Fourth quarter gross domestic product data are due on Tuesday and the central bank holds its next quarterly meeting on March 12.
The SNB has slashed its target rate for the 3-month Swiss franc LIBOR aggressively since October to just 0.5 percent. (Reporting by Sven Egenter, editing by David Stamp)