ZURICH, Aug 2 (Reuters) - Activity in Swiss industry in July dropped to its lowest level in a decade, an indicator showed on Friday, as the U.S.-Sino trade war increasingly weighs on the country's export-reliant economy.
The signal of an economic slowdown comes with the Swiss National Bank already under pressure to relax further its ultra-loose monetary policy to rein in a strong Swiss franc.
The central bank in June blamed trade tensions for a spike in the safe-haven franc, which makes Swiss products more expensive on the world markets.
The purchasing managers' index (PMI) for the manufacturing sector fell by three points to 44.7 points month-on-month, hitting its lowest level since July 2009, purchasing managers' association Procure.ch and Credit Suisse said.
The last time the seasonally adjusted manufacturing PMI indicated growth -- with a reading above 50 points -- was in March this year.
Credit Suisse economist Maxime Botteron pointed to the trade conflict between the United States and China. "This is affecting the euro zone, which is an important trade partner of Switzerland, and therefore indirectly Switzerland as well."
Engineering companies' exports to the euro zone fell markedly, Botteron added.
Credit Suisse and Procure.ch said order books continued to shrink in July to their lowest level since April 2009, which would likely weigh on production in the months ahead.
Companies are still optimistic despite weak demand, the statement said.
There was no evidence yet that the slowdown has spread to the labour market "in a sign that companies remain confident and likely assess the current slowdown as temporary", it said.
Switzerland's unemployment rate is among the lowest in Europe. Last year it fell to 2.5%, the lowest reading since 2002, and stood at 2.1% in June this year. (Reporting by Thomas Seythal in Berlin and Angelika Gruber in Zurich)