China's economic woes now seem to be making themselves felt in the Swiss watch industry, where exports of timepieces fell substantially last month.

The Swiss watch industry started the second half of the year with a decline in exports, triggered in part by a double-digit drop in exports to China, its second-largest market after the US, according to July data from The Federation of the Swiss Watch Industry on Tuesday.

Overall exports of watches fell 0.9 percent in July from a year ago and by 1.2 percent in Switzerland's top 30 export markets, as shipments to China fell 16.6 percent from a year ago to 262.9 million Swiss francs  ($298.7 million). To be sure, one month of data doesn't make a trend, something the Federation also pointed out. It said a negative base effect explained the decline in exports to China and Singapore. 

Exports to Singapore were down 7.1 percent to 130.5 million francs, while Hong Kong showed resilience, with an increase of 6.3 percent to 182.3 million francs. The association said that the results for China and Singapore «will not have a significant impact on the general trend or forecasts for 2023.»

The US remains the top export market by a wide margin, and exports in July rose 5.2 percent to 340 million, according to the Federation.

Canary in the Coalmine?

A deeper look at the numbers shows what could be a revealing dynamic. All categories of watches up to 3,000 Swiss francs showed declines in both the value and volume of imports, with the largest drop for timepieces costing between 500 and 3,000 francs which fell 12 percent in both categories.

At the same time, watches costing over 3,000 francs saw the value of exports rise 2.2 percent from a year ago, while the number of watches shipped abroad fell by 2.8 percent. So the high-end is paying more for watches. 

Last year, Swiss watch exports totaled 24.9 billion Swiss francs, of which China accounted for 2.6 billion francs. Unless developments turn very dire, that's a record that is on track to be beaten this year. Year-to-date figures through July show exports at 14.6 billion francs, up nearly 11 percent over the same period a year ago.

Time will tell if this month's decline is a blip or a canary in a coal mine.