Swiss watch exports suffered their steepest fall this year in September, pulled down by a 50% plunge in sales to China, the industry’s federation said on Thursday.

It marks the latest sign of weakening demand in the world’s second-largest economy, which has hit Europe’s luxury sector.

Sales to Hong Kong also fell 34.6% during the month from a year earlier, according to the Swiss Watch Industry Federation.

Swiss watch exports are a closely watched indicator for the overall health of the luxury goods sector.

Across all markets, exports fell 12.4% in September to CHF2.1 billion ($2.5 billion).

Sales also fell by 13.9% to Singapore and by 19.8% to South Korea.

Sales to other European countries dropped 3.4%, while the only major markets to grow were the USA, up 2.4%, and Japan, up 2.0%.

After hitting a record high in 2023, Swiss watch exports are down 2.7% in the first half of this year on falling Chinese demand as the country faces a real estate crisis and rising youth unemployment.

China is a key market for Swiss watches, representing 10.3 % of all exports in 2023.

But that figure underestimates China’s importance given purchases by Chinese tourists during trips to Europe, especially before Covid pandemic lockdowns.