KOF Business Situation: Indicator Shows Faltering Business at the End of the Year

Broken down by sector, the business trends in December were rather heterogeneous (see T 2). The excellent situation in the project engineering sector improved even further, while the other sectors failed to keep up. Although both retail and manufacturing saw an improvement in their business situation, the gain was rather small. The business trend in the construction industry and the financial and insurance sectors slowed down. Wholesale, hotel and catering and the other service providers were last surveyed in October. Both the wholesale and the hotel and catering sectors reported a slight recovery. In contrast, the other service providers suffered a small setback.

In most sectors, the business situation did not change significantly during 2016. Wholesale was the only sector that saw a considerable improvement. Compared to the beginning of the year, manufacturing, financial and insurance services as well as hotel and catering closed the year in a slightly stronger position. The situation in the retail sector, the other services and the construction-related building trades and project engineering did not change much over the year.

From a regional perspective, the most prominent trend in December was the marked slowdown of the business situation in North-West Switzerland, which was largely due to the manufacturing sector. The indicator also declined slightly with respect to the Zurich and the Lake Geneva regions as well as Eastern Switzerland. Ticino and Espace Mittelland reported little change, while the business situation in Central Switzerland had improved.

Explanations of graphs

Graph G 8 presents the KOF business situation across all sectors covered by the survey. The business situation in sectors which are surveyed on a quarterly basis is kept constant during the intervening months.

Graph G 9 presents the business situation in the main regions according to the Federal Statistics Office. The regions are coloured according to business situation. The arrows in the regions indicate the change in the business situation compared to the previous month. An upward-pointing arrow, for instance, indicates that the situation has improved over the previous month.

The KOF business situation is based on more than 4,500 reports from businesses in Switzerland. Each month businesses are surveyed in the economic sectors of industry, retail trade, construction, project engineering and financial and insurance services. Businesses in the hotel and catering sector, wholesalers and other service providers are surveyed quarterly in the first month of each quarter. Businesses are requested, amongst other things, to assess their current business situation. They may class their situation as “good”, “satisfactory” or “bad”. The balance of the current business situation is the percentage difference between the answers “good” and “bad”.