KOF Business Situation: Uncomfortable Situation for Companies

The business situation indicator is declining almost unanimously across all industries (see T 4). In the manufacturing sector it is falling for the fourth time in succession. For the second month in a row, the retail trade has recorded a clear minus. The situation is also deteriorating for financial and insurance service providers. In the construction industry, the indicator is falling as well, although it had risen even more sharply in the previous month. The project planning sector is the only branche of the economy that is bucking the negative trend; the business situation is improving here. Wholesale, hospitality and other service providers were last surveyed in January. At the time, the business situation cooled in all three economic sectors.

From a regional perspective, the development of the indicator in March was mostly unfavourable (see G 7). The business situation deteriorated in the Zurich, Central Switzerland, Eastern Switzerland and Espace Mittelland regions. It is almost unchanged in Ticino, with a slight improvement in northwestern Switzerland and the Lake Geneva region.

Explanation

Graph G 6 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 7 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”.