KOF Business Situation Indicator: Further Decline in June

At the sector level, the development in June was heterogeneous (see T 1). In the manufacturing industry, the indicator’s downward trend continued and the business situation is now distinctly less favourable than in June of last year. A slight slowdown has also occurred in the construction industry, although the business situation remains positive. The business situation in the construction-related project engineering sector is even better than in the previous month. This suggests a sustained boom in the construction industry. The retail trade is also following a positive trend, with the Business Situation Indicator rising for the third consecutive month. The business situation among the financial and insurance service providers remains favourable. Wholesalers, hotel and catering companies and the other service providers were last surveyed in April. At the time, the Business Situation Indicator had dropped in all three sectors.

At the regional level, the picture is also heterogeneous (see G 6). The business situation in North-West Switzerland is significantly less favourable than in the previous month. While the Business Situation Indicator declined slightly in the Zurich region and hardly changed in Ticino, it went up slightly in Espace Mittelland, the Lake Geneva region and Central Switzerland. The business situation was specifically more favourable in Eastern Switzerland.

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 pursuant to the Federal Statistical Office (FSO). 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, companies 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 on a quarterly basis in the first month of each quarter. Among other questions, the companies are asked 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”.