KOF Business Situation Indicator: Swiss Economy Picks Up Slightly – Manufacturing Remains Under Pressure  

The great majority of sectors reported an easing of the business situation in November. In the construction, project engineering, retail and financial services sectors, the business situation was more positive than in the preceding month. By contrast, the situation continued to deteriorate in the manufacturing industry, especially among export-oriented companies. Swiss enterprises are also affected by international reluctance to invest. Wholesalers, the hotel and catering companies and the other service providers were last surveyed in October. At the time, the situation was slowing down in all three sectors (See Table 3).

Regional betrachtet, entwickelt sich der Geschäftslageindikator sehr unterschiedlich (siehe Graph 7). Während sich die Geschäftslage in der Zentralschweiz und in der Ostschweiz verbessert, ist sie im Espace Mittelland und in der Region Zürich ungünstiger als im Vormonat. Nur wenig verändert zeigt sie sich in der Nordwestschweiz, im Tessin und in der Region Genfersee.

The KOF Business Situation illustrates the current economic situation of businesses. On the other hand, the KOF Economic Barometer is an indicator of prospects for the economy. The Economic Clock shows that prospects worsened in the autumn of last year, following a largely positive 2018 in economic terms (See Graph 8). The KOF Economic Barometer has fallen to below its long-term average. In addition, the business situation has been noticeably worsening. At present, the Economic Clock is not indicating an easing of the economic situation.

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. 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 Economic Clock (Graph G 8) plots the Business Situation Indicator against the KOF Economic Barometer. The Business Situation indicator represents the current economic situation, whilst the Barometer provides an early indicator of any changes in activity. The clock can be divided into four quadrants. During the recovery phase the business situation is below average, whilst growth prospects are above average. During the boom phase both the business situation and prospects are above average. During the cooling phase the business situation is below average whilst prospects are declining. During the slump phase both the business situation and prospects are below average. Theoretically, the graph should move through the quadrants in a clockwise direction over time.  

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”.