KOF Business Situation Indicator: business situation slightly improved

With just one exception the Business Situation Indicator is rising in all of the sectors surveyed (see table T 1). Business in manufacturing continues to improve. However, the trend here is not positive across the board. Strongly domestically focused manufacturers in particular are struggling. In addition, the availability of intermediate products continues to cause problems for companies in general. They increasingly consider their own inventories of such products to be too small. The business situation has also improved in financial services and insurance, in the project engineering sector and – albeit modestly – in the construction industry. Bucking this fairly encouraging trend, business in the retail sector is slowing for the second month in a row. These are the first signs that things are returning to normal here.

From a regional perspective the picture in September was not the same everywhere (see chart G 17). The situation improved significantly in the Zurich region and moderately in Central Switzerland. Business in Eastern Switzerland and Espace Mittelland was slightly less encouraging than in the previous month. The situation deteriorated more markedly in Ticino, Northwestern Switzerland and the Lake Geneva region.

The KOF Business Situation Indicator highlights companies’ current business situation. The KOF Economic Barometer, on the other hand, is an indicator of the economic outlook. The Economic Clock shows that the economy was abruptly slowed by the pandemic in April 2020 (see chart G 18). After a rather disappointing start to 2021 the Swiss economy subsequently recovered. Recently, however, this momentum has weakened.

Explanation:

Chart G 16 shows the KOF Business Situation Indicator across all sectors included in the survey. The business situation of sectors that are only surveyed quarterly is kept constant in the interim months.

Chart G 17 shows the business situation in the main regions as defined by the Swiss Federal Statistical Office. The regions are coloured differently to reflect their business situation. The arrows within the regions indicate the change in the situation compared with the previous month. An upward-pointing arrow indicates that the situation has improved compared with the previous month.

The Business Situation Indicator in the KOF Economic Clock (Chart G 18) is plotted against the KOF Economic Barometer. The indicator reflects the current business situation, while the barometer is a leading indicator of changes in activity. The clock can be divided into quadrants. During the recovery phase the business situation is below average but growth prospects are above average. At the peak of the economic cycle the situation and prospects are both above average. During the slowdown phase the situation is above average and the prospects are below average. At the bottom of the economic cycle the situation and outlook are both below average. Ideally the chart runs through the quadrants in a clockwise direction.