KOF Business Situation Indicator falling back
The KOF Business Situation Indicator fell back in September (see chart G 13). This meant that it could not quite maintain the higher levels it had attained during the summer months of July and August. However, firms’ expectations about developments over the next six months continue to improve. The Swiss economy is on a bumpy road to recovery.
Following a widespread improvement in the business situation across the sectors surveyed in August, the trend in September was again mixed. Business activity at financial and insurance service providers continues to increase, while it is stable in the project engineering sector. The situation in the construction industry also remains virtually unchanged. In contrast, business in the manufacturing and retail sectors is deteriorating (see table T 1).
Following a widespread improvement in the business situation across the sectors surveyed in August, the trend in September was again mixed. Business activity at financial and insurance service providers continues to increase, while it is stable in the project engineering sector. The situation in the construction industry also remains virtually unchanged. In contrast, business in the manufacturing and retail sectors is deteriorating (see chart G 14).
The KOF Business Situation Indicator illustrates companies’ current business situation. The KOF Economic Barometer, on the other hand, is an indicator of the economic outlook. The Economic Barometer shows that there were signs of economic recovery in the first half of 2024. Although this recovery has continued in the second half of the year, it is fragile.
Explanation:
Chart G13 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 G14 shows the business situation in the main regions 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, for example, indicates that the situation has improved compared with the previous month.
The Business Situation Indicator in the KOF Business Cycle Clock (chart G 15) 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 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.
The KOF Business Situation Indicator is based on more than 4,500 reports from firms in Switzerland. Companies in the manufacturing, retail, construction, project engineering, and financial services and insurance industries are surveyed monthly. Businesses in the hospitality, wholesale and other services sectors are surveyed during the first month of each quarter. These firms are asked, among other things, to assess their current business situation. They can rate their situation as either ‘good’, ‘satisfactory’ or ‘poor’. The net balance of their current business situation is the difference between the percentages of ‘good’ and ‘poor’ responses.
Contact
KOF Konjunkturforschungsstelle
Leonhardstrasse 21
8092
Zürich
Switzerland