KOF Employment Indicator: Industry’s Expectations Deteriorate Significantly

The KOF Employment Indicator currently stands at 2.3 points. In the last quarter it stood at 4.6 points (revised from 5.0 points). Although the decline in this leading indicator of employment trends is not a good sign for the Swiss labour market, it is currently still slightly above its long-term average of close to zero.

The Employment Indicator is calculated from the quarterly KOF Business Tendency Surveys. In October, firms were asked to assess their present staffing levels and to say whether they planned to alter them over the coming three months. On balance, most of the companies surveyed were of the view that their workforce was too small. Consequently, the majority of these firms plan, on balance, to increase their headcount in the next three months. The Employment Indicator represents the average of these employment assessments and expectations.

Industry in the doldrums – banks and construction on a high

Macroeconomic trends conceal the fact that the employment prospects and assessments of industrial firms in Switzerland have deteriorated significantly in recent months. Whereas the Employment Indicator for industry had been close to zero at the beginning of this year, in October it fell to minus 10.5 points. Its current level is therefore similarly low to where it was in the first quarter of 2015, when it suddenly plummeted to minus 11.8 points after the cap on the Swiss franc was abandoned.

These results suggest that workers at Swiss industrial companies could well be facing tough times ahead – quite the opposite of the prospects for employees in construction, banking and other services. Most of the firms surveyed in these sectors plan, on balance, to increase their staffing levels. Their employment indicators are therefore high. The banking industry’s indicator is actually at its highest level since 2001.