KOF Economic Barometer: Constant Level at the End of the Year

The KOF Economic Barometer stands at 104.3 points in December, 0.6 points higher than in November (revised from 103.5 to 103.7 points). The slight increase is driven by bundles of indicators from the manufacturing sector and private consumption. An additional positive signal is sent by indicators for the financial and insurance service sector. By contrast, negative impulses are coming from indicators for foreign demand.

The positive developments within the manufacturing sector stem primarily from indicators for the machine and vehicle construction industry, followed by indicators for the textile and clothing industry, the electrical industry as well as the paper and printing sector. By contrast, sub-indicators for the wood, glass, stone and earth sector fall. Bundles of indicators for the remaining sectors – including the chemicals, pharmaceuticals and plastics sector, the metal industry and the food and beverages sector – remain virtually unchanged compared to the previous month.

In the goods producing sector (manufacturing and construction) indicators for the assessment of new orders and the purchase of intermediate goods point in a positive direction. By contrast, all other sub-indicators in the goods producing sector remain nearly constant compared to the previous month.
 

KOF Economic Barometer and reference time series: annual update

The annual 2020 revision took place in October. These updates always comprise the following steps: a redefinition of the pool of indicators that enter the selection procedure, an update of the reference time series and a renewed execution of the automated variable selection procedure.

The updated pool of indicators now consists of 610 economic time series. The updated reference series is the smoothed continuous growth rate of Swiss GDP distributed across the three months of a quarter, based on the official quarterly real GDP statistics, adjusted for the effects of major international sporting events, as released by the Swiss State Secretariat for Economic Affairs (SECO) in late September 2020. SECO, in turn takes the release of the previous year’s annual GDP data published by the SFSO into account. The 2019 vintage of the KOF Barometer (published until September 2020) comprised 376 indicator variables.

The current 2020 vintage, which is now replacing the 2019 vintage, consists of 335 indicator variables, selected from a pool 610 candidate variables. Compared to the previous vintage, 59 indicators are new and 100 dropped out of the set of selected indicators. The Barometer is the rescaled weighted average of the selected indicators, where the weights correspond to the loadings of the first principal component.