The outlook for the Swiss labour market continues to improve

The KOF Employment Indicator rose again significantly in July. It now stands at 7.2 points. In the second quarter of 2021 it was still at zero points (revised from -1.8 points). This means that the indicator has made up for the slump it suffered due to the COVID-19 crisis just over a year ago. A comparably positive level was last observed in the fourth quarter of 2010 after the financial and economic crisis. The KOF Employment Indicator is a leading indicator of the change in employment throughout Switzerland over the next three months. The high level of the indicator therefore points to strong job growth in the coming months.

The employment indicator is calculated based on the quarterly KOF Business Tendency Surveys. The evaluations for the third quarter are derived from the responses of more than 4,500 companies that were surveyed in July about their employment plans and expectations. On balance, the companies surveyed assess the current number of employees as too low. Employment expectations are even more positive; there are significantly more companies that want to increase the number of employees in the next three months than there are companies that expect to cut jobs. In fact, employment expectations in the surveys are more positive than they have been for more than ten years.

Positive development in most sectors

The recovery of the overall indicator is broad-based as most sector-specific employment indicators have risen strongly. Particularly noteworthy is the development in the manufacturing sector. In this sector, the majority of firms assess current employment as too low and would like to expand the workforce considerably in the next three months. Comparably positive values of the sector indicator have not been achieved in the manufacturing sector for more than ten years. Employment indicators also improved in construction, retail trade, wholesale trade and other services.

The improvement also includes in the hospitality industry. The indicator still shows a negative value. However, the sector indicator has recovered tremendously in the last six months. There are now even more companies in the sector that expect to expand their workforce in the coming months than those that wish to cut jobs.

Banks and the insurance industry are the only exceptions to the generally positive development. The employment indicators in both sectors are developing independently of the COVID-19 crisis and have both deteriorated slightly since the second quarter. The employment indicator in the banking sector has been below the long-term average since the end of 2019.

KOF Employment Indicator (constantly updated)