KOF Economic Barometer: Dark clouds loom over the economy

The KOF Economic Barometer declines by 5.1 points in July to an index level of 90.1 (from a revised 95.2 in June). This is the third time in a row that the barometer value is below its long-term average, which it now misses by almost 10 points (which is in statistical terms one standard deviation).

The retreat in July is led by the bundle of indicators for manufacturing. But the outlook is also much less favourable than before in accommodation and food service activities, other services, and financial and insurance services. The negative tendency is also evident in the bundle of indicators for private consumption in general. The decline is dampened somewhat by the indicators for construction and foreign demand.

In the goods producing sector (manufacturing and construction), indicators for almost all aspects of business activity are falling. The development is most pronounced for the order situation and the general business situation. The only aspect for which the indicators are clearly developing positively is the competitiveness situation.

Within manufacturing, the outlook is bleaker for almost all sub-sectors. The negative development is strongest in machinery and equipment manufacturing and in the chemical and pharmaceutical industries. These are followed in their downward slide by the textiles and clothing producers, the electrical industry and the food and beverages producers.