KOF Economic Barometer: Outlook remains subdued

The KOF Economic Barometer stands at 93.8 points in September, 0.3 points higher than in August. The slight increase is primarily attributable to bundles of indicators from the manufacturing and other services sectors. Indicators from the finance and insurance sector and for foreign demand are sending negative signals.

The subdued positive developments within the manufacturing sector stem largely from the metal and textile industries, followed by indicators for the mechanical engineering and vehicle manufacturing sectors. Indicators from the electrical industry, on the other hand, recorded a slight decline. Bundles of indicators for the remaining sectors – including chemicals, pharmaceuticals and plastics, and for food and beverages manufactures – remain virtually unchanged compared to the previous month.

In the goods producing sector (manufacturing and construction), indicators assessing production developments and inventories point in a positive direction. By contrast, indicators assessing the employment outlook and the business situation point in a negative direction. Overall, however, the positive developments dominate, resulting in a positive balance for the indicators of the goods producing sector.

KOF Economic Barometer and Reference Series: Annual Update

The annual 2022 revision took place in September. 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. In addition, two methodological changes were made this year, which are discussed in a separate document.

The updated pool of indicators now consists of 608 economic time series. The updated reference series is the smoothed continuous growth rate of Swiss GDP distributed across the three months of a quarter from 2012 until and including 2021, 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 early September 2022. SECO, in turn takes the release of the previous year’s annual GDP data published by the SFSO into account.

The 2021 vintage of the KOF Economic Barometer (published until August 2022) comprised 322 indicator variables. The current 2022 vintage, which is now replacing the 2021 vintage, consists of 364 indicator variables, selected from a pool 608 candidate variables. Compared to the previous vintage, 96 indicators are new and 54 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.