Swiss economy recovering slightly during summer

The slight improvement in the business situation in July was mainly due to developments in manufacturing industry. This is remarkable as manufacturing in particular has been suffering from weak activity for some time. This month, however, it has managed to turn a corner. Project engineering firms are reporting a modest improvement on the previous month, although their overall business situation has remained fairly stable for several months. Business activity in the hospitality industry is virtually unchanged.

The business situation is deteriorating in all other sectors surveyed: primarily in retail but also in wholesale, construction, and financial and insurance services as well as – very slightly – in other services.

Manufacturing industry providing a ray of hope; weather conditions hampering growth

All in all, it was manufacturing that provided a ray of hope at the beginning of the summer quarter during an otherwise moderate trend. However, economic activity was also hampered in part by the weather conditions. Firms in the construction and food-service sectors, for example, reported a fairly unusual number of weather-related problems for the time of year.

Companies see short- and medium-term consumer price inflation within the Swiss National Bank’s target range

Although firms are planning to raise their sales prices slightly more frequently on balance than before, the overall price increase will be significantly lower than in the winter of this year and even less than in 2022. Companies in the manufacturing and retail sectors are planning to raise their prices slightly more frequently than before. In contrast, the tendency to raise prices in the hospitality industry is declining significantly, while in the other services sector it is decreasing slightly. A scenario of sharply rising services prices therefore appears to have become less likely.

When asked about their expectations for general consumer price inflation over the next twelve months, firms’ average response was 1.6 per cent – as in the previous quarter. Companies expect inflation to be below 2 per cent over the next five years. They therefore predict that consumer price inflation in Switzerland will remain below the 2 per cent target defined by the Swiss National Bank (SNB) as the upper limit for price stability in the short and medium term.