KOF Employment Indicator rises for the first time in two years

The KOF Employment Indicator has recently risen to 5.2 points from 4.2 points in the second quarter of 2024 (revised from 3.4 points). Since hitting its all-time high in the second quarter of 2022, the indicator has fallen slightly in each quarter, dropping from 16.6 points to 4.2 points in the second quarter of 2024. The current quarter marks the first time it has rebounded slightly. Overall, the indicator is above its long-term average. There are still more companies expecting to increase their staffing levels than those planning to reduce them. The indicator thus suggests that the normalisation of the labour market will be accompanied by a soft landing following the exceptionally encouraging situation in 2022 and 2023.

The analysis conducted for the third quarter of 2024 is based on the responses of around 4,500 firms that were surveyed in July about their employment plans and expectations. On balance, the majority of respondents still consider their current headcounts to be too low. The proportion of firms planning to increase their workforces in the next three months slightly exceeds the percentage of those planning to cut jobs.

More positive outlook in the manufacturing sector

The outlook in the manufacturing sector has improved considerably. In the last quarter, a clear majority of companies in this sector considered staffing levels to be too high and expected to cut jobs. On balance, a small majority of respondents are planning to boost employment this quarter. The KOF Employment Indicator is also showing a modest increase in the banking sector compared with last quarter.

Contrasting with this positive trend, the KOF Employment Indicators for retail and wholesale have deteriorated. On balance, a majority of the companies surveyed in these sectors would like to reduce their staffing levels. The KOF Employment Indicator also fell particularly sharply in the hospitality industry, plunging to its lowest level since the third quarter of 2021.