KOF Business Tendency Surveys: Swiss economy not experiencing a stable recovery

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The rise in the Business Situation Indicator in October conceals divergent sectoral trends. The upturn is being driven by manufacturing industry and the service sectors. In addition, business activity in wholesale, which remains weak, improved somewhat. However, business deteriorated in other sectors such as construction, project engineering, retail, financial and insurance services, and hospitality.

Business expectations are mixed and generally slightly more cautious than before

Companies are generally slightly more cautious than they were in their expectations for business activity over the next six months. Here too, however, trends vary from sector to sector. Forecasts for manufacturing, financial and insurance services, wholesale and project engineering are gloomier. By contrast, they are brightening in the hospitality, construction, retail and other services sectors. These widely varying results show that there is currently no momentum across large sections of the economy to support any upturn.

Labour shortage easing; firms’ wage expectations remain unchanged

Companies’ reported labour shortages are easing in some sectors such as manufacturing, financial and insurance services, project engineering and other services, while the challenging situation in the hospitality, construction and wholesale sectors has hardly changed.

When firms are asked about their forecasts for salary trends over the next twelve months, the picture has changed very little compared with the survey in July. Companies expect gross salaries to rise by 1.6 per cent on average. Wage growth is likely to be below average in the construction and retail sectors, for example, and above average in the manufacturing and hospitality industries.