KOF Business Situation Indicator down slightly

This decline was caused by the manufacturing and retail sectors, where business activity fell back almost to December’s levels in each case. However, the business situation in the construction and project engineering sectors remains good. Satisfaction with order books continues to increase among construction firms; their prices in the near future are not expected to rise quite as rapidly as before. Financial and insurance service providers continue to emerge gradually from their slump, with their business improving for the second month in a row (see table T1).

Business activity deteriorated primarily in the regions of Northwestern Switzerland and Central Switzerland. The Business Situation Indicator fell slightly in Ticino and Eastern Switzerland. While business in Espace Mittelland hardly changed compared with the previous month, in the Lake Geneva and Zurich regions it was slightly better than in January.

The KOF Business Situation Indicator highlights companies’ current business situation. The KOF Economic Barometer, on the other hand, is an indicator of the economic outlook. The Business Cycle Clock shows that 2022 saw a continuation of the recovery from the pandemic in the first few months of the year. From the summer onwards, however, the economy slowed noticeably. The economy is tending to stabilise again in early 2023.

Explanation:

Chart G3 shows the KOF Business Situation Indicator across all sectors included in the survey. The business situation of sectors that are only surveyed quarterly is kept constant in the interim months.

Chart G4 shows the business situation in the main regions defined by the Swiss Federal Statistical Office. The regions are coloured differently to reflect their business situation. The arrows within the regions indicate the change in the situation compared with the previous month. An upward-pointing arrow indicates that the situation has improved compared with the previous month.

The Business Situation Indicator in the KOF Business Cycle Clock (Chart G5) is plotted against the KOF Economic Barometer. The indicator reflects the current business situation, while the barometer is a leading indicator of changes in activity. The clock can be divided into quadrants. During the recovery phase the business situation is below average but growth prospects are above average. At the peak of the economic cycle the situation and prospects are both above average. During the slowdown phase the situation is above average and the prospects are below average. At the bottom of the economic cycle the situation and outlook are both below average. Ideally the chart runs through the quadrants in a clockwise direction.

The KOF Business Situation Indicator is based on more than 4,500 reports from firms in Switzerland. Companies in industry, the retail sector, construction, project engineering and financial services and insurance are surveyed monthly. Businesses in the hospitality, wholesale and other services sectors are surveyed during the first month of each quarter. These firms are asked, among other things, to assess their current business situation. They can rate their situation as either ‘good’, ‘satisfactory’ or ‘poor’. The net balance of their current business situation is the difference between the percentages of ‘good’ and ‘poor’ responses.