KOF Business Situation Indicator virtually unchanged

The Business Situation Indicator for the manufacturing sector remained on a downward trajectory. Having made a confident start to the year, business activity here slowed for the second month in a row. The situation in the other sectors improved noticeably (such as in the retail trade and in financial and insurance services) or, at least, very slightly (as in the project engineering sector and in construction). The trend towards further price increases weakened significantly in the retail and construction sectors (see table T 2).

The Lake Geneva region and Eastern Switzerland in particular acted as a drag on the general trend. The Business Situation Indicator rose in the other regions, i.e. Espace Mittelland, the Zurich region, Ticino, Northwestern Switzerland and Central Switzerland.

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 was tending to stabilise again at the beginning of 2023 but is flatlining now.

Explanation:

Chart G 13 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 G 14 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 G 15) 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.