KOF Business Situation Indicator slightly lower

The Business Situation Indicator for manufacturing fell after flatlining in the previous month. However, demand is no longer performing as poorly as in recent months. Looking ahead to the next three months, orders are expected to decline less frequently. The export outlook has not deteriorated any further.

Business in the project engineering and construction sectors, which are linked to building activity, hardly changed at all. The situation in the construction industry improved slightly, while it deteriorated a little in the project engineering sector. However, companies in the construction sector are no longer as satisfied with their existing order books as they were previously. Demand is less buoyant than it was in the first half of the year. Some people in the main construction trade in particular are becoming increasingly dissatisfied with the size of their order books.

The Business Situation Indicator for the retail trade fell in September. Overall, however, the situation has changed little since May. There are far fewer customers in the shops than at the same time last year. Survey respondents are therefore reporting that their warehouses are increasingly becoming too full. Sales forecasts remain cautiously optimistic. The business situation in financial and insurance services has not fundamentally changed since the spring, even though it improved slightly in September (see table T 1).

Business activity deteriorated in the Lake Geneva region, Central Switzerland and, very slightly, Eastern Switzerland. On the other hand, it improved especially in Northwestern Switzerland and Ticino and, modestly, in the Zurich region and Espace Mittelland (see chart G 9).  

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 (see chart G 10). From the summer onwards, however, the economy cooled noticeably. Although the economy stabilised temporarily at the beginning of 2023, it was fairly weak in late summer.  

Explanation:

Chart G 8 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 9 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 10) 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 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.