Explanation of Graphs

Business Situation Overview by Economic Sectors

In the Business Situation Overview, the balance of the latest survey is shown on the vertical axis, and the change in the balance is shown on the horizontal axis. The monthly survey will be compared with the survey of three months ago, and the quarterly survey is compared with the latest one. This consequently means that the Business Situation Overview consists of four separate fields: left-hand and right-hand upper field, as well as left-hand and right-hand lower field.

In the upper two fields the balance is positive, and in the lower two fields it is negative. If the positive balance deteriorates, this is shown in the upper left-hand field of the chart. If the balance improves, this is shown in the upper right-hand field. The same principle applies to the negative balances, which are shown in the lower left-hand or lower right-hand field.

For instance: if the business situation is good in the industrial sector, then the observation point will certainly be in the upper left-hand or right-hand field of the business situation overview. If the balance has also improved relative to the survey of three months ago, then the observation point will be located in the upper right-hand field of the business situation overview.

KOF Business Situation Indicator

The KOF Business Situation Indicator has a tracking characteristic relative to the GDP trend. In specific terms, it is a tracking composite indicator showing Gross Domestic Product in comparison to the same quarter of the previous year.

It is known as a composite indicator because it bundles the information from several indicators: the business situation assessment from the industry survey and from the retail trade survey. Both are monthly economic surveys conducted by the KOF. When asked about the business situation, companies may reply using the criteria: good, satisfactory or poor. The balance is then calculated on the basis of the proportion of companies reporting an increase in the indicator, minus the proportion reporting a decrease.

In order to draw up the composite indicator, the balance of the industry survey and of the retail trade survey is first weighted with the corresponding employment data, and is then aggregated. The difference relative to the same month of the previous year is then established on the basis of this time series, as the reference series is also based on a prior year comparison. In order to obtain the depicted KOF Business Situation Indicator, the time series is finally adjusted to take account of seasonal fluctuations and random data.