CH: KOF Swiss Leading Indicator

Fri Sep 29 02:00:00 CDT 2017

Consensus Actual Previous Revised
Level 105.5% 105.8% 104.1% 104.2%

The KOF's leading economic indicator rose 1.6 points from a marginally firmer revised August outturn to 105.8 in September. However, the increase failed to fully reverse the previous period's 3.3 point drop and September's reading was still well short of the recent peak levels above 108.0 seen in the first quarter.

The strongest positive contributions this month come from the manufacturing sector but the hotel and catering industry also had a small favourable impact. However, at the same time, the outlook for domestic consumption, the export industry, the financial sector and construction deteriorated somewhat.

The headline index has been relatively stable in recent months and so not indicative of any significant change in trend. Importantly, it remains comfortably above its long-run average (100) and so continues to signal historically firm economic growth over the next few months.

The KOF Economic Indicator is a composite leading indicator that aims to identify shifts in the Swiss business cycle around three months ahead of the actual event and, until the start of 2014, was based on twenty-five different economic indicators. The old version of the KOF Economic Indicator used the previous year's GDP growth rate published by the Swiss State Secretariat for Economic Affairs (SECO) as a yardstick. The revised measure still incorporates SECO data; however, KOF has changed over to month-on-month changes in GDP which are generated via statistical methods. This reference series is not about exact GDP figures but about the direction and strength of the economic trend. The new objective of the Barometer is the same as the old objective: achieving maximum possible accuracy in predicting the Swiss business cycle.

The indicator measures overall economic activity through a qualitative business survey about developments in the recent past, the current situation and expectations for the next three to six months. Getting an accurate handle on where the economy is headed is inevitably a vital element in all investment decisions and the new measure uses some 219 variables in order to do just that. The set of variables will be reviewed every autumn.

Survey questions relate to production, orders and stocks of finished goods. The Swiss Institute for Business Cycle Research (KOF) publishes this indicator monthly.