CH: KOF Swiss Leading Indicator

Fri Dec 22 02:00:00 CST 2017

Consensus Actual Previous Revised
Level 110.2% 111.3% 110.3% 110.4%

The KOF leading economic indicator rose 0.9 points from a marginally stronger revised November reading to 111.3 in December. This was its fourth consecutive increase and its highest mark since June 2010.

The headline improvement came mainly courtesy of banking following a disappointing performance by the sector in November. Exports, benefiting from CHF weakness, and, to a lesser extent, manufacturing, consumption and accommodation also all made positive contributions. However, construction slowed.

The December details suggest that the economic recovery is becoming more broad-based but also highlight the importance of the depreciation of the CHF since mid-year.

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.