CH: KOF Swiss Leading Indicator

Tue Jan 30 02:00:00 CST 2018

Consensus Actual Previous Revised
Level 110.9% 106.9% 111.3% 111.4%

The KOF's leading economic indicator fell more than 4 points to 106.9 in January. This was its first decline since August and equalled the sharpest drop since February 2015. The January outturn was also a 4-month low.

The headline deterioration was largely attributable to negative effects from manufacturing and banking but the hotel and restaurant industry in addition to exports, household consumption and construction similarly detracted.

Nonetheless, despite its decrease, the latest reading is still well above the 100 long-run average and so indicative of continued positive near-term economic growth, albeit at a probably softer pace than seen of late.

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.