CH: KOF Swiss Leading Indicator

Wed Feb 28 02:00:00 CST 2018

Consensus Actual Previous Revised
Level 106.0% 108.0% 106.9% 107.6%

The KOF's leading economic indicator rose 0.4 points from a stronger revised January level to an unexpectedly firm 108.0 in February. This was still well short of the 111.3 mark achieved in December last year but also still comfortably above its 100 long-run average and high enough to signal continued decent economic growth this quarter.

The strongest positive contributions came from construction and the hospitality sectors. Industry and domestic private consumption also provided a slight boost while the financial sector and the exporting industries remained essentially unchanged. However, manufacturing had a small negative impact.

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.