According to the KOF's latest leading indicator report, economic prospects improved significantly at the start of the year. At 97.2, the headline measure was up sharply versus December's downwardly revised 91.5 and well above the market consensus. However, while a 7-month high, the January outturn was still short of the 100 long-run average for a ninth consecutive month.

January's rise reflected broad-based gains in the components, notably in the manufacturing, hospitality, and the service sectors. Most areas remained below their historic norms but the outlook for hospitality is now better than average.

Today's surprisingly upbeat report boosts the Swiss ECDI to 13 and the ECDI-P to 33. Both gauges have spent much of the last three months below zero but now indicate that overall economic activity is holding up rather better than expected.

KOF's leading indicator is expected to rise a further 1.2 points in January to 93.4. Though rising 2.7 points in December, this index has remained well below its 100 long-run average.

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 KOF Swiss Economic Institute publishes this indicator monthly.