The KOF's leading indicator fell in September but, following annual benchmark revisions, was still well above expectations. At 95.9, the latest reading was down from a sharply stronger amended 96.2 in August but more than 5 points above the market consensus. That said, September's outturn was a 3-month low and far enough below the 100 long-run average to suggest a still subdued outlook for the Swiss economy.

Sentiment worsened further in manufacturing and in other services. However, the finance and insurance sectors showed a modest improvement as did construction.

Despite the revisions, today's update suggests that GDP growth through year-end will be soft and so provide additional justification for the SNB's decision not to raise its policy rate earlier this month. Moreover, while clearly stronger than expected, the latest results leave the Swiss RPI and RPI-P (both minus 12) in negative surprise territory meaning that economic activity in general continues to lag forecasts.

The leading index is expected to fall again, from August's 91.1 to 90.5.

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.