The KOF's leading indicator continued to gain ground at the start of 2024. At 101.5, the headline index was back above its 100 long-run average for the first time since last March and nearly 3 points stronger than the market consensus. This was the measure's third consecutive advance and its highest reading since January 2023.

The latest monthly gain was mainly driven by improving conditions in services, notably accommodation, but also better performances by construction and foreign demand. However, the outlook for consumer demand was broadly unchanged and deteriorated for financial activities.

Still, January's rise suggests that near-term economic prospects are on the up and, taken at face value, should be reflected in at least modest growth in the first half of the year. To this end, the Swiss RPI now stands at 10 and the RPI-P at 19. Both values indicate activity in general running a little hotter than forecast.

The headline index is expected to climb to 98.2 from 97.8 in December.

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.