The leading indicator fell surprisingly sharply at the start of the quarter. At 99.5, the gauge was more than 5 points short of the market consensus and recorded its first sub-100 outturn so far in 2024. The October reading also followed a weaker revised 104.5 in September.

Manufacturing, financial and insurance services, other services, hospitality and the construction sector all lost ground while both domestic and foreign demand were broadly stable. Within manufacturing, the outlook deteriorated significantly for chemical and pharmaceutical companies, the metal industry, the wood, glass, stone and earth segment and for food and beverage producers.

In sum, October's disappointingly soft report suggests that near-term GDP growth will be a little less than average which, if correct, would further increase the chances of another cut in the SNB policy rate in December. To this end, today's update trims the Swiss RPI to minus 14 and the RPI-P to 5, the gap between the two measures showing downside surprises concentrated in the inflation data.

The headline index is expected to slip to 105.1 in October but remain well above 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.