Contrary to economists' expectations, the leading indicator fell to 96.1 in June after a revised 98.6 in May, and falling to its lowest reading of the year and the lowest since October 2023 when the index was at 94.5.

This signals a deterioration in the Swiss economic outlook, particularly for the manufacturing sector. Among the sub-sectors, intermediate goods inventories, order backlogs and finished goods inventories weighed on the overall result.

Today's results indicate there isn't likely to be a quick improvement for the manufacturing sector, particularly with ongoing trade and geopolitical uncertainty. The Swiss National Bank recently cut its policy rate to zero, with expectations that it will enter a negative rate regime in September. That might help to weaken the Swiss Franc slightly and help the export sector to a degree, but the underlying situation for the economy is far from ideal.

With today's report, the RPI deteriorates to minus 16 from minus 13, showing the Swiss economy is underperforming relative to expectations.

Slight improvement to 99.0 is the call for June from 98.5 in May.

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.