The outlook for the Swiss economy improved markedly, with the economic outlook rising to 101.3 in October to its best reading since February when it stood at 103.3. Despite the improvement, the results are somewhat of a mixed bag.

Most of the main components reflected positive developments, particularly for manufacturing and financial and insurance services. Still, private consumption indicators are negative, according to the most recent survey.

The production sector which includes manufacturing and construction is mostly positive, resulting from building intermediate goods inventories and finished goods. While inventories were a positive development, the outlook for the competitive environment was subdued.

Today's results are positive, but also need to be looked at with a hint of caution. There is still no resolution surrounding the tariff dispute with the US, which could explain the negative outlook for the competitive situation. The index has struggled to stay about its long-term average of 100. The last time it did so with any consistency was at the beginning of the year when it was above that from January through March.

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.