The KOF Business Situation Indicator for the Swiss private sector, which is calculated on the basis of the KOF Business Tendency Surveys, fell in January. It had previously risen in October and November last year and remained virtually unchanged in December. Business expectations for the next six months were once again slightly more cautious in January than they had been in December.
Trends vary from sector to sector. The outlook for manufacturing appears fairly bleak. The Business Situation Indicator here has fallen for the second month in a row, and companies are very uncertain about the future. They are planning to expand their production much more cautiously than before and are increasingly looking to cut jobs.
Private consumption supporting the economy
In the areas associated with building activity – project engineering and construction – the Business Situation Indicator fell for the second month in a row. The indicator also fell in the financial and insurance sectors and in other services. By contrast, firms in the retail, wholesale and hospitality sectors reported an improvement in their business. Private consumption is therefore continuing to support the economy.
Many firms’ expectations more cautious than before
In addition to their current business situation, the prospects for project engineering firms, the construction industry, financial and insurance service providers as well as other services have also deteriorated. The outlook is also less optimistic than before in the hospitality industry, which reported a more encouraging business situation in January. Forecasts in manufacturing have changed only slightly compared with the previous month. Wholesalers are increasingly anticipating a sustained upturn.
Labour shortages easing in some sectors; wage forecasts virtually unchanged
Complaints about a shortage of suitable workers in other services are once again declining significantly. This problem is also becoming less acute in the wholesale and manufacturing sectors. In contrast, there are growing challenges facing construction and project engineering.
Firms’ forecasts of wage levels over the next twelve months have remained virtually unchanged since last autumn. Gross salaries are expected to rise by 1.5 per cent. Firms reckon that pay growth is likely to be below average in the retail sector and above average in the hospitality industry.
The results of the KOF Business Tendency Surveys from January 2025 include responses from around 4,500 firms from manufacturing, construction and the major service sectors. This equates to a response rate of around 60 per cent.
