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KOF Economic Barometer: Falls Back to its Long-term Average

The KOF Economic Barometer for May fell by 3.3 points to a new standing of exactly 100 points. The last time the Barometer had a similar standing was in December 2015. The current value of 100 points to an average development of the Swiss economy in the coming months.

In May, the KOF Economic Barometer fell by 3.3 points to 100 points from revised 103.3 in April (first publication in April: 105.3). Within a few months’ time, the Barometer has therefore reached its long-term average after over two years of above average values. At least for the time being, this indicates a normalization of economic development. The decrease by 3.3 points is mainly driven by the negative development of the indicators for manufacturing and the construction sector. Further negative contributions, albeit a little less pronounced, came from the indicators for consumption and the export sector. The accommodation and food service activities as well as the banking sector showed an increase in May.

In the goods producing sector (manufacturing and construction), in particular the indicators of employment deteriorated. Further negative contributions came from the indicators for ordering and preliminary products.

Within the manufacturing sector, prospects deteriorated especially for the chemical and the wood processing industry. The indicators for the paper industry also contributed negatively. By contrast, the food processing industry developed positively. The decrease in the construction sector was based on a more pessimistic assessment of the situation by architectural as well as engineering offices.

KOF Economic Barometer, May 2018

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KOF Economic Barometer, May 2018

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KOF Economic Barometer and reference time series: annual update

In September 2017, the scheduled annual update of the KOF Economic Barometer took place. The annual update of the Barometer concerns the following steps: redefinition of the pool of indicators that enter the selection procedure, update of the reference time series and renewed execution of the variable selection procedure. The updated reference series is the smoothed continuous growth rate of the Swiss Gross Domestic Product (GDP) according to the new System of National Accounts ESVG 2010, released in early September 2017, which takes into account the release of the previous year’s annual GDP data by the Swiss Federal Statistical Office. As a result of the indicator variable selection procedure, the updated KOF Economic Barometer is now based on 273 indicators (instead of 272 as in the previous vintage) from a pool of almost 500 potential indicator series. They are combined using statistically determined weights.

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KOF Zurich
KOF Swiss Economic Institute defines itself as one of the leading economic “think tanks” in Switzerland. In this prospect, KOF (acronym for the German word "Konjunkturforschungsstelle", which means business cycle research institute) aims to play two roles, one as a mediator between a broader public (politics, society) and the research community, and one as a leading platform for economists, especially within Switzerland.
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