The Swiss Times - Swiss News in English

KOF survey shows a further deterioration in the business situation

The business situation for companies in Switzerland continued to deteriorate at the start of the new year. Export-oriented companies in particular are concerned about the tougher market environment abroad. However, improvement is in sight, as a survey by the KOF Swiss Economic Institute shows.

The business situation indicator for the Swiss private sector, which the KOF calculates quarterly from surveys of around 4,500 companies, cooled down again in January, as was reported in a press release on Wednesday. Weak foreign demand is also weighing on the export sector, partly due to the stronger Swiss franc.

However, the strength of the franc is having less of an impact on companies than was the case at the beginning of 2015. At that time, the Swiss National Bank's (SNB) lifting of the Swiss franc floor caused the Swiss currency to strengthen in one fell swoop. Companies are even more confident about their export prospects than they were in the fall survey.

Weakening industry

According to the KOF, the business situation indicator is pointing in different directions in the individual economic sectors. It is once again developing unfavorably in the manufacturing sector. In industry, more than half of companies are complaining about a lack of demand, according to the report.

Wholesalers, the hospitality industry and financial and insurance service providers also reported a dip in their rather good business situation, according to the KOF. In contrast, the business situation in the construction industry, the project planning sector and the retail trade remained virtually unchanged. The situation in other services even brightened slightly.

Companies in many sectors have become more confident about the future. Expectations for the next six months are more positive, particularly in manufacturing and other service providers. Wholesalers are also shedding their skepticism somewhat. By contrast, the retail trade and financial and insurance service providers are becoming more cautious.

Search for personnel remains difficult

Companies are still looking for suitable staff and the search continues to be difficult, as the survey also shows. The staff shortage has not eased noticeably in any of the economic sectors surveyed. However, according to the survey, fewer companies are planning to increase their headcount than a year ago.

At the same time, companies are assuming that gross wages will increase at a slightly lower rate than before from now until a year from now. A wage increase of 1.8 percent is now expected after 1.9 percent last October. In January 2023, companies were still expecting average wage increases of 2.3%.

In addition, companies expect inflation to be generally lower over the next twelve months than previously. The decline here is more pronounced than for wages. In October, inflation was expected to be 2.4 percent, now it is 1.9 percent. However, price increases are planned more frequently, particularly in industry and the construction sector.

©Keystone/SDA

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