Swiss economy remains in good shape, but outlook darkens according to KOF

Swiss economy remains in good shape, but outlook darkens according to KOF

Regarding business developments over the next six months, companies are significantly less optimistic than before. The headwinds for the Swiss economy are likely to intensify in the near future.

The KOF business situation for Swiss companies slowed down slightly in July, but still remained better than at the beginning of the year and we have to go back to July 2011 to see a more favorable business situation than at present. Regarding business developments over the next six months, however, companies are significantly less optimistic than before. The headwinds for the Swiss economy are likely to intensify in the near future.

The business situation in the hotel and catering industry is improving despite a prevailing negative trend

In the majority of the economic sectors surveyed, the business situation cooled in July. This phenomenon is particularly noticeable in the retail trade, where the business situation indicator is now clearly on the downside after more than a year of soaring. The decline is less pronounced in financial services and insurance, in wholesale trade and in manufacturing industry. Although the Swiss franc has recently appreciated against the euro, companies in the manufacturing industry do not currently feel a strong loss of competitiveness in the EU market. The business situation shows very slight signs of wear and tear at other service providers, in projects and in construction. Contrary to a weakened general trend, the business situation is clearly improving in the hotel and catering industry.

No further worsening of the shortage of intermediate products

The problem of shortage of materials and intermediate products has not worsened since the spring, despite the war in Ukraine and anti-pandemic measures in parts of Asia. Admittedly, many companies continue to complain about the lack of intermediate products, but the worst seems to be over. Companies in the manufacturing industry have also been able to fill up their stocks of intermediate products somewhat and wholesalers are less likely than before to expect an increase in delivery times. Moreover, companies anticipate an increase in demand for their own products less often than before, which should also contribute to this slight easing.

The momentum of rising prices decreases

The rise in prices remains very high, but is no longer increasing. Trends vary by sector. Hotels and restaurants and other service providers, for example, are forecasting more and more price increases, while in manufacturing and wholesale the price forecasts are no longer so strongly on the upside. than before. This heterogeneity could further indicate that the pace of price increases will no longer increase as strongly overall.

Gross wages are unlikely to keep pace with inflation in the short term, salary survey says

In July, the KOF included in its usual economic surveys questions about companies’ expectations with regard to the development of wages in their own company and about the development of inflation (from the consumer price index ). These questions will in future be asked again every three months. The current results should still be considered experimental and therefore provisional. They indicate that, according to company expectations, gross wages will increase on average by just over 2% within a year. The survey participants therefore assume that gross wage increases will rather not follow inflation during this period.

The results of the KOF Business Tendency Surveys for July 2022 incorporate responses from around 4,500 companies in the manufacturing industry, construction and major service sectors. This corresponds to a response rate of approximately 56%.

#Swiss #economy #remains #good #shape #outlook #darkens #KOF

Leave a Comment

Your email address will not be published.