Swiss economy optimistic about the future
The latest survey by the KOF Swiss Economic Institute at ETH Zurich shows a cooling of the business climate in the Swiss private sector at the start of 2024. Despite weak foreign demand and the strong Swiss franc, companies are cautiously optimistic about the next six months.
At the start of 2024, the KOF Business Situation Indicator for Switzerland recorded a slight decline, influenced primarily by the slowdown in foreign demand, which is particularly affecting the export industry. Nevertheless, there is cause for hope: companies from various sectors are increasingly positive about their expectations for the near future.
The lack of demand is particularly noticeable in the manufacturing industry, with more than half of the companies surveyed reporting an inadequate order situation. Although the Swiss franc remains strong, this pressure does not appear to be on the same scale as in 2015. Nevertheless, export prospects are better than in the autumn of the previous year.
Even though the hospitality industry, wholesalers and financial and insurance service providers are reporting a slight deterioration in their business situation, the situation in the construction, project planning and retail sectors remains stable. The service sectors are even reporting a slight improvement.
Forecasts for business development over the next six months are more positive overall. Confidence is rising in the manufacturing industry and among service providers in particular. While wholesalers have softened their scepticism, retailers and financial service providers remain cautious.
Despite the intention to continue hiring staff, companies are now planning to increase their workforce less frequently than at the start of 2023. The difficulty of finding suitable staff remains, although the situation has eased slightly.
In terms of wage development, companies are expecting a moderate increase in gross wages of less than 2% in the coming year. This reflects a general trend towards lower wage increases.
There are mixed signals with regard to price trends: while general inflation expectations are falling, companies in some sectors, particularly in the service sector, manufacturing and construction, are planning to increase their sales prices.
The results of the KOF Economic Surveys are based on the responses of around 4,500 companies from the manufacturing industry, the construction industry and the most important service sectors, which corresponds to a response rate of around 62%.