Economy KOF survey shows renewed deterioration in the business situation
The business situation for companies in Switzerland deteriorated again at the start of the new year. Dark clouds are gathering over industry in particular.
05.02.2025, 09:17
05.02.2025, 09:38
SDA
The situation is also deteriorating in the construction and financial sectors. By contrast, the business situation is better in the retail, wholesale and hospitality sectors.
This is the result of a survey of around 4,500 companies conducted by the KOF Swiss Economic Institute at ETH Zurich, which was published on Wednesday. The business situation indicator for the Swiss private sector, which the KOF calculates quarterly from these surveys, cooled down in January.
Previously, the indicator had risen in October and November last year and remained virtually unchanged in December. Business expectations for the next six months were again slightly more cautious in January than they had been in December, the KOF wrote.
Industry feels insufficient demand
The individual sectors of the economy are developing differently. In the manufacturing sector, i.e. industry, the business situation deteriorated for the second month in a row. Incoming orders are not picking up and order backlogs are shrinking. Overall, a good 60% of companies in the manufacturing sector are complaining of insufficient demand for their products.
Capacity utilization of machinery and equipment has fallen. This is mainly due to the chemical and pharmaceutical sectors. The earnings situation is developing less favorably than before, according to the report. Companies are also very uncertain about future developments. "They are planning to expand their production much more cautiously than before and are increasingly looking to cut staff."
The situation in the construction industry and among project planning offices has also deteriorated for the second month in a row. In the construction industry, capacity utilization of vehicles, machinery and equipment has fallen well below average. Overall, companies in the construction industry are no longer planning to expand production on balance. In building construction in particular, plans are being scaled back significantly.
The business situation in the financial sector has also cooled down again somewhat. According to the KOF, the interest business in particular is having a negative impact on banks' income statements. The trading business is also no longer performing as well as before. In contrast, the commission and trading business continues to develop positively. The earnings situation for insurers has increasingly suffered.
Retailers with better business and gloomier prospects
The business situation in the retail and wholesale sectors has brightened. However, the outlook for the retail trade is clouding over. Retailers are expecting less sales growth than before and are increasingly being forced to cut prices. Wholesalers, on the other hand, are becoming more confident.
The business situation in the hospitality industry is improving again, particularly in hotels. According to the KOF, the business situation is excellent in the mountain regions and slightly above average in the lake regions and urban areas. Room occupancy rates have risen significantly and the earnings situation is better than before. Overnight stays by both foreigners and residents are on the rise. In the catering sector, however, demand is unlikely to change significantly.
The business situation for other service companies is coming under slight pressure, while business expectations remain positive, albeit no longer quite as pronounced as before.
