Business activity at Swiss firms is currently slightly stronger than it was at the beginning of the year and in July 2024. This is shown by the KOF Business Situation Indicator, which rose for the third month in a row. However, the outlook for the next six months is somewhat gloomier – mainly owing to subdued expectations in the manufacturing and wholesale sectors. This is revealed by the results of the KOF Business Tendency Surveys of nearly 7,000 firms across the private sector.
A mixed picture emerges when broken down by sector. The business situation is improving in other services, the wholesale trade and hospitality and is brightening slightly in financial and insurance services. By contrast, it is cooling in manufacturing and construction and is deteriorating to a more pronounced extent in the retail trade and project engineering.
The business outlook for the next six months is brightening in almost all sectors of the economy – in construction, financial and insurance services, hospitality, other services, retail and project engineering. However, two sectors – manufacturing and wholesale – are bucking the trend and causing the Business Expectations Indicator to fall.
Uncertainty about the future business outlook for the manufacturing sector has declined somewhat – particularly among companies with strong exposure to the US market – but remains relatively high. Firms have recently received fewer orders than before and production has been scaled back. Export-focused companies with strong ties to the US market have not yet fully recovered from the tariff shock in April. However, their production plans are no longer quite as cautious as they were at the time. Financial restrictions are hampering this sector more than labour shortages for the first time since the COVID-19 pandemic.
All in all, the Business Situation Indicators and Business Expectations Indicators across all sectors show neither a broad-based recovery nor a slowdown.
Price inflation remains low
On balance, firms' price plans have remained relatively stable since the beginning of the year, fluctuating around a slightly positive level. Companies expect inflation in general consumer prices to be significantly lower over the next twelve months than it has been to date. Whereas in April they were anticipating an inflation rate of 1.4 per cent for the next twelve months, they now expect it to be 1.1 per cent. Over the longer term (five years), however, they expect the inflation rate to pick up again (1.8 per cent).
The results of the KOF Business Tendency Surveys for July 2025 are based on responses from around 4,400 firms from the manufacturing, construction and major service sectors. This equates to a response rate of around 53 per cent.
The survey was completed before the US government announced tariffs of 39 per cent on 1 August.