According to the KOF Swiss Economic Institute at ETH Zurich, the KOF Business Situation Indicator for the Swiss private sector fell further in June, marking the second consecutive monthly decline. Construction was among the sectors dragging on the reading: the current business situation was less favorable than the previous month in construction, in the planning and design segment, and among financial and insurance services providers. By contrast, the situation improved in retail and in other services.
The indicator, which KOF describes as a gauge of companies' present economic situation as distinct from the KOF Konjunkturbarometer (KOF Economic Barometer, a forward-looking composite indicator of near-term activity), also weakened in manufacturing for the second month running. Capital goods producers in particular rated their situation as markedly less favorable than at the start of the year, and finished-goods inventories filled up more often across manufacturing. As a result, companies on balance do not plan to expand production further in the near term, even though order backlogs have increased.
Despite the deterioration in current conditions, business expectations brightened for the second consecutive month, with companies anticipating that the economic headwind will ease somewhat over the coming months. In manufacturing, expectations improved for the first time in three months. KOF's business cycle clock shows that 2025 repeatedly produced signs of a very light, fragile recovery without ever accelerating, and that early-2026 recovery tendencies were interrupted in March before June brought what KOF calls a renewed small glimmer of hope.
KOF also examined responses submitted before and after June 15, the weekend a framework agreement in the Iran war became known, and found no strong effect on response behavior overall. There was, however, a tendency for companies to expect deterioration less often after that date, alongside somewhat reduced uncertainty and less critical assessments of order reserves held with customers abroad. The underlying survey draws on more than 4.200 monthly company reports across manufacturing, retail, construction, planning, financial and insurance services, and other services.