Balance of Payments

The difference between the total value of Swiss exports and imports. Due to its small population and limited resources, foreign trade is very important for the Swiss economy and trade statistics can have a significant impact on markets.

Switzerland's major trading partners include Germany, France, Italy and the United States. While Switzerland still exports large amounts of traditional products like chocolate and watches, today more than half of Swiss exports are in mechanical and electrical engineering and chemicals.

A positive Trade Balance indicates a trade surplus, and a negative balance represents a trade deficit. Trade surpluses indicate that foreigners are buying Swiss goods, which are typically paid for in Swiss Francs. This translates into greater demand for the currency and upward pressure on the value of the Franc. Conversely, during a trade deficit, Swiss consumers have a higher demand for foreign currencies and this places downward pressure on the value of the Franc.

The headline figure for the trade balance is expressed in billions of Francs

Relevance : Tends to move markets on release
Release schedule : 6:15 (GMT); monthly, one month after the reporting period
Revisions schedule : Few revisions
Source of report : Swiss National Bank
Web Address : http://www.snb.ch
Address of release: http://www.snb.ch
AKA : Foreign Trade, Balance of Trade

GDP and Output Report

Switzerland 's Gross Domestic Product is the value of all final goods and services produced within the nation's borders. The rate of GDP growth is used as a gauge of the overall health of the Swiss economy. If growth rates are high and sustained the economy is said to be undergoing a boom. If the economy experiences consistent low growth or negative growth then it is said to be in a recession.

Since GDP is the principle indicator of overall growth it is highly watched by markets participants. Strong GDP growth can translate into inflationary pressures that the Swiss central bank may respond to by raising interest rates. Likewise, the bank regularly responds to low growth by lowering rates to spur economic activity.

Technically, Gross Domestic Product is calculated in the following way:
GDP = C + I + G + (EX - IM)
where
C = private consumption
I = private investment
G = government expenditure
EX = exports of goods and services
IM = imports of goods and services

The headline figure is the percentage change in nominal GDP from the previous quarter or year.

Relevance : Tends to move markets on release
Release schedule : 5:45 (GMT); quarterly
Source of report : Swiss Federal Statistical Office
Web Address : http://www.bfs.admin.ch
Address of release : http://www.bfs.admin.ch

Measures the level of production of Swiss manufacturing industries. The figure tracks relative changes in the production of all goods whether they are sold domestically or abroad. The headline figure is the percentage change in the index from the previous quarter or year.

Industrial Production is highly sensitive to the business cycle, thus can forecast changes in employment, earnings, and personal income. Consequently, Industrial Production is considered a reliable leading indicator that conveys information about the overall health of the Swiss economy.

Relevance : Rarely affects markets
Release schedule : 7:15 (GMT); quarterly
Revisions schedule : Revisions can be significant
Source of report : Swiss Federal Statistical Office
Web Address : http://www.bfs.admin.ch
Address of release : http://www.bfs.admin.ch
AKA : Production Index

Tracks trends in the Swiss Manufacturing sector. The Purchasing Manager's Index attracts market attention as a leading indicator for the Swiss output. The figure is very sensitive to the business cycle and tends to match growth or decline in the economy as a whole.

To construct the PMI the Swiss Association of Purchasing and Materials Management each month surveys hundreds of executives on their procurement expectations for the following month. Because the amount of materials ordered by purchasing managers parallels the level of manufacturing production, the PMI is a gauge of production growth. The results are indexed with a centerline of 50; values above 50 indicate expectations of expansion and values below 50 indicate expectations of contraction for the manufacturing sector.

Relevance : Rarely affects markets
Release schedule : 7:30 (GMT); monthly, on the first business day of the following month
Revisions schedule : Revisions for the past few releases usually occur every month.
Source of report : Swiss Association of Purchasing and Materials Management
Web Address : http://www.svme.ch/
Address of release : http://www.svme.ch/
AKA : Manufacturing Purchasing Manager's Index

Index for consumer spending in Switzerland. The Consumption Indicator moves with changes in real consumer spending and can be used as a gauge of the strength of domestic demand. A rising indicator value reflects rising consumer spending, which generally leads to economic growth and potentially augur inflationary pressures to come.

The UBS Consumption Indicator is calculated using five specific indicators of spending and expressed in the form of an index. These indicators are: new car sales, business trends in retail, overnight hotel stays by Swiss nationals in Switzerland , the consumer sentiment index and credit card transactions.

The headline is the index value for the month. Because the index value is always positive markets compare the current index value to the short and long-term average values in order to gauge Switzerland 's economic health. In the long term the average has been approximately 1.5, but may change with time.

Relevance : Tends to move markets on release
Release schedule : 8:00 GMT ; monthly, in the fourth week following the reporting month
Source of report : UBS
Web Address : http://ubs.com
Address of release: http://www.ubs.com/1/e/media_overview/media_switzerland/latest.html
AKA : Swiss Consumption

Confidence and Sentiment Reports

Swiss KoF Leading Indicators A composite of business surveys from various sectors of the economy (industry, retail and wholesale) that is combined to form a leading indicator that aims to project GDP growth approximately 8 months into the future.

Measures overall economic activity through a qualitative business survey about developments in the recent past, the current situation and expectations for the next three to six months. Survey questions relate to production, orders and stocks of finished goods. The Swiss Institute for Business Cycle Research (KOF) publishes this indicator monthly.
The KOF institute sponsors a number of business surveys, namely a monthly industry survey, a monthly retail trade survey, and a quarterly wholesale activity survey. These surveys, along with other information, are used to construct the monthly KOF composite leading indicator, which aims to track GDP growth and provide indications of major cyclical turning points about eight months in advance. In practice, the indicator appears to give a reading of the behaviour of GDP growth in the quarter of the reference month. Results are reported as the percent balance between optimistic and pessimistic responses. In addition to the monthly industry survey, the KOF also conducts a more exhaustive quarterly survey, which includes information on capacity utilization.

The composite leading indicator has six components: the change in manufacturers' orders inflow compared to the previous year's month; the change in manufacturers' order backlog over the previous month; manufacturers' expected purchase of intermediate and raw materials within the next three months; the judgement of stocks in wholesale business (quarterly series); households' judgements of their financial situation in the next year (from the quarterly survey of consumer confidence by the State Secretariat for Economic Affairs); and the quantitative year-to-year change in real orders' backlog in the construction sector (quarterly series). The three quarterly components of the leading indicator are introduced into the calculations for the KOF leading indicator for the reference month after the end of that quarter. The six component series are seasonally adjusted before being combined into the composite leading indicator.

Relevance: Rarely affects markets
Release schedule: 9:30am GMT (about 5:30am EST); monthly, in the last week of each month
Revisions schedule:
Source of report: Konjunkturforschungsstelle Swiss Institute for Business Cycle Research
Web Address: http://www.kof.ethz.ch/
Address of release: http://www.kof.ethz.ch/
(refer to 'News' section for most recent report)
AKA: Swiss Leading Indicators

Prices, Wages and Sales Figures

Tracks inflation in producer and import prices in Switzerland . The headline figure is the percentage change in the index from the previous period.

Changes in this index will generally precede changes in the consumer price index, as higher import costs and producer prices tend to eventually be passed to consumers. As with any indicator of inflation, increases in producer and import prices tend to act as an appreciating weight for the Swiss franc because inflationary pressures are almost always met with interest rate increases from the Swiss central bank.

The figure represents changes in the combined producer and import price index, calculated from changes in producer prices and import prices, giving appropriate weight to the proportion of domestic and imported goods.

Relevance :Moderate market impact
Release schedule : 7:15 (GMT); monthly, 2 weeks after the reporting period
Revisions schedule : Little or no revisions
Source of report : Swiss Federal Statistical Office
Web Address : http://www.bfs.admin.ch
Address of release : Unknown
AKA : Producer Price Index and Import Price Index

Index for consumer spending in Switzerland. The Consumption Indicator moves with changes in real consumer spending and can be used as a gauge of the strength of domestic demand. A rising indicator value reflects rising consumer spending, which generally leads to economic growth and potentially augur inflationary pressures to come.

The UBS Consumption Indicator is calculated using five specific indicators of spending and expressed in the form of an index. These indicators are: new car sales, business trends in retail, overnight hotel stays by Swiss nationals in Switzerland , the consumer sentiment index and credit card transactions.

The headline is the index value for the month. Because the index value is always positive markets compare the current index value to the short and long-term average values in order to gauge Switzerland 's economic health. In the long term the average has been approximately 1.5, but may change with time.

Relevance : Tends to move markets on release
Release schedule : 8:00 GMT ; monthly, in the fourth week following the reporting month
Source of report : UBS
Web Address : http://ubs.com
Address of release: http://www.ubs.com/1/e/media_overview/media_switzerland/latest.html
AKA : Swiss Consumption

Gauge for goods sold at retail outlets in the past month. Retail Sales is a leading indicator for the Swiss economy since private consumption makes up a large portion of Swiss Gross Domestic Product. Rising consumer spending fuels economic growth, confirms signals from consumer confidence, and may spark inflationary pressures.

The headline figure is expressed as the percentage change from the same month last year.

Relevance : Tends to move markets on release
Release schedule : 7:15 (GMT); monthly, by the 15 th of the second month after the reporting month
Revisions schedule : Few revisions
Source of report : Swiss Federal Statistical Office
Web Address : http://www.bfs.admin.ch
Address of release :
AKA : Retail Trade

Monetary Policy - Money and Interest Rates

The target interest rate set by the Swiss National Bank (SNB). Adjusting the Three-Month Target Libor Rate is the primary monetary policy instrument of the Swiss National Bank.

The bank often raises rates to control inflation and reduces the rate to spur economic growth. Because rate changes affect the costs and returns for consumer loans, mortgages, bank yields and bond rates, the decision has huge influence on the economy and financial markets. The Financial sector is a relatively large part of the Swiss economy. Consequently Libor rate changes can affect the profitability of a significant part of Switzerland 's economy and affect the value of the Swiss Franc. Increasing Libor rates increases the demand for the Swiss Franc (an appreciating weight) where rate decreases lessen demand.

The Bank's current inflation target is 2 percent, and it increases and decreases rates accordingly in pursuit of that goal.

Relevance : Tends to move markets on release
Release schedule : Whenever the bank deems fit
Source of report : Swiss National Bank
Web Address : http://www.snb.ch
Address of release : http://www.snb.ch/e/geldpolitik/geldpol.html

States the central bank's views on developments in the Swiss economy, current monetary policy, and future options for policy changes. Markets tend to focus on the points that may suggest future interest rate changes. For example if the report cites worries over deflation and suggests that lackluster demand has stymied growth, market participants will be more inclined to monitor leading inflation and consumption indicators in order to gauge the likelihood of rate increases in the future.

Additionally, markets tend to pay particular attention to language in the report that might suggest future interest rate changes. If the Swiss National Bank is cautious in its tone about the inflationary outlook for the economy (typically characterized as "Hawkish"), then the market sees a higher likelihood of future rate increases. If the Bank is optimistic ("Dovish") or concerned with deflation, it suggests that future rate increases are less likely.

Relevance : Tends to move markets on release
Release schedule : Whenever the bank deems fit
Source of report : Swiss National Bank
Web Address : http://www.snb.ch
Address of release : http://www.snb.ch/e/publikationen/publi.html

The speeches of the Chief Economist for the Swiss National Bank have heavy influence on markets as they give insight into the future of Switzerland's monetary policy. Speeches cover many aspects of Switzerland's economy, from productivity and tax issues to international relations with trade partners.

The market will generally focus on points that could suggest future interest rate changes. For example, if the speech states that high housing prices and energy costs are fueling inflation, then the financial markets will expect an interest rate increase in order to suppress inflation. Markets will also monitor the highlighted sectors in the upcoming period in order to gauge the likelihood of rate increases to come.

Relevance : Tends to move markets on release
Release schedule : No set schedule
Source of report : Swiss National Bank
Web Address : http://www.snb.ch/e/index3.html
Address of release : http://www.snb.ch/e/publikationen/publi.html

Employment

The percent of unemployed persons in the labor force. The labor force is the aggregate of employed and unemployed persons. The rate is released as both a seasonally adjusted and unadjusted figure. The seasonally adjusted number is a key indictor of Swiss labor market conditions, significant because of its timeliness and overall market impact.

High unemployment translates to lower average wages and reduced consumer spending. As consumer spending is the majority of total expenditure, rising unemployment often leads to slow economic growth. In addition, high or rising unemployment puts downward pressure on interest rates and leads to a depreciating Franc.

Relevance : Moderate market impact
Release schedule : 5:45 GMT; monthly, in the first week following the reporting month
Revisions schedule : Revisions only occur when seasonal adjustments are made
Source of report : State Secretariat for Economic Affairs
Web Address : http://www.seco-admin.ch/
Address of release: http://www.bfs.admin.ch/
AKA : Workforce Jobs

The number of paid employees working at least six hours each week. The headline number for the employment level, which is officially known as "workforce jobs," appears as both the total number of employees and as a year on year percentage change in that figure. The Swiss employment level is important serving as the headline figure for job growth or decline. Higher job growth accompanies economic expansion and could spark inflationary pressures.

Swiss unemployment has historically been very low, averaging half that of the EU. Whereas most countries consider an unemployment rate of 4% very low, Switzerland is accustomed to rates below 4%.

Relevance : Rarely affects markets
Release schedule : 7:15 (GMT); quarterly, about two months after the reporting quarter
Revisions schedule : Little or no revisions
Source of report : Swiss Federal Statistical Office
Web Address : http://www.bfs.admin.ch
Address of release : http://www.bfs.admin.ch/
AKA : Workforce Jobs

It is the key gauge for inflation in Switzerland . Simply put, inflation reflects a decline in the purchasing power of the Franc, where each Franc buys fewer goods and services. The CPI calculates the change in the price of a predetermined basket of consumer goods and services. This basket represents the goods and services that an average household will purchase. The figure is compared to those of the previous month as well as the previous year in order to gauge changes to the costs of living on a month to month and year to year basis. The headline number is the percentage change either from the previous month's value or the previous year's value.

As the key indicator of inflation, a rising CPI may prompt the Swiss National Bank to raise interest rates in attempt to manage inflation and slow economic growth. Higher interest rates make holding the Franc more attractive to foreign investors, and this higher level of demand will place upward pressure on the value of the Franc.

Relevance : Tends to move markets on release
Release schedule : Monthly
Source of report : Swiss Federal Statistical Office
Web Address : http://www.bfs.admin.ch/
Address of release : http://www.bfs.admin.ch
AKA: Consumer Prices