Zurich, 8 March 2018 – The barometer for industrial small and medium-sized enterprises (SMEs) declined to 0.51 points in January 2018 from 0.73 points in October 2017. We attribute this to the reduced influx of orders and the lower production level. Other indicators prevented a stronger decline. Particular support came from overseas orders, helped by the weaker franc against the euro and the Eurozone's solid economic performance. Industrial SMEs also had a more positive view of the general state of business in January than in October.

Among large industrial companies, the barometer rose to 0.82 from 0.53 points between October 2017 and January 2018. The reading was boosted by year-on-year changes to incoming orders and expectations surrounding incoming orders and the level of production over the next three months. However, weaker order receipts and the reduced production level compared to the previous month likely prevented a stronger rise in the barometer value.

Construction trade recovers from brief downtrend

The order books of large construction companies recovered more robustly in January than those of SMEs. Business conditions were of a similar nature, improving slightly again among large companies over recent months while remaining stable at a somewhat lower level among SMEs. On the other hand, the income of SMEs has stabilized compared with the previous quarter, while large companies' earnings have declined.

The state of business of large architect and engineering companies improved again in recent months, while it stagnated at a somewhat lower level among SMEs. The positive assessment was not attributable to earnings, however, which stagnated for both in the current quarter.

Large service providers gain confidence

Large service providers reported a more positive assessment of their business situation, while the downtrend among SMEs has continued uninterrupted since the middle of last year. This was also reflected in the income situation, which stagnated among SMEs on the level of 4Q17 while recovering slightly among large companies. The opposite was apparent in prices: SMEs had a more optimistic view of performance, despite continuing to expect a drop in prices. Demand among all company sizes has recovered somewhat.

The business conditions of major retailers improved slightly in January, while they slightly deteriorated again for SME retailers at the start of the year. The mild recovery toward the end of last year was unfortunately not representative of a turning point for SME retailers' economic situation. The earnings situation among large retailers also stagnated, while it continued to deteriorate among SMEs. The uptrend continued among large tourism companies in the first quarter, while all indicators for tourism SMEs fell with the exception of demand, which stagnated at a low level.

UBS SME barometer

Sources: KOF, UBS

Calculation of the UBS SME barometer
The UBS Industrial Barometer is based on the industry survey conducted by the KOF each month (excluding the construction industry). It is calculated as the first main component of 17 subindicators for the entire industry, divided into SMEs (up to 200 employees) and large companies (more than 200 employees). It is scaled so that its mean value is zero and its variance is 1

Industry

Sources: KOF, UBS

Services

Sources: KOF, UBS

Important
The data is seasonally adjusted. Survey responses are evaluated using a diffusion index: the result represents average of companies reporting a positive or a negative trend. It therefore does not represent a percentage rate of change.

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