Economic Expectations Rise for the Third Consecutive Month

The ZEW-CS Indicator for the economic sentiment in Switzerland continues to improve in November 2016. Compared to the previous month, it increased by 3.7 points to a current reading of 8.9 points. This marks the third successive rise of the indicator. In contrast, the assessment of the current economic situation in Switzerland deteriorates: the corresponding indicator declines by 3.2 points to a level of 14.7 points. Almost three quarters of the surveyed experts expect the economic development to remain unchanged within the next six months. Furthermore, a large majority of 85 per cent of the respondents considers the current economic situation to be normal.

The ZEW-CS Indicator reflects the expectations of the surveyed financial market experts regarding the economic development in Switzerland on a six-month time horizon. It is calculated monthly by the Mannheim-based Centre for European Economic Research (ZEW) in cooperation with Credit Suisse (CS), Zurich.

Economic expectations for the eurozone are improving in a similar way as they do for Switzerland, with a rise of 4.4 points to a level of 12.5 points. The indicator regarding the US economy, by contrast, drops by 16.4 points to a current reading of 18.7 points. One possible reason for this assessment may be the result of the US presidential election, which took place during the survey period. Quite a different picture emerges when considering the stock markets: the indicator for the development of the S&P 500 rises by 26.2 points to a reading of 37.5 points. This is the largest increase of the indicator since the question about US stock market expectations has been first introduced into the survey in 2008. For the SMI in Switzerland and the STOXX 50 in the eurozone the indicators also increase substantially, by 19.6 points and 16.6 points, respectively.

Trend of growing inflation expectations continues

The difference between analysts expecting a rise in inflation rates in Switzerland and analysts expecting inflation rates to decline can be used to measure inflation expectations. In the current survey this difference has risen by 10.6 points to a reading of 61.8 points. For the eurozone and the USA these indicators have increased as well. Hence, the trend of growing inflation expectations from the previous months continues. Against this backdrop, the development of short-term interest rates appears plausible: in all three economic regions, the corresponding indicators rise by approximately ten points.

Detailed Results

More detailed results – including survey participants' assessment of developments in other countries – can be found in this month's edition of the "Switzerland Financial market report".

For more information please contact

Markus Teske (ZEW), Phone +49 (0)621/1235-372, E-mail teske@zew.de

Lukas Gehrig (Credit Suisse), Phone +41 44 333 52 07, E-mail lukas.gehrig@credit-suisse.com