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Swiss leading indicator edges lower as outlook worsens
[ZURICH] Switzerland's leading economic indicator edged lower in January, a survey showed on Friday, though the reading doesn't yet reflect fallout from a surging Swiss franc after the Swiss central bank abandoning a cap on currency.
The KOF economic barometer, which gives an indication of the likely performance of the economy in about six months' time, fell to 97 points in January from a revised 98.8 points in December. That was below analysts' expectations for a reading of 97.5 and below the long-term average of 100 points.
The KOF institute predicted earlier this week that Switzerland's economy will contract as a result of the central bank's shock decision on Jan. 15 to abandon the Swiss franc cap.
It said that change was not yet reflected in the January indicator because most participants had already responded beforehand.
"However, the KOF Barometer would have also declined if only those responses would have been taken into account, which were given before the repeal of the Swiss franc lower bound," KOF economists said in a statement.
"Therefore, the KOF Economic Barometer indicates that the climate for the Swiss economy gets rougher."
The KOF said hospitality industry and textile, mechanical engineering and chemical manufacturing were the main drags on the index, but construction and consumption partly cushioned the blow. The banking sector was largely stable.
The Swiss National Bank upended financial markets two weeks ago by scrapping the franc's three-year-old cap against the euro, sending the currency soaring and stoking fears for Switzerland's export-driven economy.