Source: KOF Economic Institute
The KOF Employment Indicator rose to 2.1 points in the third quarter of 2026, returning to the level last seen at the start of the year.
This improvement is being driven by more encouraging employment forecasts for the next three months, whilst companies are assessing their current employment levels with slightly greater caution than in the last quarter.
The KOF Employment Indicator for the third quarter of 2026 stands at 2.1 points – up from 1.6 points in the last quarter (revised from 2.2 points). When each set of figures is published, the figures for past quarters are also revised – mostly upwards in recent quarters.
The previous quarter's figure, by contrast, is lower. In May it was based solely on responses from the first month of the quarter. The downward revision is attributable solely to employment forecasts, which now stand at 1.2 points instead of 2.9 points.
Among other factors, the war in Iran, which has been ongoing since the end of February, and rising energy prices are likely to have dampened employment prospects in the spring more than the May figures suggested. The indicator is currently slightly above its long-term average of 1.7 points. As it leads actual employment trends, this level points to a slight increase in employment extending into the autumn.
The KOF Employment Indicator is calculated from the KOF Institute's quarterly Business Tendency Surveys. It comprises two components: an assessment of current employment levels, and the employment outlook for the next three months. Around 4,500 firms provided data for the third quarter of 2026 in July. The indicator's two components are moving in opposite directions. On balance, the assessment of current employment levels has fallen from 1.9 points to 1.7, whilst forecasts have risen from 1.2 points to 2.5. Consequently, the proportion of firms planning to create additional jobs in the near future again more clearly outnumbers those intending to cut jobs.
Retail back in positive territory; hospitality slipping
The retail sector has seen the biggest jump. Its indicator has risen from minus 3.1 points to plus 2.9, returning to positive territory for the first time since the second quarter of 2024. The indicator also rose in the wholesale trade although, at minus 1.9 points, it remains in negative territory, as it has done for over two years.
The employment situation in manufacturing eased for the fourth consecutive time, with the indicator reaching minus 5.3 points, although it remains below zero. The hospitality sector is moving in the opposite direction, with the indicator falling once again to minus 8.8 points – its lowest level since the second quarter of 2021. The construction industry continues to provide strong support for the overall indicator with a reading of 11.2 points, whilst the indicator for other services remains positive but has declined for the third consecutive quarter.