Financial Outlook H1 2026

Swiss Inflation Report

Swiss inflation slowed to 0.5% year-on-year in June, after standing at 0.6% in May. This matched market expectations. The primary driver for the decline was the cooling of energy and fuel price inflation, although at +5.0% year-on-year, it remained at an elevated level. Core inflation, which excludes volatile components such as energy and seasonal products, remained low and stable at 0.3%, pointing to continued low underlying inflationary pressure.

Among individual expenditure categories, clothing and footwear recorded the strongest increase in inflation, while price developments in recreation, sport, and culture, as well as restaurants and accommodation, softened the most. Domestic inflation eased slightly to 0.5%, while imported inflation fell more sharply to 0.2%.

On a seasonally adjusted basis, inflation remained unchanged compared to the previous month. The three-month annualized inflation rate held steady at 1.4%, indicating that inflationary momentum continues to subside. The breadth of price increases also decreased, suggesting that inflationary pressure is becoming increasingly concentrated on fewer goods and services.

Overall, headline inflation is developing broadly in line with the Swiss National Bank's (SNB) June forecast. As energy price pressures ease and core inflation remains subdued, the SNB is expected to keep its policy rate unchanged at 0% for the foreseeable future. All in all, inflation remains well under control, meaning there is currently no need for additional monetary policy tightening.

Slowdown of Hiring in the US Tech Sector: Higher Interest Rates, Artificial Intelligence, and Pandemic Overhiring

Since late 2022, hiring behavior in the US tech sector has cooled significantly, following an exceptionally strong phase of workforce expansion during the COVID-19 pandemic. Annual employment growth is now running about five percentage points below its long-term trend. Three main factors are considered the primary causes: the rise in interest rates, the increasing use of artificial intelligence (AI), and the correction of the above-average level of new hires made during the pandemic.

The Impact of Higher Interest Rates

The analysis shows that higher interest rates had only a limited impact on employment trends. Companies with a heavier burden from rising financing costs did not experience significantly weaker employment trends than less affected firms. This suggests that tighter monetary policy is not the primary reason for the slowdown in tech sector employment.

The Role of Artificial Intelligence (AI)

While artificial intelligence is beginning to influence workforce planning, its impact to date remains relatively small. Occupational groups highly exposed to AI have seen slightly weaker hiring dynamics since 2023. Overall, it is estimated that AI explains only about 0.5 percentage points of the decline in annual employment growth. Furthermore, companies that cited AI as the reason for layoffs primarily reduced roles in highly AI-susceptible activities. This suggests that such statements are predominantly based on actual productivity gains rather than serving merely as a cover for general staff reduction programs.

Post-Pandemic Normalization (Overhiring)

The most significant factor behind the weaker employment trend is normalization following the exceptionally strong staff buildup between 2020 and 2022. Many tech companies hired new employees during the pandemic at a pace that outstripped productivity growth. Since 2022, these companies have scaled back their hiring behavior much more aggressively than firms that pursued a more moderate workforce expansion. This staffing normalization process is estimated to account for up to two percentage points of the drop in annual employment growth, making it three to four times more significant than the impact of AI.

Conclusion

In total, higher interest rates, the growing adoption of AI, and the normalization of staffing levels account for roughly half of the decline in employment dynamics within the tech sector. The remaining portion is likely due to generally weaker macroeconomic conditions. Although artificial intelligence is expected to play an increasingly important role in hiring decisions in the future, evidence so far indicates that the current cooling of the tech job market is primarily a correction of the extraordinary workforce expansion seen during the pandemic.