The index, which points to likely economic developments in about six months, rose to 1.30 from a revised 1.28 in February, the influential KOF Institute for Business Cycle Research said in a statement on Wednesday.
Economists' forecasts for March had ranged from 1.30 to 1.42, with a mid-range prediction of 1.35.
"The current barometer trend signals a gradual weakening of GDP growth around the middle of this year," the think tank said.
The barometer - which is regularly revised as fresh data become available - was initially reported at 1.30 in February.
After the data, the Swiss franc ticked lower against the dollar and euro but interest rate futures were little changed as markets focused on the still high level of the indicator.
"Today's KOF barometer reading was in line with our expectation, showing that growth dynamics in Switzerland remain high but the potential for further acceleration is limited," Credit Suisse economist Roland Klaeger said.
"GDP is growing well above potential, which is why today's KOF barometer is nothing to worry about (in terms of the growth outlook). Amid sound growth the SNB is likely to raise rates in June and September," Klaeger added.
The Swiss National Bank (SNB) tightened borrowing costs in December and March, taking the three-month Swiss franc LIBOR rate to effectively 1.25 percent.
The central bank has left little doubt that rates may still be too low as output increases while inflation remains in check.
A snap poll after the central bank's last rate decision showed economists expected the rate to rise to 2.00 percent by the end of the year, implying a quarter point increase at each of its quarterly meetings.
"The Swiss economy continues to have strong growth rates but in the coming quarters they are just not going to increase as much as they did in the strong recent quarters," KOF economist Daniel Bloesch told Reuters.
"The Swiss economy remains in very good shape."
The KOF reading comes on the heels of a slew of strong Swiss data - which have made a further acceleration of growth likely at least for the first half - and upbeat results from large Swiss companies.
Some economists have already said such strong growth rates seem hardly sustainable.
"We are looking for global sentiment indicators to reach their peak in the coming months and we might well see some slowdown after that," said Sarasin economist Astrid Frey.
Last week, SNB board member Philipp Hildebrand signalled Swiss rates may still be too low and that the central bank would continue lifting them gradually as a pick-up is becoming increasingly broad-based.
On Tuesday, data showed business sentiment in Germany, Switzerland's single largest trading partner, unexpectedly rose to a 15-year high in March, lifted by an improvement in current conditions and stronger expectations for the coming months.