Following a sharp decline in September, the UBS Consumption Indicator rose by 0.02 points, to 1.72 in October. The increase can be attributed primarily to an improvement in business activity in the retail sector as well as growing new car registrations, up 5.7% year-on-year. But weaker consumer sentiment, a factor that accounts for a fifth of the Indicator, as well as stagnant hotel overnights by Swiss residents, weighed on it as a whole in October.

The UBS Consumption Indicator enables direct comparisons with the year-on-year growth rate of private consumption. October's reading closely matched our expectations for this year's inflation-adjusted private consumption growth of 1.8%. UBS anticipates a robust, consumer-driven domestic economy in coming quarters as well. Continuing immigration inflows, low interest rates and declining unemployment should further support solid private consumption.

The Indicator is calculated from five sub-indicators: new car registrations, business activity in the retail sector, the number of domestic overnight stays in hotels by Swiss residents, the consumer sentiment index, and credit card transactions via UBS at points of sale in Switzerland.

UBS Consumption Indicator and private consumption in Switzerland
(Private consumption: year-on-year change, in %; UBS Consumption Indicator: index level)