UBS consumption indicator sees slight upturn in May
Following quite a weak first quarter for private consumption, with growth of only 1.2% year-on-year, the UBS consumption indicator is pointing toward acceleration in the second quarter.
Zurich/Basel, 25 June 2014 – The UBS consumption indicator rose in May from 1.68 to 1.77 points, boosted by the good performance of the retail business. Weaker figures for new car registrations prevented an even more significant increase.
It has been a long time since we have seen so much optimism among retailers. Retail sales as surveyed by the Swiss economic research institute KOF, one of the five sub-indicators used in calculating the UBS consumption indicator, climbed to 16 points in May, its highest level since January 2011. Although nominal retail revenues fell 1.3% in April compared to the previous month, business conditions seem to have brightened somewhat in May.
New car registrations were marginally down in May. Five percent fewer new cars were registered compared to the previous month, after figures are seasonally adjusted. This marks the continuation of the negative trend in the car trade, with almost 6% fewer new cars registered in the first five months of this year compared with the same period last year.
Sources: Seco, UBS
How the UBS Consumption Indicator is calculated
The UBS Consumption Indicator signals private consumption trends in Switzerland with a lead time of about three months on the official figures. At roughly 60%, private consumption is by far the most important component of Swiss GDP. UBS calculates this leading indicator from five consumer-related parameters: new car registrations, business activity in the retail sector, the number of domestic overnight hotel stays by Swiss residents, the consumer sentiment index, and credit card transactions made via UBS at points of sale in Switzerland. With the exception of the consumer sentiment index, all of this data is available monthly.
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Sibille Duss, UBS Chief Investment Office WM
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