The monthly UBS Consumption Indicator, which had remained unchanged at 1.89 since October, edged up slightly to 1.95 in January. The indicator surpassed the January reading just once last year, in June. Overall, the UBS Consumption Indicator has now stood above the long-term average level of 1.49 for 11 months.

Of the five sub-indicators used to calculate the UBS Consumption Indicator, consumer sentiment showed a positive trend. The business trend in the retail sector also improved further, as revealed by the survey results of the Swiss Institute for Business Cycle Research (KOF) at the Federal Institute of Technology in Zurich. Furthermore, the favourable trend in the number of overnight hotel stays by Swiss nationals in Switzerland continued. On the other hand, new car registrations recorded a slump, declining 4.4% year-on-year in January to 17,553. The fifth variable incorporated in the calculation of the UBS Consumption Indicator is cumulative monthly credit card spending via UBS at points of sale in Switzerland.

With a lead time of three to four months on the official figures, the UBS Consumption Indicator thus signals a persistent robust pattern in private consumption as well as an overall solid state of Swiss domestic demand up to the outset of the year. This strong growth should nevertheless persist over the coming months thanks to upbeat income and job market trends. UBS forecasts real growth in private consumption of 2.1% in the current year, following 1.9% in 2006.

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

UBS publications and forecasts for Switzerland: www.ubs.com/economicresearch