The monthly UBS Consumption Indicator dipped to 2.09 in May, following revised figures of 2.38 for April and 2.09 for March. Hence, the indicator has now exceeded its long-term average of 1.49 for 15 consecutive months.

The UBS Consumption Indicator is calculated from five sub-indicators: new car sales, business activity in the retail sales sector, the number of overnight hotel stays by Swiss residents in Switzerland, the consumer sentiment index, and credit card transactions made via UBS at points of sale in Switzerland. The main factor behind the decline in May was the slight cooldown in retail sector business activity, although sales remained strong compared with the long-term average. New car sales, down 2.4% year-on-year, also had a negative effect. On the other hand, the monthly number of domestic hotel overnight stays by Swiss residents as well as very upbeat consumer sentiment had a positive impact on the indicator.

Despite its decline, the UBS Consumption Indicator continues to signal a very robust trend in Swiss private consumption. What is more, the outlook remains promising. The recovery on the job market, for example, is in full swing, which looks set to continue through the coming months. The resulting boost in employment levels and the increase in real wages expected in this environment are having a positive effect on disposable household incomes. This, in turn, should underpin consumer spending further over the next few months. Overall, therefore, UBS forecasts real growth in private consumption of 2.5% this year, up from 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