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UBS Consumption Indicator moves lower in November
The UBS Consumption Indicator was unable to build on the positive trend of the past few months as it edged slightly lower in November. The indicator came in at 2.13, which is still a high level and well above its long-term average, and continues to point towards strong private consumption in Switzerland.
The monthly UBS Consumption Indicator in November was 2.13, after 2.21 in October and 1.99 in September. It has now exceeded its long-term average of 1.49 for 21 months in a row.
The UBS Consumption Indicator is calculated from five sub-indicators: new car sales, business activity in the retail sector, the number of domestic hotel overnights by Swiss nationals, the consumer sentiment index and credit card transactions via UBS points of sale in Switzerland. The downturn in November is attributable to the trend in hotel overnight stays, which dropped sharply versus the prior month due to seasonal effects. Business was upbeat in the retail sector, and the number of new car registrations was also positive. New car registrations rose by 13.3% year-on-year, an impressive figure that confirmed the strong trend of the last few months. Consumer sentiment has now stabilized at a high level following the drop in the third quarter.
At its current level, the UBS Consumption Indicator signals that Swiss consumer spending remains healthy with a positive outlook going forward. The situation in the labour market has brightened considerably, and we expect this trend to continue in the coming months. The resulting rise in employment and the expected increases in real wages are having a positive impact on disposable household income and this should fuel consumer spending in the next few months. Overall, UBS anticipates real growth of 2.1% in private consumption this year and 2.2% for the coming year.
UBS Consumption Indicator and private consumption in Switzerland
(Private consumption: year-on-year change in %, UBS Consumption Indicator: index level)
Calculation of the UBS Consumption Indicator:
The UBS Consumption Indicator signals private consumption trends in Switzerland with a lead of about three months on the official figures. At 61%, private consumption is by far the most important component of Swiss GDP. UBS calculates this leading indicator from five consumer-related parameters: new car sales, the business situation in the retail trade, the number of overnight hotel stays by Swiss nationals in Switzerland, 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 these data are available monthly.
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