The UBS Consumption Indicator continued to rise in August. It increased to a value of 1.95 from its July level of 1.88.

As in the previous month, the rise in the Consumption Indicator in August had a broad base, with all sub-indicators contributing to the increase. The number of new car registrations was particularly strong: 11.9% more cars were registered in August compared to the previous year.

According to estimates published by the State Secretariat for Economic Affairs (seco) at the start of September, private consumption declined in the second quarter of this year when adjusted for inflation. The growth of private consumption thus fell from an annualized rate of 2.2% in the first quarter to 1.5% in the second quarter.

This decline is hard to reconcile with the increase in the UBS Consumption Indicator. Low interest rates and an improvement in the labor market, as well as the ongoing increase in the permanent resident population, should continue to support private consumption. The broadly based increase in the Consumption Indicator leaves us expecting a clear increase in private consumption in the second half of the year.

The UBS Consumption 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 citizens, 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)

Contact:

Caesar Lack, Swiss Economic Research
TEL. +41 44 234 44 13

Carla Duss, Swiss Economic Research
Tel. +41 44 234 21 19

UBS publications and forecasts for Switzerland: www.ubs.com/wmr-swiss-research