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UBS Consumption Indicator: setback in January
Positive business activity in the retail sector, slowdown in new car registrations
After an increase in December, the UBS Consumption Indicator fell by 0.15 points in January to 1.68, primarily attributable to flattening growth in new car registrations. Although the number of new car registrations increased by 7.7 percent compared to the same month in the previous year, double-digit growth had been posted in the two previous months. The slight rise in business activity in the retail sector was not able to compensate for the negative impetus caused by new car registrations.
The UBS Consumption Indicator is structured so that clear conclusions can be drawn about the year-on-year growth rate of private consumption. The UBS Consumption Indicator's current level reflects our expectations for this year's inflation-adjusted private consumption growth of 1.7 percent almost exactly. Private consumption and the economy as a whole continue to be supported by the low interest rates, improvements in the labor market and ongoing immigration. In addition, the strong Swiss franc is leading to falling prices of imports; in January the annual inflation rate for foreign goods stood at -0.7 percent. By contrast, inflation for domestic goods stood at +0.6 percent. Falling prices of foreign goods are also likely to boost consumption.
The UBS Consumption Indicator is calculated on the basis of five sub-indicators: new car registrations, business activity in the retail sector, the number of domestic overnight stays in hotels by Swiss residents, 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)
Carla Duss, Swiss Economic Research
Tel. +41 44 234 21 19
Daniel Kalt, Chief Economist Switzerland
Tel. +41 44 234 25 60
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