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UBS Consumption Indicator: decline continues in February
Strongest February in 10 years for new car registrations does not compensate slump in retail business
The UBS Consumption Indicator continued to fall in February. After declining in January, the index lost another 0.20 points and now stands at 1.46 points. Sub-indicators, however, paint an uneven picture. The strongest February in 10 years for new car registrations (an increase of more than 20% compared to the same month in the previous year), the positive trend in overnight stays and brightening consumer sentiment were unable to compensate the steep slump in the retail sector. After two months of significantly higher figures, business activity in the retail sector declined sharply in February. This sub-index is highly volatile, however, making a rapid recovery from the momentary slump appear possible.
The UBS Consumption Indicator enables direct comparison of the growth rate in private consumption against the previous year's level. At 1.46 points, the index came in only marginally below our expectation of 1.6% for inflation-adjusted private consumption growth in 2011. The mainstays of private consumption and the economy as a whole remain low interest rates, labor market improvements and ongoing immigration. UBS Economic Research Switzerland remains upbeat on the development of the economy as a whole. We have increased our forecast for this year's growth in Swiss gross domestic product to 2.7%. Investment remains the main growth driver, while private consumption also represents an important mainstay.
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)
Caesar Lack, Economic Research Schweiz
Tel. +41 44 234 44 13
Elias Hafner, Economic Research Schweiz
Tel. +41 44 234 77 94
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