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UBS consumption indicator sluggish
While UBS anticipates an acceleration in consumption in 2012 compared with last year, the UBS consumption indicator suffered in February a further slight decline. Nevertheless, the indicator remains above the lows of last autumn.
Zurich/Basel, 27 March 2012 – In February, the UBS consumption indicator declined slightly for the second month in a row. At 0.87 points, however, it is still above the lows of last autumn. The increase in the registration of new cars and the slight improvement in the consumer sentiment index impacted the consumption indicator positively, but this was more than offset by the negative effect of the other sub-indicators.
The most recent estimates issued by the State Secretariat for Economic Affairs (Seco) show that private consumption accelerated steadily throughout last year: from +0.1 percent in the first quarter of 2011 to +0.4 percent in the fourth quarter of 2011 (adjusted for seasonal effects and inflation, quarter-on-quarter). As such, consumption developed conversely to the economy as a whole, which grew by 0.4% in the first quarter and fell to 0.1% in the fourth quarter. In its anti-cyclical behavior, private consumption made an important contribution to stabilizing the economy and prevented it from slipping into recession in the fourth quarter.
Due to better-than-expected economic figures of the fourth quarter of 2011 and the slight brightening of the global economy, UBS revised its growth forecast for Switzerland upwards in mid-March – economic growth of 0.9 percent is now anticipated for 2012 as a whole (previously: 0.4 percent). Low interest rates, continued immigration and falling consumer prices will all give fresh impetus to private consumption this year. At an expected level of growth of 1.2%, private consumption is likely to make an above average contribution to economic growth in the current 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 time of about three months on the official figures. At roughly 60%, private consumption is by far the most important component of Swiss GDP. UBS calculates this leading indicator from five consumer-related parameters: new car registrations, business activity in the retail sector, the number of domestic overnight hotel stays by Swiss residents, 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 this data is available monthly.
Daniel Kalt, Chief Economist Switzerland
Tel. +41 44 234 25 60
Caesar Lack, Wealth Management Research
Tel. +41 44 234 44 13
UBS publications and forecasts for Switzerland: www.ubs.com/wmr-swiss-research
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