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Consumption recovers slightly in September
The UBS consumption indicator recovered in September a little from its weak showing in August. Retail sales and overnight stays in hotels were the most important pillars. In contrast, new car registration slumped dramatically.
Zurich/Basel, 30 October 2012 – The UBS consumption indicator rose slightly to 1.07 points in September from 1.02 in August. Overnight stays in hotels by Swiss residents stabilized, while the situation in the retail sector improved. On the other hand, new car registrations saw a real slump, down 20% year-on-year.
Following a dip in August, the business situation for retailers brightened in September. Business activity in the retail sector fluctuates greatly from month to month. In the fall of last year, the sector nonetheless appeared to reach its low point. Since then, business has tended to pick up. This could be due to the currency stability resulting from the exchange rate floor to the euro. The price decline in retail trade has slowed down this year – food prices have even stabilized. Previously falling prices had a very adverse effect on the retail sector, since they led to a drop in turnover which in turn resulted in tighter margins.
While overnight stays in hotels by Swiss residents have stabilized, the number of new car registrations in September was one fifth below the prior-year level. This fall is - at least to some extent - probably due to the inventory restocking in June, i.e. before the introduction of the CO2 tax in July.
Despite the poor figures for September, 2012 has seen more new cars registered in Switzerland than ever before. This supports the expectation held by UBS that private consumption in the current year will make a major contribution to economic growth in Switzerland.
How the UBS Consumption Indicator is calculated
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.
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