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UBS consumption indicator: significant boost to consumer sentiment
The UBS consumption indicator rose substantially in April, driven primarily by the improvement in new car registrations.
Zurich/Basel, 29 May 2013 – In April, the UBS consumption indicator rose significantly month-on-month from 1.24 (revised from 1.25) to 1.46. A positive trend in new car registrations, consumer sentiment and the demand for hotel accommodations among Swiss residents were the main factors in this rise.
The number of new car registrations was higher than expected in April. Following the 12.1% collapse in March, the 1.5% decline in April compared to the same month last year was considerably lower. Since car sales were exceptionally high last year, the automotive industry already factored in a fall of 10% to start 2013. The decrease in new car registrations has only been 7.2% for the first four months of the year (compared with the same period in 2012), which is better than expected.
The SECO survey of private households for the second quarter indicates a slight improvement in consumer sentiment. This is included in the UBS consumption indicator as one of five sub-indicators. Job security in particular was rated higher than in the previous quarter. These results continue the positive trend in consumer sentiment that has been observed for several quarters now.
The business situation in the retail trade remains at a very low level from a historical viewpoint. Following the deterioration in sales in March, the retail trade assessed business in April as being once again more negative than in the previous month. The poor performance in March and April shattered hopes of a sustained improvement resulting from the tentative rise in business activity during the previous months.
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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