The latest UBS Consumption Indicator for February 2006 at 1.39 is below January's figure of 1.47, but still above the recent low of 1.24 seen last October and thus continues to point to solid growth in private consumption.

The UBS Consumption Indicator comprises five sub-indicators that, with the exception of consumer sentiment, are generally available relatively quickly on a monthly basis. The decline seen in February was due to slower growth in new car registrations coupled with a substantial slowdown in retail business, with several sectors reporting sluggish trading following the busy January clearance sales. However, the index of consumer sentiment, a constituent of the main indicator, had a significantly positive impact in February, having risen strongly recently. The UBS Consumption Indicator also incorporates monthly figures on the number of overnight stays in hotels by Swiss guests as well as the credit card turnover at points of sale in Switzerland that passes through UBS.

Despite the moderate decline in the UBS Consumption Indicator, UBS's economists expect private consumption to remain robust. The vagaries of the weather are likely to have hit consumption in March. With consumers far more optimistic looking ahead and positive momentum from the job market, there is even expected to be a moderate pick-up in consumer spending during the course of the year. Overall, UBS expects real private consumption to grow by an average of 1.9% for 2006.

UBS Consumption Indicator and private consumption in Switzerland
(Private consumption: year-on-year change in %, UBS Consumption Indicator: Index level)