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UBS Consumption Indicator: A stable October

Zurich / Basel | | Media Releases Switzerland

UBS Consumption Indicator signals strong consumption growth

Following a sharp decline in September, the UBS Consumption Indicator rose by 0.02 points, to 1.72 in October. The increase can be attributed primarily to an improvement in business activity in the retail sector as well as growing new car registrations, up 5.7% year-on-year. But weaker consumer sentiment, a factor that accounts for a fifth of the Indicator, as well as stagnant hotel overnights by Swiss residents, weighed on it as a whole in October.

The UBS Consumption Indicator enables direct comparisons with the year-on-year growth rate of private consumption. October's reading closely matched our expectations for this year's inflation-adjusted private consumption growth of 1.8%. UBS anticipates a robust, consumer-driven domestic economy in coming quarters as well. Continuing immigration inflows, low interest rates and declining unemployment should further support solid private consumption.

The Indicator is calculated from 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)

Calculation of the UBS Consumption Indicator

The UBS Consumption Indicator signals private consumption trends in Switzerland with a lead time of about three months of the official figures. At 57%, 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 nationals, 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.

Contact:

Caesar Lack, Swiss Economic Research
Tel. +41 44 234 44 13

Daniel Kalt, Chief Economist Switzerland
Tel. +41 44 234 25 60

UBS publications and forecasts for Switzerland: www.ubs.com/wmr-swiss-research