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UBS Consumption Indicator surges to highest level in years

Zurich / Basel | | Media Releases Switzerland

The UBS Consumption Indicator continued its upward trend in June. At 2.11, it is now at its highest level since July 2001, suggesting that robust growth in Swiss private consumption is set to continue, and may even pick up slightly.

The monthly UBS Consumption Indicator rose sharply again in June, reaching 2.11, up from 1.87 in May. It is now well above its long-term average of 1.49, meaning that the healthy Swiss economy will probably continue to be supported by robust consumer spending.

Improved consumer sentiment and the increase in new car registrations - up 11.7% in June year-on-year - once again contributed to the rise. At the same time, the KOF survey indicates that business conditions in the retail sector have improved significantly, and the number of overnight hotel stays by Swiss nationals in Switzerland, an important indicator of domestic demand for tourism services, has picked up noticeably since the beginning of the year.

Swiss economy in strong form
On the whole, the economic environment in Switzerland remains robust. Having accelerated in the first quarter, economic momentum has not slackened. Recently published indicators point to an ongoing strong industrial activity which is broadly supported across a range of sectors. The economic situation in Asia and the Eurozone is very favourable, with borrowing rates remaining moderate and the Swiss franc exchange rate continuing to benefit the export industry. The improved employment outlook has bolstered consumer spending, and UBS reckons that private consumption will rise by 1.9% in 2006. Overall, UBS economists expect robust GDP growth of 3.0%.

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 indicates private consumption trends in Switzerland with a lead of about three months on the official figures. At 61%, private consumption is by far the most important component in the Swiss GDP. The UBS economic barometer is calculated on the basis of five consumer-related indicators: new car sales, business conditions in the retail sector, the number of overnight hotel stays by Swiss nationals in Switzerland, 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 these data are produced on a monthly basis.

Contacts

Hans-Peter Hausheer

Economic Research

Tel. +41 44 234 67 32

Karin Schefer

Swiss Economic Research

Tel. +41 44 234 43 94