UBS launches Consumption Indicator for Switzerland
UBS is launching the UBS Consumption Indicator. This is a leading indicator that foreshadows GDP figures three to four months ahead of release and provides a reliable measure of the private consumption trend in Switzerland. The indicator currently points to an acceleration in consumer spending in the second quarter after a modest rise in the first three months. The UBS Consumption Indicator will be launched in May 05 and published on a monthly basis.
Private consumption is by far the largest component of gross domestic product (GDP). It accounts for 61% of GDP, making it a key measure of economic performance in Switzerland. To provide companies and individuals with a macroeconomic performance indicator that is as reliable and up-to-date as possible, the economists at UBS Wealth Management Research have amalgamated five sub-indicators of consumer behaviour into a single leading indicator that foreshadows GDP figures three to four months ahead of release. The UBS Consumption Indicator is based on four publicly available sets of figures (the KOF/ETH survey of business activity in the retail sector; new car registrations; the number of overnight stays by Swiss guests at hotels in Switzerland; and the seco consumer sentiment index) and on internal UBS data (credit card transactions).
The UBS Consumption Indicator shows that consumer activity has dropped off a little since the middle of last year. Accordingly, growth in the real private consumption component of GDP slowed from 1.4% in the first three months to 1.1% in the final quarter of last year. The new UBS indicator points to a 1.1% rise in private consumption for the first quarter of 2005. The indicator's sharp rise in March and April suggests a gradual acceleration in the second quarter. For instance, new car registrations - one of the indicator's components - stabilized in March following a steep decline, while consumer sentiment improved again slightly in April. Overall, the UBS economists see private consumption picking up gradually over the remaining course of the year, so average real growth of 1.5% can be expected for 2005 as a whole. As regards the overall economy, UBS anticipates real GDP growth of 1.6% this year and a modest acceleration to 1.8% for 2006.
As of now, the UBS Consumption Indicator will be published in a press release on the fourth Tuesday of each month.
Zurich / Basel, 18 May 2005