UBS Consumption Indicator still at high level
The UBS Consumption Indicator registered a slight month-on-month fall in July. At 2.26 points, however, it did not slip far from the prior months' high levels and remains well above its long-term average. At this level, the indicator signals continued healthy growth for consumer spending in Switzerland.
The UBS Consumption Indicator, calculated on a monthly basis, stood at 2.26 points in July after readings of 2.31 in June and 2.08 in May. It has now exceeded its long-term average of 1.49 for 17 months in a row.
The UBS Consumption Indicator is calculated from five sub-indicators: new car sales, retail sales, 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. The slight drop in July was primarily due to somewhat weaker consumer sentiment, although sentiment remains strong by historical standards. All other sub-indicators, meanwhile, showed an increase. Growth in new car registrations and overnight hotel stays by Swiss nationals in Switzerland was especially strong.
At its current level, the UBS Consumption Indicator shows that Swiss consumer spending is still very buoyant. The outlook is upbeat, with the recovery on the job market in full swing and likely to continue in the coming months. The resulting rise in employment and the expected increases in real wages are having a positive impact on disposable household incomes and should support consumer spending in the next few months. Overall, UBS expects real private consumption growth of 2.5% in 2007, following an increase of 1.9% in 2006.
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 of about three months on the official figures. At 61%, private consumption is by far the most important component of Swiss GDP. UBS calculates this leading indicator from five consumer-related parameters: new car sales, the business situation in the retail trade, 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 available monthly.
Daniel Kalt, Head of Swiss Economic Research
Tel. +41-44-234 25 60
Felix Brill, Economic & Swiss Research
Tel. +41-44-234 35 54
UBS publications and forecasts for Switzerland: www.ubs.com/economicresearch