UBS Consumption Indicator still at a high level
The UBS Consumption Indicator improved slightly in January, holding steady at a high level of 2.19, noticeably above its long-term average. The indicator continues to point to robust growth in Swiss private consumption.
The monthly UBS Consumption Indicator stood at 2.19 in January, after revised levels of 2.18 in December and 2.19 in November, and has now exceeded its long-term average of 1.50 for 23 consecutive months.
The UBS Consumption Indicator is calculated on the basis of five sub-indicators: new car sales, business activity in the retail sector, the number of hotel overnight stays by Swiss nationals in Switzerland, the consumer confidence index, and credit card transactions via UBS at points of sale in Switzerland. The slight spurt in the January reading was attributable primarily to the 22.3% year-on-year increase in the number of new passenger car registrations as well as to improved business activity in the retail sector, which reached its highest level in January since July 2001. The ongoing recovery in tourism also had a positive impact on the indicator, as reflected in the additional increase in the number of hotel overnight stays. Somewhat dampened consumer confidence was the only sub-indicator standing in the way of a more pronounced improvement in the overall UBS Consumption Indicator. However, it is noteworthy that despite the prevailing financial market turbulence, the consumer confidence index continues to hover at a very high level - by historical comparison as well as relative to the consumer confidence readings in the USA or neighbouring Europe.
At its current level, the UBS Consumption Indicator signals that Swiss private consumption is continuing to grow briskly. The positive trend in the labour market has led to a sharp rise in employment. Real wages too will likely rise further this year. Both these factors have a favourable impact on disposable household income and should boost consumer spending in the coming months. Overall, UBS expects real growth in private consumption to reach 2.2% in 2008.
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