After declining values early in the year, the consumption indicator rose considerably in May by 0.34 points to 1.91, its highest level since August of last year. New car registrations were the primary factor, up 20.2 percent compared to the same month last year. Retail sales also helped propel the consumption indicator higher.
UBS Wealth Management Research sees private consumption as a key driver of the Swiss economy. Consumption is supported by low interest rates, consistently high immigration and falling unemployment. As a result, we expect consumer spending to play a major role in growth again this year.
The UBS consumption indicator is an index designed to provide concrete conclusions regarding the annual growth rate of private consumption. Since the start of the year the UBS consumption indicator has shown private consumption growing at a rate of over 1.4%, and currently as high as 1.9%, which substantially exceeds the estimates from the State Secretariat for Economic Affairs (SECO). According to SECO, the Swiss gross domestic product only rose 0.3 percent in the first quarter of this year compared to the previous quarter, when adjusted for seasonal fluctuations and inflation. Consumer spending was quite disappointing: it increased only by about 0.2% quarter on quarter and 0.6% year on year. This actually represents a decline on a per capita basis, since the Swiss population is growing by approximately 1% each year.
UBS Consumption Indicator and private consumption in Switzerland
(Private consumption: year-on-year change, in %; UBS Consumption Indicator: index level)
UBS AG
Contact:
Daniel Kalt, Chief Economist Switzerland
Tel. +41 44 234 25 60
Sibille Duss, Economic Research Switzerland
Tel. +41 44 235 69 54
UBS publications and forecasts for Switzerland:
www.ubs.com/wmr-swiss-research
