UBS Consumption Indicator: upward trend continues
The UBS Consumption Indicator climbed from 1.63 to 1.66 points in November, continuing the positive trend seen in recent months and pointing to further growth in private consumption in the months ahead. The main reasons for the good news are the less gloomy outlook in the retail sector and the increase in new car registrations.
Zurich, 30 December 2015 – The monthly survey of the KOF Swiss Economic Institute at ETH Zurich indicates an encouraging trend in retail business, with November's index values for sales slowly approaching the levels seen prior to the abandonment of the EURCHF minimum exchange rate. Car sales also picking up again. November saw 11% more new cars registered compared with the same month last year. Tourism, by contrast, was more subdued. Hotel owners are increasingly feeling the pressure from foreign competitors, who have become cheaper in relative terms.
Third-quarter private consumption grew 1.2% year-on-year in real terms, a trend that may well gain even greater momentum in the fourth quarter thanks to falling consumer prices. The retardant effects of the strong franc, however, are gradually becoming evident. Rising unemployment will likely limit disposable household income and thus restricting growth in private consumption in the medium term.
How the UBS Consumption Indicator is calculated
The UBS Consumption Indicator signals private consumption trends in Switzerland with a lead time of one to three months on the official figures. At more than 50%, private consumption is by far the most important component of Swiss GDP. UBS calculates this leading indicator from six consumer-related parameters: new car registrations, business activity in the retail sector, the number of domestic overnight hotel stays by Swiss residents, the consumer sentiment index, employment figures and credit card transactions made via UBS at points of sale in Switzerland. With the exception of the consumer sentiment index and employment figures, all of this data is available monthly.
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