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UBS consumption indicator: Stable consumer sentiment ushers in the summer break
The UBS consumption indicator moved sideways in June. The first half of the year was weak for registrations of new cars.
Zurich/Basel, July 31, 2013 – The UBS consumption indicator remained stable for the most part in June at 1.44 index points compared to 1.45 the previous month (revised from 1.46). It trended sideways for the second month in a row.
The 27.6% year-on-year drop in registrations of new cars in June is due mainly to special factors from the corresponding period the previous year. The introduction of CO2 sanctions on July 1, 2012 spurred a rash of registrations in June, particularly of vehicles with high CO2 emissions. This raised the number of new cars registered in that month an unusual amount. In spite of this factor, however, this year's June figures are unsettling news for car dealers. Although registrations for new cars increased by 6.1% from the previous month, the negative trend dating from the start of the year continues once figures are seasonally adjusted. A weak six months for registrations thus ends with a considerable decline of 11.8%.
Retail business as surveyed by the Swiss economic research institute KOF, one of the five sub-indicators that feed into the UBS consumption indicator, supported last month's increase, but remains at a low level. Domestic tourism reveals somewhat improved consumer sentiment. The number of hotel stays by Swiss residents rose 0.3% year on year during the first five months of 2013, ending at 6.3 million.
How the UBS Consumption Indicator is calculated
The UBS Consumption Indicator signals private consumption trends in Switzerland with a lead time of about three months on the official figures. At roughly 60%, private consumption is by far the most important component of Swiss GDP. UBS calculates this leading indicator from five 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, and credit card transactions made via UBS at points of sale in Switzerland. With the exception of the consumer sentiment index, all of this data is available monthly.
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