The UBS consumption indicator fell to 1.28 index points in October from 1.56. The drop was due to a lower assessment of business conditions in the retail sector. Good figures for new car registrations and an improvement in consumer sentiment prevented a steeper drop in the UBS consumption indicator.

The index for business conditions in the retail trade, surveyed by the Swiss economic research institute KOF and constituting one of five sub-indicators in the UBS consumption indicator, fell to –0.5 index points in October from 6. After retailers showed some optimism in the last two months, a slight majority judged business conditions in October to be negative. Pricing pressure and lower margins resulting from the appreciation of the Swiss franc between 2009 and 2011 continued to dampen retailers' mood. The rise in retail revenue in real terms appears to have flattened somewhat in the past 12 months – growth was only 1% in September compared with a year earlier.

New car registrations grew in October, increasing 8% compared with the previous month on a seasonally adjusted basis. Consumer sentiment, surveyed by the State Secretariat for Economic Affairs SECO and constituting one of five sub-indicators in the UBS consumption indicator, improved slightly in the fourth quarter. Compared with the third quarter, consumer sentiment rose to –6 points from –9, putting it slightly above its historical average.

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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UBS publications and forecasts for Switzerland: www.ubs.com/wmr-swiss-research 

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