Zurich/Basel, 24 September 2014 – The UBS consumption indicator for August confirmed that private consumption is indeed slowing down, as indicated by second-quarter data. The indicator slumped from 1.67 to 1.35 points in August. The decline was fueled by all the subindicators. New car registrations, for example, dropped precipitously, recording a 5.8% drop year-on-year. The retail business activity subindicator tracked by KOF fell from 11 to 2 points, putting it below the longtime average of 6.2 points for the first time in four months.

The quarterly estimates of Swiss economic growth published in early September show weaker growth in private consumption for the second quarter in a row. The domestic sector, previously a pillar of the Swiss economy, has lost much of its momentum. Between the fourth quarter of 2011 and the fourth quarter of 2013, Swiss private consumption grew an average of 2.2% year-on-year. In the first two quarters of this year, however, growth only reached 1.2% relative to the previous year. The drop in the UBS consumption indicator confirms that consumption growth is slowing down.

UBS economists assume that private consumption will play only a moderate role in driving growth this year. Following the weak second quarter, UBS economists have lowered this year's GDP growth forecasts from 2.1% to 1.3%. In 2015, UBS now expects the economy to grow 1.6%.

  

Sources: Seco, UBS

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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Media contact

Sibille Duss, UBS Chief Investment Office WM
Phone +41 44 235 69 54, sibille.duss@ubs.com

Veronica Weisser, UBS Chief Investment Office WM
Phone +41 44 235 50 62, veronica.weisser@ubs.com

  

UBS publications and forecasts for Switzerland: www.ubs.com/cio-swiss-views

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