UBS Consumption Indicator: Encouraging trends with a hint of uncertainty

The UBS Consumption Indicator rose from 1.40 to 1.47 points in April. Private consumption was buoyed by positive trends in tourism and new car registrations but hampered by a pessimistic assessment of job security in Switzerland.

Zurich, 25 May 2016 – The UBS Consumption Indicator climbed from 1.40 to 1.47 points thanks to solid performances in the automotive and domestic tourism markets. Tourism delivered on the previous month's positive signals. Overnight stays by Swiss guests reached around 1.5 million in March, an increase of 8.9 percent year-on-year. It should be noted, however, that the Easter weekend this year fell in March. The year-on-year increase was an impressive 2.3 percent in the first quarter. The Swiss automotive market remains strong. Although new car registrations dropped 1.0 percent year-on-year in April, figures for the first four months of 2016 are nonetheless encouraging.

These bright spots, however, have been offset by the Consumer Confidence Survey conducted by the State Secretariat for Economic Affairs (SECO). Future economic prospects are expected to be fairly gloomy, and the trend in unemployment figures still paints a rather bleak picture. The index dropped in January from -14 to -15 points in April, below the long-term average of -9 points. Despite subdued consumer sentiment, UBS economists believe that private consumption will remain solid, drawing support from positive developments in the Swiss tourism and automotive market.