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UBS Consumption Indicator slightly weaker
The UBS Consumption Indicator, calculated on a monthly basis, was slightly weaker in July, thereby losing some of the gains it had been making since February. Nevertheless, the current level suggests that private consumption in Switzerland is still experiencing stable development.
The Consumption Indicator's most recent level for the month of July (-0.4) was slightly below the level for June (-0.2), but still above the recent low seen in February of this year (-1.4). This means that the Indicator is still pointing towards stable growth in consumption, which is even expected to increase slightly over the course of the year.
Calculation of the UBS Consumption Indicator is based on five sub-indicators, which - with the exception of consumer sentiment - are available every month and normally very promptly. The consumer sentiment index has begun to decline recently and thus had a slightly negative impact on the UBS Consumption Indicator in July. The numbers of newly registered automobiles, the index for retail business performance and the monthly figures on overnight hotel stays by Swiss nationals in Switzerland also feed into the Indicator. As a result of methodological adjustments at the institutions responsible for their publication, the two latter indicators were not available at the time of calculation of the Indicator, and we were thus forced to use own estimates for these values. The fifth variable for the calculation of the UBS Consumption Indicator is the volume of monthly credit card transactions at domestic points of sale as cumulated via UBS. The Indicator, calculated using these five components, is currently slightly below the long-term average.
Despite the minor dip witnessed in the UBS Consumption Indicator, UBS economists are predicting that Swiss economic growth will pick up slightly in the second half of the year. The economic recovery is being driven by the sustained health of private consumption and in particular by exports, which have recently experienced a significant boost. This, in turn, will lead to increased corporate investment activity.
UBS Consumption Indicator and private consumption in Switzerland
(Private consumption: % change year-on-year; UBS Consumption Indicator: level)
Zurich / Basel, 23 August 2005