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UBS outlook update 1st quarter 2006. Swiss industry in top form.

Zurich / Basle Media Releases Switzerland

The upswing in Swiss industry accelerated strongly in the final quarter of 2005. Growth in most sectors of the economy looks to be continuing for the moment according to the latest UBS quarterly survey conducted in January.

UBS's quarterly poll of the business trend at some 350 companies shows a further acceleration of activity in Swiss industry. Almost 60% of companies surveyed reported an increase in orders received, while only 15% noted a decline. This is the best reading since the third quarter of 2000. Output and sales also exhibited stronger growth. With an average utilization of 87.2%, production capacities were operating at higher rates than in the previous quarter. The pressure on selling prices has eased somewhat but on balance the reports still reflected lower rather than higher prices. Companies remain optimistic for the first quarter of 2006. They are betting on strong growth in sales and earnings and plan a slight increase in hiring.

UBS Business Cycle Indicator reaches the highest level since 2000
The UBS Business Cycle Indicator, which is calculated from the results of the quarterly survey, is currently signalling a strong acceleration throughout the economy. As a leading indicator of Swiss gross domestic product it is pointing to annual growth of well over 3% for the final quarter of 2005 and for the current quarter. This is the highest level since 2000. Numerous other indicators are likewise forecasting that the upswing is set to continue for the time being and has now spread from the export sector to domestic demand. In view of the emerging global slowdown in growth, primarily in the US, UBS expects momentum in the Swiss economy to let up slightly from the second half of 2006 onwards. Real growth should nevertheless average around 2% for the year as a whole.

UBS Business Cycle Indicator and GDP
(Year-on-year change in %)

Data (in %):

Zurich / Basle, 07 February 2006