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UBS Consumption Indicator rebounds in June
The UBS Consumption Indicator recovered briskly in June from the downturn in the previous month. It now stands close to April's record level and, at 2.31, is well ahead of its long-term average. At this level, the indicator is signalling continued healthy growth for consumer spending in Switzerland.
The monthly UBS Consumption Indicator rose to 2.31 in June following a revised 2.10 in May and 2.38 in April. It has now exceeded its long-term average of 1.49 for 16 consecutive months.
The UBS Consumption Indicator is calculated from five sub-indicators: new car sales, business activity in the retail sector, the number of overnight hotel stays by Swiss nationals in Switzerland, the consumer sentiment index and credit card transactions made via UBS at points of sale in Switzerland. The increase in June is attributable in part to the number of new car registrations, which were up 3.5% over the prior year, and to very good consumer sentiment. The monthly figures relating to overnight stays by Swiss nationals in Switzerland also made a positive contribution. The only negative impact came from the retail sector, where business activity softened somewhat. From a long-term perspective, however, business activity continues to be in good shape.
The upturn in the UBS Consumption Indicator for June shows that Swiss consumer spending remains buoyant. The outlook is upbeat, as the labour market is picking up nicely and should continue to do so in the coming months. The resulting rise in employment and the expected increases in real wages are having a positive impact on disposable household income and should support consumer spending in the next few months. Overall, UBS expects real private consumption growth of 2.5% in 2007, following an increase of 1.9% in 2006.
UBS Consumption Indicator and private consumption in Switzerland
(Private consumption: year-on-year change in %, UBS Consumption Indicator: index level)
Calculation of the UBS Consumption Indicator:
The UBS Consumption Indicator signals private consumption trends in Switzerland with a lead of about three months on the official figures. At 61%, private consumption is by far the most important component of Swiss GDP. UBS calculates this leading indicator from five consumer-related parameters: new car sales, the business situation in the retail trade, the number of overnight hotel stays by Swiss nationals in Switzerland, 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 these data are available monthly.
Daniel Kalt, Head of Swiss Economic Research
Tel. +41-44-234 25 60
Felix Brill, Economic & Swiss Research
Tel. +41-44-234 35 54
UBS publications and forecasts for Switzerland: www.ubs.com/economicresearch