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UBS Consumption Indicator stable at high level
The UBS Consumption Indicator remained stable in December. At 2.20, it was again well above the long-term average and thus continues to signal robust growth in Swiss private consumption.
The monthly UBS Consumption Indicator stood at 2.20 in December, after revised levels of 2.20 in November and 2.28 in October. It has now exceeded its long-term average of 1.50 for 22 months in a row.
The UBS Consumption Indicator is calculated from five sub-indicators: new car sales, business activity in the retail sector, the number of domestic hotel overnight stays by Swiss nationals, the consumer sentiment index, and credit card transactions via UBS at points of sale in Switzerland. In December, the number of new passenger car registrations did not keep pace with previous months. After the earlier double-digit growth, the figure was only 0.2% more than in the previous year. In contrast, the number of domestic hotel overnight stays by Swiss nationals increased significantly, due to seasonal effects. Consumer sentiment and business activity in the retail sector stayed the same in December.
At its current level, the UBS Consumption Indicator signals that Swiss consumer spending remains healthy. The improved situation in the labor market has led to a sharp rise in employment. Real wages too may very well rise further this year. Both have a positive impact on disposable household income and should fuel consumer spending in the coming months. Overall, UBS expects real growth in private consumption to reach 2.2% in 2008.
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.
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UBS publications and forecasts for Switzerland: www.ubs.com/economicresearch