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UBS consumption indicator recovers slightly
Following the marked downward movement seen in July and August, the UBS consumption indicator recovered again slightly in September. At its current level of 1.67, it still signals that Swiss consumer spending has continued to develop healthily. However, prospects are looking increasingly gloomy.
The monthly UBS consumption indicator rose slightly to 1.67 in September. After the interim high of 2.22 in June, it fell significantly in July and August. In spite of the overall negative trend observed in recent months, the UBS consumption indicator is still above its long-term average of 1.50.
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. The slight rise in September is due in particular to the number of new car registrations, as well as the increase in the number of overnight hotel stays by Swiss nationals. The former increased by some 3.5% compared to the previous year. By contrast, the deterioration in consumer sentiment and business activity in the retail sector had a negative impact. However, taken over the long term, the activity level can still be described as good.
At its current level, the UBS consumption indicator signals that Swiss consumer spending has continued to develop healthily, but prospects are looking increasingly gloomy. The situation on the labor market is still encouraging, which is likely to have a positive impact on expected household income, and continues to give cause for optimism. However, the continuing high level of inflation coupled with deteriorating economic prospects tarnished this outlook. For this reason, UBS expects overall real private consumption to grow 1.9% in the current year.
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 58%, 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 Economic Research
Tel. +41-44-234 25 60
Felix Brill, Head of Economic Research Switzerland
Tel. +41-44-234 35 54
UBS publications and forecasts for Switzerland: www.ubs.com/economicresearch