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UBS Consumption Indicator: Continuation of the upward trend in January
Following a modest decline in December, the UBS Consumption Indicator returned to its upward course in January. Its current level points to a remarkably robust expansion of private consumption.
Following a modest decline in December, the UBS Consumption Indicator rose clearly in January. At 1.36 (previous month: 1.19), it is again approaching the levels seen prior to the Lehman Brothers collapse and the ensuing turbulence in the financial markets.
The UBS Consumption Indicator is calculated from five sub-indicators: new car registrations, business activity in the retail sector, the number of overnight stays in domestic hotels by Swiss nationals, the consumer sentiment index, and credit card transactions processed by UBS at points of sale in Switzerland. The marked increase in January is ascribable to improving business activity in the retail sector, an increase in new vehicle registrations and an improvement in consumer sentiment.
At 1.36 the UBS Consumption Indicator is only slightly below its long-term average of 1.5. Historically, the current level has gone hand in hand with real growth in private consumption of approximately 1.5% year-on-year. Despite the relatively high unemployment rate, private consumption appears to be accelerating. Taking into account other indicators tracking the development of other GDP components (exports, imports and investments), the Swiss economy is likely to grow at a rate close to its potential of around 2%.
UBS consumption indicator and private consumption in Switzerland
(Private consumption: year-over-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 57%, 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 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.
Carla Duss, Economic Research Switzerland
Tel. +41 44 234 21 19
Hans-Peter Hausheer, Economic Research
Tel. +41 44 234 67 32
UBS publications and forecasts for Switzerland: www.ubs.com/wmr-swiss-research