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UBS Consumption Indicator rose only slightly in May
A drop in business activity in the retail sector slows down the rise of the UBS Consumption Indicator in May.
The UBS Consumption Indicator rose only slightly in May: from the revised level of 1.73 in April to 1.74.
The UBS Consumption Indicator is based on 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 flattening out of the Consumption Indicator in May is attributable to a steep decline in business activity in the retail sector. This does, however, fluctuate considerably from month to month. Thanks to an improvement in the consumer sentiment index and continued growth in new car registrations (May: +7.7% compared with the prior year), the UBS Consumption Indicator nevertheless recorded a slight rise in May.
According to the latest estimates by the State Secretariat for Economic Affairs, in the first quarter of this year private consumption was 2.3% higher than in the prior year after allowing for inflation. We expect the current flattening out of the Consumption Indicator to be temporary and the indicator to rise to the level of consumption growth in the coming months. Several of the components used to calculate the Consumption Indicator are set to improve considerably in the coming months; for instance, the consumer sentiment index and business activity in the retail sector, which is still classified as low.
UBS Consumption Indicator and private consumption in Switzerland
(Private consumption: year-over-year change, in %, UBS Consumption Indicator: index level)
Caesar Lack, Economic Research Switzerland
Tel. +41 44 234 44 13
Daniel Kalt, Head Macroeconomic Research
Tel. +41 44 234 25 60
UBS publications and forecasts for Switzerland: www.ubs.com/wmr-swiss-research