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UBS Consumption Indicator: Slight setback in consumer spending
Although the UBS Consumption Indicator showed a slight decline in April, it still indicates moderate growth in consumption.
In April, the UBS Consumption Indicator fell by 0.10 points to 1.58. This value is still slightly above the long-term average of 1.5 and indicates moderate growth in Swiss consumption year-on-year. The continued increase in new car registrations (April: +6.8 percent year-on-year) and the slight increase in business activity in the retail sector continued to support the economy in April. However, a decline in consumer sentiment as surveyed by the State Secretariat for Economic Affairs (SECO) is also included in the calculation of the UBS Consumption Indicator and overshadowed these positive trends.
Consumer sentiment may have been adversely affected by negative reporting on the European debt problem and the disaster in Japan. Fundamentally though, UBS Economic Research still has a positive outlook for consumers: Low interest rates, a booming job market and the strong franc, which makes imported consumer goods cheaper, are likely to continue to help fuel solid growth in consumer spending. Concretely, UBS expects a 1.6 percent growth rate in inflation-adjusted consumer spending this year.
The UBS Consumption Indicator is calculated on the basis of five sub-indicators: new car registrations, business activity in the retail sector, the number of domestic overnight stays in hotels by Swiss residents, the consumer sentiment index, and credit card transactions via UBS at points of sale in Switzerland.
UBS Consumption Indicator and private consumption in Switzerland
(Private consumption: year-on-year change, in %; UBS Consumption Indicator: index level)
Daniel Kalt, Chief Economist Switzerland
Tel. +41 44 234 25 60
Sibille Duss, Economic Research Switzerland
Tel. +41 44 235 69 54
UBS publications and forecasts for Switzerland: