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UBS consumption indicator: pessimistic mood despite solid figures

Zurich / Basel Media Releases Switzerland

The UBS consumption indicator fell by another 0.23 points: In July, it reached a level of 1.29 points, with the pessimistic mood of consumers and retailers contributing significantly to this decline.

The downward trend of the UBS consumption indicator continued in July. It fell by 0.23 points to a level of 1.29 – its lowest level since December 2009. Poor performance in the retail sector and declining consumer sentiment were responsible for the drop. Countering this trend were the strong number of new car registrations and the increase in overnight stays in hotels by Swiss residents.

The UBS consumption indicator is calculated from a range of sub-indicators. Currently, clear divergence is apparent between the sub-indicators that are based on subjective and those based on objective assessments. The two subjective sub-indicators, consumer sentiment (collected by SECO) and business activity in the retail sector (collected by KOF), both declined last month and were lower than the long-term average. However, this negative view is not supported by the objective sub-indicators: The number of overnight stays in hotels by Swiss residents rose slightly in the first six months of the year and was nearly on par with the record level in 2008, while the number of new car registrations has already exceeded its pre-crisis level by a considerable margin.

The negative mood can be explained by the crisis reports that have repeatedly emerged in recent months from Europe and the United States. In the past, however, sentiment indicators in Switzerland have not been particularly good economic indicators. UBS therefore still expects robust growth in private consumption of 1.6 percent for this 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 time of about three months of the official figures. At roughly 60%, private consumption is by far the most important component of Swiss GDP. UBS calculates this leading indicator from five consumer-related parameters: new car registrations, business activity in the retail sector, the number of domestic overnight hotel stays by Swiss residents 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 this data is updated on a monthly basis.



Daniel Kalt, Chief Economist Switzerland
Tel. +41 44 234 25 60

Caesar Lack, Economic Research Switzerland
Tel. +41 44 234 44 13

Sibille Duss, Wealth Management Research
Tel. +41 44 235 69 54

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