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UBS consumption indicator: Consumer sentiment subdued to start the year
The UBS consumption indicator dampened in January. The effect was mainly due to the decline in new car registrations.
Zurich/Basel, February 27, 2013 – In January the UBS consumption indicator slid to 1.18 compared with 1.32 (revised from 1.34) in the previous month. Disappointing figures for new car registrations account for the decline. There was, however, some positive stimulus: Business in the retail industry and consumer sentiment picked up significantly.
After last year's soaring figures, car registrations have run out of gas for the time being. In January new car registrations dropped by around 10% year-on-year, falling to 21,000. The outlook for the year as a whole also remains subdued. For the current calendar year, car importers are reckoning with a decline of 10% in new registrations, down to 295,000 in total. If the figures do in fact fall to this level for the year as a whole, this would be no catastrophe. First, in 2012 Switzerland registered the second-highest number of new car registrations in its history. So the current decline is occurring at a very high level. Secondly, Switzerland's performance remains extraordinarily good in comparison with the rest of Europe. The European Automobile Manufacturers Association (ACEA) recently published figures for January on new car registrations in the Eurozone. These are now down to a historic low.
Apart from this, we see signs of positive development in the business situation in the retail industry and in consumer sentiment as measured by Seco. This shows that sentiment among Swiss consumers is better than it has been for the last year and a half. Consumer sentiment, which constitutes one of the five sub-indicators in the UBS consumption indicator, is now slightly above the historical average again.
How the UBS Consumption Indicator is calculated
The UBS Consumption Indicator signals private consumption trends in Switzerland with a lead time of about three months on 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 available monthly.
Caesar Lack, UBS CIO Wealth Management Research
Tel. +41 44 234 44 13, email@example.com
Bernd Aumann, UBS CIO Wealth Management Research
Tel. +41-44-234 88 71, firstname.lastname@example.org
UBS publications and forecasts for Switzerland: www.ubs.com/wmr-swiss-research
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