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UBS consumption indicator: Downward trend continues
The UBS consumption indicator dropped from 1.67 points to 1.35 points in August.
Zurich/Basel, 24 September 2014 – The UBS consumption indicator for August confirmed that private consumption is indeed slowing down, as indicated by second-quarter data. The indicator slumped from 1.67 to 1.35 points in August. The decline was fueled by all the subindicators. New car registrations, for example, dropped precipitously, recording a 5.8% drop year-on-year. The retail business activity subindicator tracked by KOF fell from 11 to 2 points, putting it below the longtime average of 6.2 points for the first time in four months.
The quarterly estimates of Swiss economic growth published in early September show weaker growth in private consumption for the second quarter in a row. The domestic sector, previously a pillar of the Swiss economy, has lost much of its momentum. Between the fourth quarter of 2011 and the fourth quarter of 2013, Swiss private consumption grew an average of 2.2% year-on-year. In the first two quarters of this year, however, growth only reached 1.2% relative to the previous year. The drop in the UBS consumption indicator confirms that consumption growth is slowing down.
UBS economists assume that private consumption will play only a moderate role in driving growth this year. Following the weak second quarter, UBS economists have lowered this year's GDP growth forecasts from 2.1% to 1.3%. In 2015, UBS now expects the economy to grow 1.6%.