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UBS consumption indicator: Slight increase from a low level
The UBS consumption indicator rose from 1.11 to 1.19 points in February, boosted by an increase in new car registrations. The pessimistic mood of retailers after the abandonment of the EURCHF minimum exchange rate has proven to be a burden.
Zurich/Basel, 25 March 2015 – In February, the registration of new cars climbed 13% compared to January (seasonally adjusted). However, registrations in the first two months of this year were 3% lower than in the same period last year. New car sales in January 2015 were significantly lower due to the higher carbon tax on automobile sales.
Reflecting the pessimism felt by most Swiss retailers, the consumer sentiment index fell from 4 to -4 points. The franc's strength after the removal of the floor is likely hurting retailers, many of whom have begun offering rebates and discounts to counter increased shopping tourism to neighboring countries. This may well please consumers, because their purchasing power thereby increases, but the ongoing price pressure will leave companies with no option but to lower their costs. This will likely lead to lower salary increases and higher unemployment in 2015, which will ultimately weaken the purchasing power of private households and thus private consumption.
Bernd Aumann, UBS Chief Investment Office WM
Phone +41-44-234 88 71, firstname.lastname@example.org
Sibille Duss, UBS Chief Investment Office WM
Phone +41-44-235 69 54, email@example.com
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