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UBS Consumption Indicator: year ends optimistically
The UBS Consumption Indicator rose to 1.62 points in December from 1.55. Consumer sentiment improved somewhat toward the end of the year, but retailers did not share this confidence. We assume private consumption will continue trending upward.
Zurich, 27 January 2016 – Consumer sentiment will likely start the year strong despite a seasonal increase in the unemployment rate in December. As low interest rates provide little incentive to save, people tend to consume more. Consumer prices are still falling, with much of the decline attributable to energy prices in general and crude oil in particular. Lower energy expenses leave more disposable income available, and thus should increase consumer spending.
Survey figures from the KOF Swiss Economic Institute at ETH Zurich indicate that retailers expected the business situation to worsen in December in month-on-month comparison. They believed that consumers are shopping more abroad and spending less in general due to economic conditions. However, initial reports from retailers indicate that Christmas sales were better than anticipated.
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Sibille Duss, UBS Chief Investment Office WM
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