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UBS Consumption Indicator: Confidence despite weakness in retail

Zürich Media Releases Switzerland

The UBS consumption indicator rose from 1.53 to 1.59 points in September. The positive trend continues and points to further growth in private consumption for the fourth quarter. The driving forces are new vehicle registrations, which are at a record level, and the upsurge in domestic tourism in August.

Zurich, 27 October 2016 – The UBS Consumption Indicator rose in September. The increase from 1.53 to 1.59 points confirmed recent positive developments in private consumption. This is in sharp contrast to the picture among retailers, who recorded a 2.9 percent fall in sales year-on-year in August and thus the twentieth drop in succession. Retailers have not had any good news to report since January 2015, and the improbability of any significant improvement over the next few months is highlighted by the retail business climate index of the ETH Swiss Economic Institute (KOF). The August figure is significantly lower than the long-term average.

Despite the ailing retail sector, private consumption has shown solid development. This is primarily down to domestic tourism and the car market, with vehicle sales actually exceeding expectations recently. An increase of 2000 new registrations compared to September last year, itself already a good month, made this the second-best September of this millennium. Domestic tourism also appears to be in good shape right now. Although the hotel industry recorded a 1.0 percent fall year-on-year in August, this relates exclusively to foreign visitors. Domestic tourists, on the other hand, generated an increase of 1.5 percent on August 2015. The warm and sunny weather helped hoteliers notch up more overnight stays and gave the summer tourist season a final spurt. If the winter season can keep up the pace it too will boost private consumption.

How the UBS Consumption Indicator is calculated
The UBS Consumption Indicator signals private consumption trends in Switzerland with a lead time of one to three months on the official figures. At more than 50%, private consumption is by far the most important component of Swiss GDP. UBS calculates this leading indicator from six 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, employment figures and credit card transactions made via UBS at points of sale in Switzerland. With the exception of the consumer sentiment index and employment figures, all of this data is available monthly.

UBS Switzerland AG


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Alessandro Bee, UBS Chief Investment Office WM
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