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UBS consumption indicator: Late Easter slows down car sales
The UBS consumption indicator stood at 1.48 points in April, indicating average private consumption growth. The improved mood in the retail sector supported the indicator, while a decline in new car registrations had a negative effect. The index of consumer sentiment measured by the State Secretariat for Economic Affairs also fell slightly.
Zurich, 31 Mai 2017 – The UBS consumption indicator stood at 1.48 points in April, marginally below its long-term average. The March figure was revised slightly lower, from 1.50 to 1.44.
Late Easter effect
New car registrations in April were down 10% from the previous year, or by almost 3,000 vehicles. Owing to the late Easter, however, April this year had three fewer working days than last year, when Easter fell in March. Thus, the demand for cars may have been greater than the number of new car registrations would suggest, since more than 1,200 new vehicles were registered on average per working day in 2016. On the other hand, tourism may have benefited from the additional public holidays in April, after the number of overnight stays in hotels by Swiss residents fell by 0.3% this March compared to the previous year.
Consumer sentiment still cautious
Although the index for the mood in the retail sector, as measured in a survey by the Swiss Economic Institute (KOF) at ETH Zurich, still points to pessimism among retailers, the index improved to -2.6 points in April, significantly higher than the March reading of -9 (before revision). By contrast, the index of consumer sentiment measured by the State Secretariat for Economic Affairs declined slightly. While consumers did not change their assessment of the future labor market compared with the last survey in January, they revealed a more cautious attitude on the general economic outlook, their own financial position, and the possibility of saving money next year.
Impact of the French elections
Emmanuel Macron’s victory in the French presidential elections has considerably reduced the political uncertainty in the Eurozone. As a result, the growth prospects for Swiss exporters have also improved this year. Swiss consumption should also benefit from solid economic growth and a drop in unemployment. The increase in consumer prices, however, could moderate consumption as rising inflation will lead to lower growth in real income.
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Alessandro Bee, UBS Chief Investment Office WM
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