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UBS consumption indicator shows continued solid growth in consumer spending
The UBS consumption indicator showed another slight decline in April. However, at 2.18 the indicator confirms last year's high levels, and is still significantly above its long-term average. As such, it is a sign of continuing solid growth in consumer spending in Switzerland.
The monthly UBS Consumption Indicator stood at 2.18 in April, after a revised 2.25 in March and 2.32 in February. It is still holding steady at a high level, way above the long-term average of 1.50, which it has exceeded for two years now.
The UBS Consumption Indicator is calculated on the basis of five sub-indicators: new car sales, business activity in the retail sector, the number of domestic hotel overnights by Swiss nationals, the consumer sentiment index and credit card transactions by Swiss residents via UBS points of sale in Switzerland. The decline in April is primarily due to deteriorating consumer sentiment and slower business activity in the retail sector. Both indicators, however, point to further expansion. The seasonal drop in domestic hotel overnight stays by Swiss nationals had a minor negative impact. The remaining indicators acted as a support, particularly the number of new car registrations which rose 14.8% from the prior year.
At its current level, the UBS Consumption Indicator signals that Swiss private consumption is continuing to grow briskly. The positive trend in the labor market has lifted employment. Real wages will likely rise further this year as well. Both factors have a favorable impact on disposable household income and should boost consumer spending in the coming months. Overall, UBS therefore expects real private consumption to grow by 2.2% in 2008.
UBS Consumption Indicator and private consumption in Switzerland
(Private consumption: year-on-year change in %, UBS Consumption Indicator: index level)
Calculation of the UBS Consumption Indicator:
The UBS Consumption Indicator signals private consumption trends in Switzerland with a lead of about three months on the official figures. At 61%, private consumption is by far the most important component of Swiss GDP. UBS calculates this leading indicator from five consumer-related parameters: new car sales, the business situation in the retail trade, the number of overnight hotel stays by Swiss nationals in Switzerland, the consumer sentiment index and credit card transactions made via UBS at points of sale in Switzerland. With the exception of the consumer sentiment index, all of these data are available monthly.
Daniel Kalt, Head of Swiss Economic Research
Tel. +41-44-234 25 60
Felix Brill, Economic & Swiss Research
Tel. +41-44-234 35 54
UBS publications and forecasts for Switzerland: www.ubs.com/economicresearch