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UBS consumption indicator: weaker private consumption even before the minimum exchange rate was dropped

Zurich/Basel Media Switzerland

The UBS consumption indicator fell to 1.24 points in January from 1.42 due to a lower number of new car registrations. The improved mood of retailers and consumers prior to abandonment of the exchange rate floor prevented a sharper drop.

Zurich/Basel, 25 February 2015 – In January, seasonally adjusted new car registrations were down 20% compared to the previous month, more than wiping out the rise in December. This trend was expected since higher carbon taxes apply from January 2015 when purchasing a car. For this reason, many new car purchases were brought forward to the old year, causing registrations in the new year to slump.

The retail sector showed budding optimism at the start of the year. In January, the index assessing business conditions rose to 11 from –6 points. However, 94% of retailers submitted their assessment before the Swiss National Bank (SNB) abandoned the exchange rate floor on January 15. The subsequent appreciation of the Swiss franc is likely to have had a significant negative impact on retailers' views, given the expected rise in shopping tourism and the weak phase for the economy.

The rise to –6 points from –11 in the consumer sentiment index, which is compiled by the State Secretariat for Economic Affairs, must likewise be viewed with some skepticism. In this case too, three quarters of the respondents delivered their assessment prior to abandonment of the exchange rate floor. The one quarter who responded after January 15 showed considerably more pessimism (–17 points) than the three quarters who provided their views at an earlier stage (–3 points). Private consumption is therefore likely to be weaker at present than a first glance at these survey results would suggest.

Media contact

Bernd Aumann, UBS Chief Investment Office WM
Phone +41-44-234 88 71,

Sibille Duss, UBS Chief Investment Office WM
Phone +41-44-235 69 54,

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