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UBS Consumption Indicator falls in August
In August the UBS Consumption Indicator declined to 1.93. While falling short of the previous month's level, this is still well above its long-term average. At this level, the indicator is signalling continued healthy growth for consumer spending in Switzerland.
The monthly UBS Consumption Indicator stood at 1.93 in August, down from 2.26 in July and 2.31 in June. It has now exceeded its long-term average of 1.49 for 18 months in a row.
The UBS Consumption Indicator is calculated from five sub-indicators: new car sales, business activity in the retail sector, the number of domestic hotel overnight stays by Swiss nationals, the consumer sentiment index, and credit card transactions via UBS at points of sale in Switzerland. The main factors in the August decline were weaker consumer sentiment and deterioration in retail activity. However, both continue strong in terms of their long-term trend. Positive factors were domestic hotel overnights by Swiss nationals and new registrations of private cars, which again rose significantly by 17.3% year-on-year.
Despite the decline, the UBS Consumption Indicator shows that Swiss consumer spending remains buoyant. The outlook is upbeat, as the labour market is picking up nicely and should continue to do so in the coming months. The resulting rise in employment and the expected increases in real wages will have a positive impact on disposable household income and should support consumer spending in the next few months. Overall, UBS expects real private consumption growth of 2.0% in 2007, following an increase of 1.5% in 2006.
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