Switzerland UBS Consumption Indicator June: Subdued Growth

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UBS Switzerland AG
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George Dorgan
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The Swiss consumption indicator by UBS shows improvements. The indicator is still distant from the highs in 2012. At the time stronger growth in Emerging Markets and the weaker franc helped the Swiss economy.

UBS consumption indicator printed 1.38 in June, pointing to subdued growth in Swiss private consumption in recent months. Relatively weak growth in employment was much to blame for the lackluster number, however this was offset somewhat by robust new car registrations data and overnight hotel stays by Swiss nationals.

Private consumption vs. UBS Consumption Indicator Zurich, 26 July 2017 – The UBS consumption indicator stood at 1.38 points in June, pointing to subdued growth in consumption at the end of the second quarter. The May figure was revised downwards slightly to 1.32. UBS’s consumption indicator has been hit by weak growth in Swiss employment in recent quarters. Indeed, across the last five quarters, data suggests employment has all but stagnated. Since 2000, the annual growth in employment has been 1.1 percent. We expect employment growth rates to pick up during the course of the year, which should support consumption. Somewhat offsetting weak employment data, new car registrations rose 2.1 percent year-on-year in June. Additionally, most recent available data reveals that hotel overnight stays by Swiss nationals increased by 2.4 percent year-on-year. The mood also improved in the retail sector, although it started from a low base. The UBS consumption indicator aligns with the forecasts issued by UBS’s Chief Investment Office Wealth Management, which forecasts private household consumption will grow by 1.3 percent in 2017. This value is slightly below the long-term average of 1.5 percent.

UBS Consumption Indicator June 2017 (see more posts on Switzerland Private Consumption, Switzerland UBS Consumption Indicator, ) Source: ubs.com - Click to enlarge

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.

About UBS Switzerland AG

UBS AG is a Swiss global financial services company, incorporated in the Canton of Zurich, and co-headquartered in Zurich and Basel. The company provides wealth management, asset management, and investment banking services for private, corporate, and institutional clients worldwide, and is generally considered to be a bulge bracket bank. In Switzerland, these services are also offered to retail clients. The name UBS was originally an abbreviation for the Union Bank of Switzerland, but it ceased to be a representational abbreviation after the bank's merger with Swiss Bank Corporation in 1998. The company traces its origins to 1856, when the earliest of its predecessor banks was founded.

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