UBS Consumption Indicator shows modest decline in December

After three months of clear increases, the UBS Consumption Indicator posted a slight decline in December: At 1.20, it ended the year slightly under the 2009 high of 1.26 achieved in November. The UBS Consumption Indicator continues to remain below its long- term average of 1.5. Although the current trend is evidence of a robust expansion in private consumption, significant acceleration cannot be expected.

The UBS Consumption Indicator is calculated from five sub-indicators for Switzerland: new car registrations, business activity in the retail sector, the number of overnight stays in domestic hotels by Swiss nationals, the consumer sentiment index, and credit card transactions processed by UBS at points of sale in Switzerland. The increase in new car registrations, the seasonal increase in overnight stays and the improvement in consumer sentiment were not able to compensate for the negative impulses from the two remaining sub-indicators.

The level of the Consumption Indicator indicates a clearly positive, although still below average, expansion of private consumption. Despite the apparent economic improvement, UBS economists are not expecting an acceleration in private consumption in the coming months. The expected rise in unemployment and the associated job uncertainty are likely to continue to put a damper on consumption.

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