UBS Consumption Indicator: Continuation of the upward trend in January

Following a modest decline in December, the UBS Consumption Indicator rose clearly in January. At 1.36 (previous month: 1.19), it is again approaching the levels seen prior to the Lehman Brothers collapse and the ensuing turbulence in the financial markets.

The UBS Consumption Indicator is calculated from five sub-indicators: 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 marked increase in January is ascribable to improving business activity in the retail sector, an increase in new vehicle registrations and an improvement in consumer sentiment.

At 1.36 the UBS Consumption Indicator is only slightly below its long-term average of 1.5. Historically, the current level has gone hand in hand with real growth in private consumption of approximately 1.5% year-on-year. Despite the relatively high unemployment rate, private consumption appears to be accelerating. Taking into account other indicators tracking the development of other GDP components (exports, imports and investments), the Swiss economy is likely to grow at a rate close to its potential of around 2%.

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