UBS consumption indicator October 2014: Consumer climate remains positive

Zurich and Basel - 26 November 2014

In October, the UBS consumption indicator fell from 1.39 to 1.29 points. Deteriorating consumer sentiment and a gloomy assessment in the retail sector pulled the UBS consumption indicator down.

The consumer mood, recorded by the State Secretariat for Economic Affairs (SECO), fell from -1 to -11 index points, dropping below its long-term average of -9 points for the first time since February 2013. The slowdown in growth during the second quarter of 2014 (growth rate of only 0.2 percent compared to the previous quarter) seems to have heightened concerns about economic performance and job security. This uncertainty has led consumers to put off making major purchases.

Retailers are also feeling blue. They put consumer sentiment at -9 index points, compared with -3 points in September, with the long-term average of the indicator at 6. This gloomy assessment indicates a significant deterioration in sentiment since the early summer, when retailers still considered the business situation to be quite good (19 points).

Car dealers provide slightly better news for the month. Seasonally adjusted registrations of new cars in October rose by 4.4 percent over the previous month. The figures for January to October nevertheless represent a drop of 3 percent over the same period in 2013.

How the UBS Consumption Indicator is calculated
The UBS Consumption Indicator signals private consumption trends in Switzerland with a lead time of about three months on the official figures. At roughly 60%, private consumption is by far the most important component of Swiss GDP. UBS calculates this leading indicator from five 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, and credit card transactions made via UBS at points of sale in Switzerland. With the exception of the consumer sentiment index, all of this data is available monthly.

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