UBS Consumption Indicator: Automobile market with record year-end results

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.

The UBS consumption indicator rose from 1.45 to 1.50 points in December. The positive trend of last fall continued and signalizes solid growth prospects for private consumption this year. New car registrations in the automobile sector, which are at an all-time high, are at the root of this positive outlook.

Zurich, 25 January 2017 – The UBS consumption indicator rose from 1.45 to 1.50 points in December due primarily to the strong year-end results of the Swiss automobile sector. Compared with the previous December, new car registrations were up by 8.2%. The mood in the retail sector remains pessimistic, though. Domestic tourism managed to maintain its robust November showing. Compared with December 2015, the number of overnight hotel stays rose 0.9%.

Private consumption vs. UBS Consumption Indicator Following a relatively sluggish start to the winter season due to the lack of snow, hopes for a good winter have since grown thanks to the major snowfalls before the start of the sports holiday season. Nevertheless, a long-term recovery of the Swiss tourism sector is not expected. The negative effects of the strong Swiss franc and the associated disadvantages vis-à-vis European competitors are simply too great. There is some light at the end of the tunnel, though. In many areas the sector is expanding its traditional winter tourist offerings to include alternatives like ice fishing. Furthermore, a weaker Swiss franc, which UBS is predicting for the next 12 months significantly above EURCHF 1.10, should boost Swiss tourism.

Switzerland Private Consumption and UBS Consumption Indicator, January 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.