Swiss Consumer Index Rises First Time in Three Months, UBS Says
Written on January 27, 2009
A gauge of Swiss consumption improved for the first time in three months in December as slowing inflation boosted households’ purchasing power.
An index of consumption compiled by Zurich-based UBS AG rose to 1.15 from 0.96 in November, Switzerland’s largest bank said today in a statement. The measure aims to predict annual growth in consumer spending, the largest part of the economy, about three to four months ahead.
Retreating oil and food costs are leaving consumers with more money to spend as the economy slides deeper into recession. Still, Swiss households may cut back spending in the coming months as some of the nation’s largest companies shed jobs to cope with a decline in demand and a 29 percent drop in the country’s main SMI stock index over the past year erodes wealth.
“The prospects are becoming increasingly gloomy,” UBS said in the statement. “Due to the economic downturn, unemployment is set to rise in the coming months, which will have a negative effect on consumer spending.”
Unemployment climbed in December to the highest in 19 months as the manufacturing sector shrank and the global credit crisis continued to dent banks’ earnings fast payday loans. Clariant AG, the world’s largest maker of chemicals used in printing ink, said today it will increase the number of planned job cuts by 1,000 to counter a “dramatic” drop in demand.
OC Oerlikon Corp AG, the Swiss maker of spinning machines and solar-panel equipment, will cut about 70 jobs in Cham, Switzerland, it said yesterday.
Growth in household spending will probably slow to 1.2 percent this year and 0.7 percent in 2010, compared with 1.9 percent in 2008, the government estimates.
The UBS indicator is based on new car sales, retail sales, the number of overnight hotel stays by Swiss residents within the country, the consumer sentiment indicator and credit-card transactions registered by UBS.
Filed in: money.