2010.08.3108:03:00UTC+00Swiss Private Consumption Continues To Rise In July

The UBS consumption indicator for Switzerland rose for a fifth consecutive month in July boosted by higher new car registrations, signaling that consumers will contribute to the economy's growth. The indicator is expected to rise further in the coming months.

The indicator rose to 1.86 in July from its June level of 1.80. Among the five sub-indicators of the consumption index, a high number of new car registrations contributed to the increase in July. In June, new car registrations logged record growth.

Business activity in the retail sector improved considerably, but is still at a relatively low level. Other components of the consumption indicator such as the number of domestic overnight stays in hotels by Swiss citizens, the consumer sentiment index and credit card transactions via UBS at points of sale in Switzerland, also contributed to the overall rise.

UBS expects the second quarter national accounts figures to be very encouraging. The State Secretariat for Economic Affairs is due to release figures on September 2. In the first quarter, the Swiss economy expanded 0.4% sequentially following 0.8% growth in the fourth quarter of 2009. SECO foresees Switzerland's economic growth to moderate to 1.6% in 2011 from an estimated 1.8% in 2010.

The growth rate of private consumption may well reach the magnitude of the first quarter, an increase of 2.2% year-on-year, UBS said. The consumption indicator is still clearly below this level and should thus continue to rise in the coming months.

Switzerland's KOF economic Institute said on Friday that its economic barometer declined for the second straight month in August suggesting that the economic growth will not accelerate in the next few months, yet will remain positive.

In its most recent monetary policy meeting in June, the Swiss National Bank retained its key interest rate of 0.25% for a fifth time. The central forecast the Swiss GDP to rise 2% this year. The next monetary policy meeting is due on September 16.

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