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Swiss Consumption Indicator Rises Strongly In March: UBS

4/24/2012 2:26 AM ET

Swiss consumption indicator increased significantly in March led by improved business in retail trade and record-high new car registrations, survey data released by investment bank UBS revealed Tuesday.

The UBS consumption indicator for the Swiss economy rose to 1.22. The consumption indicator is currently signaling a consumption growth of 1.2 percent for the year, the bank said.

An increase in Swiss residents' overnight stays in hotels in the country despite a strong franc also boosted consumption.

The indicator may even underestimate the current trend in consumption, UBS said. This is because the indicator does not take the sustained high population growth fully into account. The Swiss population is forecast to increase by more than 1 percent this year.

Further, falling prices influence the indicator negatively, according to the model. In reality, however, falling prices should be valued positively as they increase consumers' purchasing power, as indicated by the record-high new car registrations, the bank noted. Car prices declined as much as 10 percent annually in March.

Hence, it is possible that the actual consumption trend exceeds the consumption indicator and that Switzerland is heading for a consumption boom, UBS added.

by RTT Staff Writer

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