According to SECO consumer sentiment was hardly changed in October. At minus 18 the headline climate indicator was just a point up on its July reading and so remained well below its long-run average. The outturn equalled its second weakest reading since October 2011.
However, the survey details were mixed. Hence, on the positive side, the assessment of economic performance over the third quarter climbed 6 points to minus 30 and expectations for the future gained 9 points to minus 16. However, job security dropped from minus 76 to minus 85, its first print below its January 2012 reading when its downward trend really began, and buying intentions slumped 11 points to minus 5, easily their worst level so far in 2015.
That said, the SNB can at least take a little heart from an 18 point jump in inflation expectations to 36, their highest level since October 2014.
Overall the results suggest that household morale is still languishing and near-term prospects for consumption look quite poor. Higher inflation expectations are positive but otherwise today's findings should increase the likelihood of additional easing from the SNB, possibly as soon as next month.
SECO Consumer Climate compiles a quarterly survey of consumer attitudes on present economic conditions and expectations of future conditions. The survey covers around 1,200 Swiss households and results are synthesised into a single summary index that attempts to measure consumer sentiment.
The pattern in consumer attitudes and spending is often a major influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth. Consumer spending accounts for a major portion of the Swiss economy, so investors want to know what consumers are up to and how they might behave in the near future. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend. An increasing important element of the survey is the question concerning current buying intentions.
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