CH: SECO Consumer Climate

Thu Nov 02 01:45:00 CDT 2017

Consensus Actual Previous
Level 0 -2 -3

The new SECO consumer climate survey shows little change in household sentiment last month. At minus 2, the headline index was weaker than expected but still a point higher than its July outturn, above its long-run average (minus 9) and a multi-year high.

The relative buoyancy of the headline data reflected continued optimism about the economic outlook (14 after 16) and the labour market (unemployment sub-index 39 after 41). However, consumers remain pessimistic about their future financial situation (minus 6 after minus 4). As a result, their propensity to consume (minus 10 after minus 4) also weakened.

Still, the SNB will be relieved at a pick-up in inflation expectations (56 after 45) which showed both a sizeable jump and their strongest reading in more than three years.

Overall then, today's results are mixed and suggest that households have yet to become fully convinced that an apparently improving economic outlook will benefit them significantly. As such, the risk is that growth stays quite sluggish and inflation uncomfortably low. A very accommodative SNB policy will not be changing anytime soon.

The State Secretariat for Economic Affairs (SECO) compiles a quarterly survey of consumer attitudes on present and expected economic and financial conditions. The survey covers around 1,200 Swiss households and results are synthesised into a single summary consumer climate 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.