CH: SECO Consumer Climate

Thu Feb 01 00:45:00 CST 2018

Consensus Actual Previous
Level 2 5 -2

Consumer sentiment improved last quarter according to the new SECO survey. At 5, the headline climate index was up 7 points versus its third quarter reading and at its highest level in seven years. It was also well above its long-run average (minus 9).

The more positive assessment reflected increased optimism about the economic outlook and the labour market. The sub-index measuring economic prospects advanced 18 points to 32, its best reading since 2010, while the sub-index for expected unemployment was down 13 points at 26. This compares with its historic norm of 49. In addition, there was a small rise in households' expectations for their future financial position (minus 2 after minus 6). However, anticipated saving opportunities declined (22 after 16).

Meanwhile, price developments were soft as expected inflation (44 after 56) more than reversed the previous period's advance to touch its lowest level in three quarters.

Signs that the consumer sector is stirring again will be well received by the Swiss monetary authorities. Nonetheless, the SNB will be disappointed with the slide in inflation expectations which poses a threat to the attainment of the central bank's medium-term price stability goals.

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.