CH: SECO Consumer Climate

Wed May 02 00:45:00 CDT 2018

Consensus Actual Previous
Level 5 2 5

SECO's new survey of consumer sentiment suggests that households were still quite optimistic in April. At 2, the headline gauge was not as positive as in January (5) but still well above the levels seen in recent years and comfortably stronger than its long-run average (minus 9).

Amongst the main components, expectations on future growth (14 after 32) reversed all of the previous period's improvement but similarly remained on the right side of its historic norm (minus 9). Importantly too, attitudes towards the labour market were little changed and expectations on unemployment (28 after 26) edged only slightly higher. This compares with an average of 44 in 2017. The outlook for household finances (0 after minus 2) was marginally better and future savings opportunities (21 after 16) were markedly stronger. However, buying intentions (minus 12 after minus 6) posted a multi-year low, possibly reflecting significantly firmer inflation expectations (53 after 44).

In sum, the April results indicate no major change in household morale from three months ago. The pick-up in inflation expectations will please the SNB but the sharp decline in buying intentions is a worry against a backdrop of already soft retail sales.

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.