Consumer sentiment improved sharply in January. At minus 30, SECO's climate indicator was up fully 17 points versus October to record its first increase since July 2021 and its highest mark since April. However, it was still some 24 points short of its long-run average.

In large part, the headline gain was attributable to a markedly less negative view of the economic outlook. The sub-index jumped from minus 57 to minus 16, now only 7 points below its historic norm. There was also a significant upgrade to both the expected financial situation (minus 25 after minus 47) and job security (2 after minus 25). Even so, buying intentions (minus 41 after minus 42) remained very weak, probably reflecting inflation expectations (90 after 105) which, while down, were still well above their long-run mean (67).

Consequently, while today's survey suggests that households are feeling more confident than three months ago, there remains a clear sense of caution. This should act as a brake on consumer spending this quarter.

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.