Consumer sentiment improved by more than expected in July. At minus 32, the unadjusted headline index was 4 points stronger than the market consensus and at its highest level since the monthly data were first compiled in January 2023. It was also up 5 points on the year and well above its minus 40 long-run average.

The solid headline increase reflected gains in most components, notably the economic outlook (minus 16 after minus 19), job security (minus 23 after minus 27) and buying intentions (minus 30 after minus 34). However, 1-year ahead inflation expectations (97 after 99) fell again and now stand 6 points below their historic norm.

Taken at face value, today's report points to a firmer trend in household spending over the coming few months. That said, the SNB will be at least as interested in the decline the inflation expectations which will help to underpin speculation about another reduction in the policy rate next month. The July data boost the Swiss RPI to minus 8 and the RPI-P to minus 10 but both measures show economic activity in general still underperforming market forecasts.

Switzerland's SECO consumer climate is expected to be little changed at minus 36 in July, improving only slightly from minus 37 in June.

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.