Consumer sentiment improved just marginally and by less than expected in September. At minus 34, the unadjusted headline index was up just a point versus August and a point short of the market consensus. However, it was fully 17 points stronger than a year ago and also well above its minus 40 long-run average.

The minimal monthly gain was largely due to a better economic outlook (minus 19 after minus 22) and stronger spending intentions (minus 29 after minus 32). However, the financial outlook worsened (minus 33 after minus 31) and job security deteriorated significantly (minus 31 after minus 22) although the latter was probably only due to seasonal factors. Elsewhere of note, 1-year ahead inflation expectations (95 after 97) hit a new series low.

Today's report leaves a gently improving profile to consumer confidence - at minus 34, the third quarter average was up 4 points versus the previous period. This points to a possible pick-up in household spending to come, albeit likely not to the extent that would dampen speculation about another cut in the SNB's policy rate in December. The September update puts the Swiss RPI at exactly zero and the RPI-P at 17. Overall economic activity is performing in line with market forecasts.

At minus 33, consumer confidence is expected to be little changed in September, in line with the broadly flat trend seen in recent months.

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.