"The franc currently is probably less of a problem for Swiss exporters than it was in the past. They are more hurt by weaker growth globally"
- Maxime Botteron, an economist at Credit Suisse Group AG
An index of consumption amid Swiss residents inched slightly higher last month, boosted mostly by a notable improvement in sentiment in retail sector, the Swiss bank's economists said Wednesday. The UBS consumption indicator increased to 1.46 from the previous month, when it reached 1.43. Sentiment in the retail sector brightened considerably in May, however, the consumption indicator just nudged into positive territory, in other words the number of pessimists among retailers is almost equal to the number of optimists. A gauge of business conditions in the retail industry, which is one of the five components of the consumption indicator, surged to 1 in the same period, compared with -10.5 in the prior month, finally moving into a positive territory after two months of losses.
However, the improvement in the retail sector was partly offset by poor figures from new car registration. Data also showed that the number new car registration in April increased 1.5% on a monthly basis, the figures for May are showing a much bigger drop of 7.4%. Despite mixed signals from several components of a consumption indicator, the overall trend remains positive, suggesting it could be the effect of a Franc cap, implemented by the SNB to prevent deflation and avoid a recession, as well as raising hopes that retail sales will stabilize and the pressure on margins will wane soon.
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