"The risk of less favorable global economic developments has decreased somewhat compared to the last quarter. Nevertheless, structural problems in Europe persist, which could cause new tensions on the markets."
-Thomas Jordan, the Swiss National Bank President
A couple of days after the SNB stayed pat on its monetary policy, and once again assured the cap on domestic currency, a report from UBS showed a gauge of consumption slowed slightly last month, as improvement in overnight hotel stays and business conditions in the retail sector could not compensate a fall in new car registrations. The UBS consumption indicator, which is a combined reading of 5 economic indicators, stood at 1.32 in August, markedly lower from July's 1.41. Driving the deterioration of the index, the number of new car registrations plunged a seasonally adjusted 1.1%, while in the first eight months of the year the indicator tumbled 9.2%. The main contributors to growth came from strong number of tourists stayed overnight in hotels, while retailers also assessed the situation more positively.
Despite the weaker reading, UBS does not sees a beginning of negative movement of the consumption, as grounds for diverging from the recently upgraded growth forecasts, since domestic consumption is expected to continue growing robustly and is likely to remain the main pillar of the Alpine economy. The SNB warned that even despite some improvement in the Eurozone, structural problems still persist and taking into account low inflationary pressure in Switzerland, the SNB will defend the cap with unlimited market interventions in order to protect the economy for as long as it is needed.
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