The Swiss UBS consumption indicator dropped to 0.89 in February from 0.92 last month, the UBS said Tuesday. The indicator thus continued its downward trend and remained below its long-term average of 1.5 for the fifth consecutive month.

The consumption indicator is calculated from five sub-indicators namely new car sales, business activity in the retail sector; the number of domestic overnight stays in hotels by Swiss residents, the consumer sentiment index, and the volume of credit card transactions via UBS at points of sale in Switzerland.

The indicator signals that consumer spending will rise slightly, however prospects are becoming increasingly gloomy. Unemployment would possibly rise considerably in the months ahead, which will impact consumption tendencies negatively. But falling inflation is likely to bolster purchasing power, the UBS added. The UBS forecasts a modest rise of 0.4% this year, following a real 1.7% increase in consumer spending last year.

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