The UBS consumption indicator weakened for the third month in August, with the index slipping to 0.658 from a revised reading of 0.747 in the previous month, and households may continue to scale back on spending over the coming month as they face a weakening labor market paired with fears of a protracted downturn. Meanwhile, the accompanied statement said that “despite the current economic weakness, the indicator’s positive level hints at a modest increase in Swiss private consumption in August” however, businesses may continue to cut back on production and employment over the coming months as global trade conditions remain weak. Nevertheless, as the Swiss National Bank maintains the benchmark interest at 0.25% and pledges to intervene in the currency market to stem the appreciation in the exchange rate, the extraordinary efforts should help to shore up the economy as policy makers anticipate the economy to return to growth going into the following year.
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