Consumer confidence weakens

Swiss consumer confidence sank to a two-year low in July, according to data released by the State Secretariat for Economic Affairs (Seco) on Tuesday.

It is the latest sign that the record-strong franc is taking its toll on expectations for growth and employment, observers say.

The Swiss consumer confidence index slipped to -17 points in July from -1 points in April, Seco said in a statement. Economists had expected the index to fall to -5, and the reading for July 2011 missed even the lowest estimate. 

Seco added that expectations for future economic growth and unemployment levels were far more negative than in April.

The safe-haven franc has surged more than 18 per cent against the euro since early April, prompting the Swiss National Bank (SNB) earlier this month to slash rates to virtually nil, boost liquidity in the money market and warn that growth was set to slow in the second half of the year. 

“With the eurozone and United States debt crises boosting the franc’s safe-haven appeal, risks to the economy are on the rise and consumers have picked up on it as they see their jobs threatened by considerations to move production abroad,” Informa Global Markets analyst Nikola Stephan told Reuters news agency.  

“Notably, price expectations have also deteriorated sharply, which will be interesting for the SNB, giving it yet more to worry about as it keeps deflation concerns on the agenda.”