* Swiss consumer spending set to weaken
* Overall employment up in Q1 but drops in manufacturing
* Employment outlook gloomy
(releads, adds economist's comments, employment data)
ZURICH, May 26 (Reuters) - Swiss consumers are increasingly likely to scale back spending as the recession hurts job prospects, economic indicators showed on Tuesday.
The UBS consumption indicator, based on five subcomponents measuring consumer behaviour, fell to 0.92 in April from 0.99 in March, UBS said in a statement. The indicator still pointed to a slight rise in consumption, but the outlook was becoming gloomy.
"Unemployment is rising further and people will worry more about job security," UBS economist Daniel Kalt said. "This will hit consumer spending."
"In addition, employment is set to fall this year, taking away support from consumption," he said.
In the first quarter, employment continued to rise, the Federal Statistics Office said. The number of non-farm payrolls increased 0.8 percent on the year to 3.957 million, a 0.1 percent rise on the quarter when adjusted for seasonal factors. But employment has already dropped in the industrial sector -- which has been hit hard by the collapse of Swiss exports due to the global recession -- and the employment outlook index fell below 1.00 for the first time.
"This indicates that employment will fall in the next quarter," the statistics office said.
A boom lasting nearly five years created tens of thousands of jobs in Switzerland, many filled with highly-qualified professionals from neighbouring countries, which boosted consumer spending and the housing market.
But Switzerland slipped into recession last summer and the Swiss National Bank forecasts a drop in gross domestic product (GDP) of up to 3 percent in 2009, which would be the worst decline in over 30 years.
Still, the economy has held up better so far than many of its peers thanks to solid consumer spending.
But unemployment has risen from 2.5 percent last summer to 3.5 percent in April and economists expect the jobless rate to hit nearly 6 percent next year, the highest since the mid-1990s.
UBS economist Kalt said consumers had so far mainly cut back on larger purchases such as cars, with a 13 percent drop in new car registrations in April weighing on the consumption index.
Lower prices, mostly cheaper energy, were boosting purchasing power and consumer spending, he said, though news that Swiss health care contributions were set to rise up to 20 percent next year does not bode well for consumption.
(Reporting by Sven Egenter and Emma Thomasson; editing by David Stamp)