NEWS,31.01.2013

Income surge releaves US consumers

American income growth surged in December as companies rushed to make dividend payments before higher tax rates set in, while buoyant wage growth also gave a lift to households. US personal income rose 2.6% last month, the biggest increase in eight years, the Commerce Department said on Thursday. While much of the gain was due to special payments aimed at beating tax increases due to begin this month, wages still grew at one of the faster rates seen last year. That should lend support to consumer spending and provide some underlying momentum for the economy despite a surprise contraction in gross domestic product during the fourth quarter."Even abstracting from the one-off surge in dividend payments ... the general tone of this report was quite encouraging," said Millan Mulraine, an economist at TD Securities in New York.The increase in overall personal income was well above analysts' expectations for a 0.8% gain. However, another economic report showed an increase in new jobless claims last week, and US stocks traded lower as investors sifted through the mixed data, while prices for US Treasuries were higher.The big rise in incomes put consumers on stronger footing entering the new year, even if the gains may not have been distributed evenly throughout the workforce. Extra dividend payments likely went to the nation's wealthier households who derive more of their income from investments.Still, wages and salary payments grew 0.6% last month, building on a sizable 0.9% gain in November.The income gains helped push the saving rate, the amount of disposable income households socked away, to 6.5%, the highest since May 2009. That offers a cushion for consumer spending as the temporary boost in incomes from investments unwinds and households deal with higher tax rates that took effect this month.Last month, consumer spending rose a modest 0.2%, which was just below the pace expected by analysts.The Commerce Department report also showed cooling inflation, which could help the US Federal Reserve continue easy-money policies aimed at boosting employment.Prices rose 1.3% in the 12 months through December, down a tenth from the reading in November and well below the Fed's 2% target. A core price reading, which strips out volatile food and energy prices to provide a better sense of inflation trends, was up a tame 1.4% from a year ago. A separate report from the Labour Department showed initial claims for state unemployment benefits increased 38 000 last week to 368 000. However, the increase followed a week where new claims were at their lowest in five years and still pointed to an economy where employers are adding jobs, albeit at a lackluster pace. The four-week moving average for new claims, which provides a better sense of underlying trends, gained 250 to 352 000.A report on Friday is expected to show employers added 160 000 jobs to their payrolls in January after an increase of 155 000 in December. The unemployment rate is seen holding steady at 7.8%.The number of planned layoffs at US firms rose in January from the prior month, but declined from a year earlier, another report showed on Thursday. Employers announced 40 430 job cuts this month, up 24.2% from 32 556 in December, according to the report from consultants Challenger, Gray & Christmas, Inc. Layoffs were down 24.4% from January 2012.

Worldwide tablet sales soar

Worldwide tablet sales jumped in the fourth quarter beyond even some of the most optimistic forecasts to 52.5 million, with Android-powered devices pacing growth, a survey showed on Thursday.The preliminary survey by business research firm IDC showed the tablet market grew 75.3% year over year in the quarter and rocketed 74.3% from the previous quarter's total of 30.1 million.IDC said the strongest growth came from Android, including tablets made by South Korea's Samsung and Taiwan's Asus, which makes a Google-branded Nexus tablet.Apple remained the biggest seller, but its market share was under 50%, IDC said. The survey found that Microsoft, which launched its new Surface tablet in the quarter, failed to break into the top five sellers and shipped a modest 900 000 of the devices in the quarter.Overall, the market's strong gains came from a spate of new product launches, including the iPad mini, and lower prices, which encouraged buyers over the holiday shopping season, IDC said."We expected a very strong fourth quarter, and the market didn't disappoint," said IDC analyst Tom Mainelli."The record-breaking quarter stands in stark contrast to the PC market, which saw shipments decline during the quarter for the first time in more than five years."Apple's iPad held its top position with 22.9 million units shipped. That was up 48% from a year earlier, but lower than overall market growth.As a result, Apple's market share declined for a second quarter in a row to 43.6% from 46.4% in the third quarter.Samsung, the number two vendor, saw year-on-year growth of 263%, selling 7.9 million tablets and grabbing a 15.1% market share.IDC said Amazon, which does not provide its own sales data, delivered some six million tablets in the quarter to retain its spot as the number three vendor.That represented 26.8% growth, giving Amazon a market share of 11.5%, IDC said.Fourth place belonged to Asus, which sold 3.1 million tablets, year-on-year growth of more than 400%. That gave the Taiwan-based firm a 5.8% market share.Barnes & Noble sold one million of its Nook tablets and accounted to 1.9% of the market, the survey found.IDC analyst Ryan Reith said Microsoft will need to shift its strategy to compete better in the tablet market."There is no question that Microsoft is in this tablet race to compete for the long haul," he said, calling the market reaction to Surface "muted.""We believe that Microsoft and its partners need to quickly adjust to the market realities of smaller screens and lower prices. In the long run, consumers may grow to believe that high-end computing tablets with desktop operating systems are worth a higher premium than other tablets, but until then (selling prices) on Windows 8 and Windows RT devices need to come down to drive higher volumes."

Ukraine economy in official recession

 

Kiev Ukraine's economy plunged into recession in the final quarter of 2012 with GDP contracting 2.7%, the second quarter running of negative growth, the statistics office said.Gross domestic product in Ukraine contracted 2.7% in the fourth quarter of 2012 compared with the same period last year. The economy had already shrunk by 1.2% in the third quarter.For the whole of 2012, growth was almost stagnant at 0.2% compared with 5.2% in 2011 and the projection in the budget for growth of 3.9%.Ukraine, which was one of the European states worst hit by the 2009 economic crisis, is hugely vulnerable to the current global slowdown due to its dependence on metals exports.

Bitter taste for German chocolate makers

German antitrust authorities have fined 11 chocolate makers €60m for colluding to rig the price of confectionary.The Federal Cartel Office says the offences committed by companies, including Kraft and Nestle, occurred between 2004 and 2008.The offences include agreeing on how much to increase the price of chocolate bars when the cost of raw materials rose sharply in 2007.The cartel office said in a statement on Thursday that the companies "simply ceased competing with each other and piled the price rises on to consumers".It said that Mars avoided a fine by alerting authorities to the illegal practices.

Nappy hunters bare Norwegian bottoms

Southern Norway is in the midst of a nappy shortage after a supermarket price war lured enterprising bulk shoppers from eastern Europe who have cleaned out the shelves, customs officials and retailers said.Norway is one of the world's most expensive countries. However, supermarkets in the south trying to lure local customers by undercutting rivals on the price of nappies inadvertently made it profitable enough for residents of nearby countries to start trading in them."They buy every last diaper [nappy], I mean everything we have on the shelves, throw it in the back of their car and take them home, where they sell it for a nice profit," says Terje Ragnar Hansen, a regional director for retail chain Rema 1000."It's not stealing and it's not even criminal but it's a big problem, ... they leave nothing for our regular customers.Customers come into Norway from Sweden, drive along the coast to fill their cars, then take a ferry back to the continent, said Helge Breilid, the chief of customs in Kristiansand on Norway's southern coast.Some have been stopped with nappies worth up to $9 100, roughly 80 000 nappies, a legal shipment even though Norway is not part of the European Union. "They told us that the only reason they came to Norway was to drive around and buy nappies to bring back home and resell," Breilid said. "These people mainly come from Poland and Lithuania, and we have no reason to believe that they are part of any criminal gangs."Norwegian nappies cost as little as $5.47 for 50, less than half of the prevailing price in Lithuania. Coincidentally, the internet is heaving with Lithuanian sellers advertising Norwegian nappies.

French civil servants go on strike

French civil servants went on strike on Thursday for better pay in their first mass show of dissent since the Socialist Francois Hollande became president last year.Dozens of street protests were planned across the country as part of the day of action called by three of the several unions which represent France's 5.2 million state workers.The main complaint of the unions relates to the index used to calculate salaries, which has been frozen for three years.Raising the index by one point would cost €800m if applied only to central government workers or €1.8bn if applied to all civil servants, according to the state audit authority.Jean-Marc Canon of the CGT union said the situation was "absolutely catastrophic", and noted that nearly a million civil servants were being paid the minimum wage.The unions are seeking to put pressure on Civil Service Minister Marylise Lebranchu ahead of pay talks next Thursday.She has acknowledged "the difficult situation facing civil servants" but hinted that pay rises were unlikely given the budgetary constraints on the government.The government was due later on Thursday to announce how many civil servants had answered the strike call.

NEWS,13.07.2012

Spain Protests: Civil Servants Protest Wage Cuts

 

Spanish civil servants, many dressed in mourning black, took to the streets Friday in angry protest as the government approved new sweeping austerity measures that include wage cuts and tax increases for a country struggling under a recession and an unemployment rate of near 25 percent.Spain is under pressure to get its public finances on track amid concerns in the markets over the state of the country's banks and the wider economy."Spain is going through one of its most dramatic moments," Deputy Prime Minister Saenz de Santamaria said after a Cabinet meeting at which sales tax hikes and spending cuts were approved.Admitting that the austerity measures were "neither simple, nor easy, nor popular," she said the government would try to enact the measures "with the maximum justice and equity."The conservative government has come under mounting criticism that the austerity measures are hitting the middle and working classes the hardest."The government should go after the big companies that don't pay tax and bankers that have committed fraud and have run this country to the ground," said Pablo Gonzalez, 52, who works for the Madrid regional government. "Instead, we have to pay."The aim of the latest package of measures is to chop (EURO)65 billion ($79 billion) off the budget deficit through 2015, the biggest deficit-reduction plan in recent Spanish history.Though the increase in sales taxes, which risks slowing consumption and worsening Spain's recession, will take effect Sept. 1, other reforms will be left for later in the year, including a plan to speed up the gradual raising of the retirement age from to 65 to 67.Meanwhile, Economy Minister Luis de Guindos announced the creation of a new mechanism to help Spain's 17 regions finance themselves more easily. Some, such as Valencia in the east, are finding it increasingly difficult to tap capital markets for much-needed cash.The latest bout of austerity is prompting widespread opposition, not least from civil servants. In Madrid, several hundred government workers blocked traffic briefly in different parts of the city. In Valencia, several hundred Justice Ministry workers shouted "hands up, this is a stick-up" at a protest rally.The civil servants  whose wages were cut 5 percent on average in 2010 in the first round of austerity cuts –are usually paid 14 times a year. The government is now axing an extra payment made just before Christmas. The prime minister, his cabinet and lawmakers will also suffer the cut. At the local, regional and central level, there are around 3 million public servants in Spain.In the Puerta del Sol in downtown Madrid, about 500 civil servants gathered, about half dressed in black. Some women wore veils, as if at funerals. Protesters blew whistles and horns. Civil servants are often ridiculed in Spain and seen as lazy, clock-in and clock-out types with the luxury of lifetime jobs. But many earn as little as (EURO)1,000 a month.Isabel Perez, a 40-year-old librarian, said "our wages have already been cut and now they take away the Christmas payment. I don't make it to the end of the month as it is. The extra payment gave some relief. We're not exactly millionaires." She earns (EURO)1,300 a month and had already faced a yearly (EURO)330 euro wage cut by the Madrid regional government.The latest austerity package has come after Spain won approval from the other 16 countries that use the euro for the first (EURO)30 billion tranche of a bailout of up to (EURO)100 billion for its troubled banking sector. Spain also managed to secure an extra year to meet a European deficit reduction target of 3 percent of GDP. The size of Spain's economy in 2011 is estimated to have been $1.5 trillion.Investors' response has been lukewarm, and the yield on Spain's benchmark 10-year bonds, a measure of investor wariness of a country's debt, remains very high at 6.61 percent, up 4 basis points for the day.Investors are also becoming increasingly wary of placing money in Spanish banks, which are having to turn to the European Central Bank for financing.In June, Spanish bank borrowing from the ECB rose 17 percent from May. The accrued total as of the end of that month was (EURO)337 billion, 77 percent of all the money owed to the ECB and seven times the figure from June 2011.A draft memorandum of understanding agreed by eurozone finance ministers for Spain's bank bailout suggests billions in problematic assets should be segregated into an "external asset management agency" to clean up Spanish banks' balance sheets.It also says that by the end of the year certain areas of jurisdiction  sanctioning and licensing  should be transferred from the Spanish economy ministry to the Bank of Spain.This is seen as paving the way for Europe having a single bank supervisory body that will oversee central banks and be empowered to recapitalize Spanish and other troubled banks directly instead of via debt-laden government.

 

Europe shows chocolate not recession-proof

 

An assumption that chocolate is a recession-proof treat that consumers continue to buy despite the grim economic outlook was proven wrong today by the sharpest fall on record in Europe's quarterly cocoa grind - an indicator of demand.Analysts said worsening economic conditions in the euro zone had prompted a sharp slowdown in European demand for chocolate, and the outlook could deteriorate further if the crisis deepens.The Brussels-based European Cocoa Association (ECA) reported that Europe's second-quarter cocoa grind tumbled 17.8% from the same period last year to 292,551 tonnes, far worse than even the most pessimistic predictions of a fall of up to 12%."We think the current slowdown in grindings reflects worsening economic conditions in the euro area. If contagion spreads to Spain and Italy, this would have undoubtedly an impact on demand for indulgence products like chocolate," said Francisco Redruello, senior food analyst at Euromonitor International.In Switzerland, the world's top chocolate consumer, domestic chocolate consumption dropped about 8% by volume in the first four months of the year, said Franz Schmid, managing director of the association of Swiss chocolate manufacturers Chocosuisse.Swiss chocolate exports - of which around two thirds are destined for Europe - also fell about 12% in the January to April period. Schmid said the strong Swiss franc also had hurt exports.In Germany, one of the world's largest chocolate consumers, retail sales of chocolate bars by tonnes fell 7.3% on the year in the first four months of 2012, according to the association of German confectionery producers BDSI.Following the grindings data, benchmark ICE September cocoa futures fell 5% to $2,177 per tonne 1516 GMT."It is by far the worst ever result in a quarter since the ECA began reporting these figures. It is reflecting the reality of the demand picture in Europe," said Javier Almela, head of cocoa purchasing at Spanish cocoa processor Natra Cacao.In Spain, where unemployment is high and consumers are feeling the pinch, chocolate consumption is expected to suffer.According to market research firm Mintel's June chocolate confectionary report, only 44% of Spaniards agree that chocolate is value for money, while 43% claim that they will cut back on purchasing chocolate if the value of their favourite bars rises."Given these responses it is not unreasonable to assume that consumers are likely to be cutting back on purchasing some forms of chocolate," said Marcia Mogelonsky, global food and drink analyst at Mintel.Cocoa demand growth typically tracks GDP growth, and with many European countries in recession plus cocoa processing margins being squeezed, analysts had expected a negative grind number - just not of this magnitude.Some are adjusting their global supply and demand balance sheet accordingly."This transforms a flat supply and demand picture into looking like a meaningful surplus for the year. We are now looking at a 2011/12 surplus of over 100,000 tonnes," said Jonathan Parkman, joint head of agriculture at broker Marex Spectron.In May, the International Cocoa Organization (ICCO) forecast a 2011/12 global cocoa deficit of 43,000 tonnes.Until now, growing global demand was attributed to strong cocoa powder demand from emerging markets including Brazil and China, but Parkman said the weak grind data throws this into question.When cocoa beans are ground, they produce roughly equal parts of butter, which makes chocolate melt in the mouth, and powder, used to flavour products including cakes and biscuits."Everyone is aware that powder demand has been holding grindings up and yes margins were negative, and that's what caused this slowdown in grindings, but the European grind also suggests the powder demand story has been exaggerated. Powder demand certainly doesn't seem to be growing," said Parkman.

 

China's economic growth slows

 

China's economy expanded at its slowest pace since the depths of the global financial crisis more than three years ago, official data showed on Friday, fuelling expectations of more stimulus moves.The world's second-largest economy grew 7.6% from April to June year-on-year, the National Bureau of Statistics said, the worst performance since 6.6% in the first quarter of 2009.The slowdown "was mainly due to the continued deterioration in the international environment, which further dampened foreign demand," statistics bureau spokesperson Sheng Laiyun told reporters."Domestic demand eased also as macro-economic tightening, particularly controls on the real estate sector, continued."The weak second-quarter expansion dragged down growth to 7.8% for the first half of the year.Sheng expressed confidence that the economy would stabilise and China would meet its full-year growth target of 7.5%."I believe China's economy will continue moderate and steady growth in the second half of the year," he said, citing the potential for investment, consumption and exports to propel expansion the rest of the year."We are very confident in achieving the full-year growth target."Nevertheless, the target growth rate of 7.5% is well down on the 9.2% achieved last year, and 10.4% in 2010.Market reaction in China to Friday's data was muted. Chinese stocks turned slightly into negative territory after initially rising following the release of the figures.The Shanghai Composite Index, which covers both A and B shares, was down 0.15%, or 3.30 points, to 2,182.19 in late morning.Tang Jianwei, economist at Bank of Communications in Shanghai, said the second-quarter result was in line with expectations and that China's planners would be able to speed up the economy."We expect economic conditions in the second half of the year will be slightly better than the first half," Tang said. "We've already seen stabilisation in investment from June's data thanks to government stimulus policies."The government last week took the rare step of slashing interest rates for the second time in a month. That came after three cuts since December in banks' reserve requirements, or the amount of money they must keep on hand.Such cuts are meant to free up funds for lending and thus boost the economy.Chinese leaders have vowed to take further measures. Premier Wen Jiabao this week called stabilising economic growth the government's "top priority".Slowing growth in China is also casting a further cloud over the broader global economy, which is still suffering the effects of the 2008-2009 financial crisis.Employment figures in the United States, the world's biggest economy, remain weak and Europe is struggling to overcome its sovereign debt crisis.Ren Xianfang of IHS Global Insight said in a report that China's second-quarter figure marked the sixth straight three-month period of slower growth, and highlighted that the country's economy risked losing momentum. Still, she said that the government retained ample tools - including another interest rate cut, more loosening in bank reserve requirements and exchange rate stability - to spur activity."We are expecting about 7.9% growth this year," she said.Besides the growth figures, the bureau released a slew of other economic statistics on Friday that backed up the broader slowdown.Growth in retail sales, the main gauge of consumer spending, continued to slow in June, rising 13.7% in June compared with the same period a year earlier, marginally down from growth of 13.8% in May.Output from China's millions of factories and workshops also continued to slow, growing by 9.5% year-on-year in June, the bureau said, down from 9.6% in May.However, indicating that some government measures to revive growth were starting to kick in, China's urban fixed asset investments rose 20.4% in the first half of 2012 compared with a year earlier, the bureau said.The investments for the half year compared with growth of 20.1% in the first five months of the year, signalling a slight increase in June.Fixed asset investments are a key measure of government spending on infrastructure.