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,05.12.2012

Euro zone downturn eases slightly

The euro zone's economic slump was a little less pronounced in November than previously thought, although there are few signs the region will emerge from recession any time soon, business surveys showed on Wednesday. Markit's Euro zone Composite PMI, which gauges business activity across thousands of companies, rose in November to 46.5 from 45.7 in October markedly higher than the preliminary reading of 45.8 reported 10 days ago.The PMI has lingered below the 50 mark that divides growth and contraction for all but one of the last 15 months and with no economic stimulus in the pipeline, there is little reason to expect a rebound.Survey compiler Markit said there was no single reason for the upward revision to the PMI from the mid-month flash estimate, which could simply be down to a stronger end to the month for businesses.France, Spain and Italy were the biggest drags on the euro zone economy through last month. Germany performed better. Overall, however, the survey still pointed to a deepening recession this quarter, following the economy's 0.1% decline in the third quarter."The (upward revision) is good news as it might be a sign that activity has bottomed out in Q3," said Annalisa Piazza, economist at Newedge Strategy in London."Nevertheless, we see no signs of improvement that suggest that the EMU economy might recover any time soon. Further contraction in GDP remains our baseline scenario at least until Q1 2013."The euro hit a seven-week high on Wednesday and European shares continued their recent rally, although that was mainly due to comments from China's new leader which boosted expectations for global growth. Monday's manufacturing PMI's told a similar story to Wednesday's composite and services numbers. The composite new orders index saw a sharp upward revision to 45.0 from 44.1 in the preliminary data but still showed company order books declining at a fast rate.Service sector businesses like banks, hotels and restaurants that account for the vast bulk of the euro zone's private economy, also saw activity decline at the slowest rate in three months.The final services PMI was revised up a full point from the flash reading, to 46.7 and compared with October's 46.0.Prices charged for products fell again in November, at a similar rate to the previous month, giving further weight to the view that inflation would pose little impediment to the European Central Bank if it wanted to further ease monetary policy.The ECB ends its monthly policy meeting on Thursday. While only a handful of economists polled by Reuters think it will cut interest rates at the meeting, overall they are split on whether the bank will do so early next year. "The improvement in the services sector purchasing managers' survey further reduces the likelihood that the ECB will cut interest rates on Thursday," said Howard Archer, chief UK and European economist at IHS Global Insight."Nevertheless, we believe a cut from 0.75% to 0.50% remains likely in the early months of 2013 as the euro zone continues to struggle to grow and underlying inflationary pressures are muted."

EU imposes record cartel fine on Philips

The European Commission imposed the biggest antitrust penalty in its history on Wednesday, fining six firms including Philips, LG Electronics and Samsung SDI a total of €1.47bn for running two cartels for nearly a decade.The Commission said executives from the European and Asian companies met until six years ago to fix prices and divide up markets for TV and computer monitor cathode-ray tubes, technology now mostly made obsolete by flat screens.Between 1996 and 2006 they met in Paris, Rome, Amsterdam and in Asia for "green meetings", so-called because they often ended in a round of golf.The EU antitrust regulator imposed the biggest penalty, of €313.4m, on Dutch-based Philips for its role in fixing prices and carving up markets. LG Electronics of South Korea must pay the second biggest fine, set at €295.6m."These cartels for cathode-ray tubes are 'textbook cartels': they feature all the worst kinds of anti-competitive behaviour that are strictly forbidden to companies doing business in Europe," EU Competition Commissioner Joaquin Almunia said in a statement. Taiwanese firm Chunghwa Picture Tubes blew the whistle on the cartels in TV and computer monitors and escaped a fine.The Commission also fined Panasonic €157.5m, Samsung SDI €150.8m, Toshiba €28m, and French company Technicolor €38.6m.A joint venture between Philips and LG Electronics was penalised €391.9m while two Panasonic joint ventures were also sanctioned. Almunia said the violations were especially harmful for consumers, as cathode-ray tubes accounted for 50% to 70% of the price of a screen.Cathode-ray tubes have largely been replaced by more advanced display technologies such as liquid-crystal display (LCD), plasma display and organic light-emitting diodes. Philips said it would make a provision of €509m in the fourth quarter for the fine, but Chief Executive Frans van Houten also said the group would challenge what he called the disproportionate and unjustified penalty. Philips sold off the business which committed the infringement in 2001.ING analyst Fabian Smeets told ANP-Reuters that the sanction was significant, but expected. Philips' shares were down 0.2% to €20 in mid-session, erasing earlier gains after news of the fines. Technicolor said the fine, which will be booked as an exceptional item in its second-half accounts, would not affect its 2012 earnings and free cash flow targets.Until now, the Commission's biggest antitrust penalty had been a €1.38bn fine imposed on participants in a car glass cartel in 2008.The Commission's sanctions followed a total fine of €128.74m levied last year against four producers of the glass used in cathode-ray tubes.Chunghwa Picture Tubes, Samsung Electronics, LG Display and three other LCD companies were penalised a total €648m two years ago for taking part in a cartel.

Fiscal watchdog sees a million jobs lost

Britain's fiscal policy watchdog said on Wednesday that more than one million jobs would now be cut from the public sector by 2018 because of further government spending cuts.The independent Office for Budget Responsibility, which produces forecasts that underpin the government's economic policy, said gross domestic product would grow much more slowly than it forecast in March. According to the OBR, about 1.1 million general government jobs would be lost in total from the Conservative-Liberal Democrat coalition's austerity plans, which got underway in mid-2010, "reflecting the additional year of spending cuts pencilled in for 2017-18".In March, it had expected about 730 000 public sector jobs to be cut across the full period of austerity. There are roughly five and half million people employed in Britain's public sector.The watchdog predicted a 0.1% fall in GDP in the fourth quarter followed by growth of 0.3% in the first three months of 2013. In March, it had expected growth of 0.3% in the final three months of this year.It has also cut longer-term forecasts sharply. The economy will grow 1.2% next year and 2% in 2014, while 2015 and 2016 forecasts were revised down to 2.3% and 2.7% respectively.

Senate approves $631bn defence budget

The US Senate unanimously passed the Pentagon's 2013 budget on Tuesday, despite a political impasse over debt reduction that could see huge cuts to military spending next year.After months of negotiations, lawmakers voted 98-0 to approve the $631bn National Defence Authorisation Act for Fiscal Year 2013, which began on 1 October.The sweeping measure, passed after five days of debate and hundreds of amendments, would tighten sanctions on Iran, restrict the president's authorisation in handling terrorism suspects, and prohibit the military detention of US nationals.The bill must be reconciled with a version passed earlier this year in the House of Representatives before going to President Barack Obama's desk for his signature, though the White House has threatened a veto.The two versions have major differences, but both Senate Armed Services Committee chairperson, Carl Levin, and ranking Republican, John McCain, expressed confidence in reaching consensus in conference.The administration "strongly objects" to sections of the bill that would, among other things, impose restrictions on the use of funds to transfer detainees held at the US Naval base at Guantanamo Bay, Cuba to foreign countries; and to the proposed trimming of civilian and contract workers."If the bill is presented to the president for approval in its current form, the president's senior advisers would recommend that the president veto the bill," the Office of Management and Budget said last week. Obama had sought $614bn, of which $89bn would go to the war in Afghanistan.The Senate however, hiked the total figure by $17bn, even as lawmakers and the president grapple with how to avoid hundreds of billions of dollars in automatic spending cuts that kick in next month if no deficit reduction deal is reached. Tuesday's legislation saw more than 140 amendments added to the bill, including a ban on the US government detaining American citizens or US permanent residents without charge, and tough new economic sanctions on Iran aimed at stalling the Islamic republic's nuclear programme.It also includes an amendment requiring the administration to report to Congress on the US military options available for degrading Syrian President Bashar al-Assad's use of air power against his own people, although it does not expressly authorise the use of US military force and is not to be construed as a declaration of war against Syria.The bill also provides a 1.7% pay raise for military personnel, strengthens the Pentagon's anti-sexual assault programmes, and improves the care and management of wounded warriors, McCain said.The bill also approves funding for the deployment of additional US forces to protect American embassies and diplomatic missions abroad a reaction to the September 11 attack on the consulate in Benghazi, Libya.Four Americans including ambassador Christopher Stevens were killed in the attack by Islamist militants, and several investigations are under way to determine possible security lapses that contributed to the incident.Tuesday's vote marked a rare moment of cooperation between the two parties. Democrats and Republicans are engaged in fierce negotiations on deficit reduction for the next 10 years; they have until the end of the month to forge a compromise, but as of Tuesday, the discussions seemed stalled."Our efforts demonstrate that when it comes to addressing the issues important to the men and women in uniform, the Senate can work together in a bipartisan manner," McCain said.

Saudi businesses fear impact of new fees

Glancing through the newspapers one morning last month Saudi Arabian businessperson Ihsan al-Naeem was stunned by a government announcement that he fears will threaten the survival of his family's 30-year-old contracting business.In the latest and most aggressive of a series of labour reforms, the government has started imposing fees on companies that hire more foreign than local workers. The requirement covers everyone from expat professionals to hospital workers and labourers on construction sites and is in addition to quotas already in place to limit foreign staff numbers.The new rule is aimed at reducing unemployment of 10.5% among Saudi nationals by getting them into jobs now performed by 8 million expatriates in the country, a long-term Saudi goal given fresh impetus by the uprisings in Arab countries last year that were partly driven by high unemployment. Labour Minister Adel al-Fakeih said in January that the largest Arab economy needed to create 3 million jobs for Saudi nationals by 2015 and 6 million by 2030, partly through "Saudi-ising" work now done by foreigners. However, in an economy in which imported labour fills nine in 10 private sector jobs, according to central bank data, many companies fear the new fees will hit their businesses hard by adding to their costs and shrinking the pool of available workers."There are no Saudis who can drill or operate heavy machinery ... Where will they work in the construction industry?" said Naeem, who employs more than 1,000 foreign labourers working on 17 government contracts. As of November 15, Naeem and other private sector employers who hire more foreigners than Saudis must pay a fee of 2 400 riyals ($640) a year for each additional expatriate when they renew an expat's one-year residency permit.The rule does not cover foreigners with Saudi mothers or nationals of other Gulf states. Businessmen protested outside Labour Ministry offices after the decision, threatening to raise their fees to cover the additional labour costs o r terminate existing government contracts. A Labour Ministry spokesperson said there were no plans to reverse or amend the decision. "The decision is based on detailed studies of the market mechanisms and it will hopefully increase the competitiveness of our local youth in a market that has no mercy, which has eight foreigners in every 10 employees of the private sector, who compete with our youth for their livelihood," the spokesperson, Hattab Alenezi, said. Businesses say the new system will not address the problem of Saudis unwilling to work in the private sector. Wages are much lower than in government jobs and in many cases people are better off on unemployment benefit, which pays 2 000 riyals a month for up to a year. A security guard in the private sector, for example, earns only around 1 500 riyals a month. After the 1970s oil boom, which propelled many Saudis into a lifestyle of wealth and luxury, locals viewed jobs requiring manual labour as menial and imported cheap foreign labour to build their cities and service their offices. Construction labourers from India, Pakistan, Bangladesh and the Philippines form the biggest group of foreign workers." I have never come across a Saudi willing to work as a labourer," Naeem said, estimating his medium-sized company will have to pay around 2.4 million riyals in annual fees. Businesses complain that the fees on foreign workers were introduced with immediate effect with no warning or consultation, and that they appear to contradict other recent reforms to encourage "Saudi-isation" that take account of different industries' requirements. Last year the Labour Ministry overhauled a crude quota system for Saudi and foreign employees to take account of a company's size and sector. Those who do not comply with the quotas, known as Nitaqat, face hiring restrictions. Before the overhaul the local quota was a flat rate of 30%. Now the rate varies depending on what sector a company is in and what size it is. A small construction company is allowed more foreigners than a large bank, for instance. The impact of the Nitaqat reform is not yet clear but some economists fear the introduction of fees on foreign staff fit an old pattern of ineffective measures that add costs for companies." I think that (the fee) is going to be treated as a tax by some companies rather than an incentive to employ additional Saudis. It doesn't really address the supply issue which is that Saudis need to be incentivised to take private sector jobs," said James Reeve, a senior economist at Samba Financial Group. There is no formal minimum wage despite government efforts to raise pay for Saudis in private companies. Under Nitaqat rules, construction and transport businesses only need employ one Saudi for 19 expatriates and fear the new fees will hit them particularly hard."Saudis can work in the administration, but there are only a few jobs there," said Mahfooz Bin Mahfooz, who owns a transport company and said he cannot find Saudis to work for him as truck drivers." I want a job in the field that I studied for. I did not go to college so I can work as a driver," said a 22-year-old unemployed Saudi in Jeddah w i th a computer science degree. Not all businessmen disagree with the fee. Some say it is important to achieve the kingdom's long-term goal of getting more Saudis into work. Mohammed al-Agil, head of the kingdom's largest listed retailer Jarir Marketing Co, said about 40 percent of his employees are Saudi although he accepted that it was easier to find local workers in his sector." I think it is a good initiative but I think they should have given enough notice," he said. Many newspaper commentators, however, have voiced vehement opposition."The first to be harmed by it are local business owners, and secondly consumers who will no doubt bear the brunt of rising prices," said Essam al-Ghafaily, a columnist in al-Watan daily newspaper. Even the price of bread could rise by as much as 7 percent as bakers expect to transfer the cost of the new fees onto consumers, said Ali al-Shehri, head of the Jeddah Chamber of Commerce bakers' committee, in remarks printed by al-Watan newspaper.Naeem, the contractor, said he feared missing out on important tenders because the price of his bids will have to rise."Coming from a medium-sized company I'm getting exhausted ... my activities internally may change and I may even look to shift business a b road," he said.