Weekly Industry Crib Sheet: Smartphones Outsell Standard Phones for First Time
Credit: Pivada7
Credit: Pivada7

U.S. Economy Accelerates in First Quarter
Manufacturing Expands at Slower Pace
Jobless Claims Fall

Smartphones outsold standard-feature phones in the worldwide mobile phone market for the first time ever in the first quarter of 2013, according to a new industry report.

Recent research from International Data Corporation (IDC) found that the global mobile phone market grew 4 percent during Q1 2013, with vendors shipping a total of 418.6 million phones this year, compared to 402.4 million units during the same period in 2012.

Smartphones accounted for 51.6 percent of the total, with 216.2 million units moved, a growth of 41.6 percent from the same period last year. However, this figure represents a 5.1 percent drop from the 227.8 million units shipped in the fourth quarter of 2012.

“Phone users want computers in their pockets. The days where phones are used primarily to make phone calls and send text messages are quickly fading away,” Kevin Restivo, senior research analyst with IDC’s Worldwide Quarterly Mobile Phone Tracker, said. “As a result, the balance of smartphone power has shifted to phone makers that are most dependent on smartphones.”

Of the major smartphone vendors, Samsung lead with 70.7 million units moved, representing a 32.7 percent market share. Samsung was followed by Apple (37.4 million units, 17.3 percent share), LG (10.3 million units, 4.8 percent share), Huawei (9.9 million units, 4.6 percent share), and ZTE (9.1 million units, 4.2 percent share). Other vendors made up the remaining 36.4 percent share of the market with 78.8 million smartphones shipped.

U.S. Economy Accelerates in First Quarter

The U.S. economy expanded in the first quarter of 2013 at a considerably faster pace than at the end of 2012, although future growth is expected to be slower as financial pressures bear down. The nation’s gross domestic product (GDP) increased at an annual rate of 2.5 percent in Q1, following a 0.4 percent gain in the Q4 2012, according to an advance estimate from the U.S. Department of Commerce.

The growth was primarily driven by a surge in consumer spending, which rose an annual rate of 3.2 percent for the first quarter, as well as increases in home construction and businesses rebuilding their stockpiles in response to higher demand. Automobile purchases and higher utilities spending due to unusually cold temperatures also made significant contributions to overall GDP.

“The GDP report showed contributions to growth from all areas of the economy, with the exception of government, trade and investment by businesses in offices and other commercial buildings,” Reuters reports. “However, households cut back on saving to fund their purchases after incomes dropped at a 5.3 percent rate in the first quarter. The drop in income was the largest since the third quarter of 2009.”

Despite the gains, economic growth came in below economists’ forecast of 3 percent. Business spending on equipment and software posted a 3 percent gain, down from 11.8 percent in the fourth quarter of last year. Government spending fell at an annual rate of 8.4 percent, led by an 11.8 percent plunge in military expenditure, as sequestration begins to take effect.

“The GDP report amounts to a caution about the looming consequences of federal spending cuts known as the sequester,” the Washington Post explains. “The cuts officially began in March but could take months – or even years – to fully digest. The Congressional Budget Office estimates that the sequester will shave nearly half a percentage point from economic growth this year, delaying projections for economic liftoff to 2014.”

Manufacturing Expands at Slower Pace

Research firm Markit’s latest Purchasing Managers Index (PMI) found that manufacturing and services in the U.S. continued to grow in April, but at a considerably slower pace than in prior months, with the index falling to 52 from 54.6 in March. This marked the slowest rate of expansion since October 2012.

“The biggest monthly fall in the PMI since June 2010 raises concerns that the U.S. manufacturing expansion is losing momentum rapidly as  businesses and households worry about the impact of tax hikes and government spending cuts,” Chris Williamson, chief economist at Markit, noted. “The PMI suggests that output growth has slowed from an annual pace approaching 8 percent earlier in the year to only 2 percent at the start of the second quarter.”

Manufacturing output fell to 53.6 in April, down from 56.6 in March and representing a five-month low, while the new orders index fell to 51.8 in April, down from 55.4 in March, as domestic demand growth slowed. The employment index also slowed last month, falling to 52.7 from 54.6 in March. On a more positive note, exports climbed to 52.2 in April, up from 51.8 in March.

“Exports remain a bright spot, rising at the fastest rate since December, but a weakening of demand from domestic customers meant overall order books showed the smallest increase since October,” Williamson explained. “With backlogs of work falling at one of the fastest rates since the height of the financial crisis, firms will also look to cut headcounts soon unless demand improves in the coming months.”

Jobless Claims Fall

New initial jobless claims fell sharply in the latest week reported, dropping close to a five-year low and suggesting that layoffs have bottomed four years after the end of the recession. According to the U.S. Department of Labor, unemployment claims for the week ending April 20 decreased by 16,000 to a total of 339,000.

Moreover, the four-week moving average, which smoothes out volatility and provides a clearer long-term picture of labor market conditions, fell by 4,500 to 357,500.

“The data can be choppy from week to week, but nevertheless, the initial claims report is considered one of the most important gauges of the job market’s strength. During the height of the financial crisis in 2009, jobless claims rose as high as 670,000,” CNN Money reports. “Now they’re at half those levels, showing that fewer employers are laying off workers. That said, hiring hasn’t necessarily been robust.”

The U.S. labor market has added an average of about 190,000 jobs per month since last fall, which is faster the typical rate of growth in the labor force but not fast enough to significantly drive down the national unemployment rate.



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