Slower Domestic Demand Pushes Australian Retail Sales to Drop 0.2% in April 2008

A sharp drop in retail sales figures for April 2008 masks what economists consider is a flat result for the month.

Australian retail sales fell in April 2008, adding to evidence of slowing the nation's 17 years of economic expansion.

Sales fell 0.2 percent from March, when they climbed a revised 0.2 percent, the Bureau of Statistics said in Sydney today. The median estimate of 22 economists surveyed by Bloomberg News was for a 0.2 percent gain, reports Bloomberg.

Skyrocketing gasoline prices and a rise in borrowing cost by the central bank is the main reason behind the fall in the retail sales. Slowing economy along with higher borrowing cost tide the customer hands for further spending. Hence less domestic demand is creating the pressure on the retail sales industry and forcing its sales to drop down.

Also inflated food prices made the damage to the retail sales with decreasing spending on retail food products. The Australian turnover of retail sales decreased due to decline in sales by chain and large retailers. The sales decline for small retailers is expected to be marginal. At the same time decline in spending on the recreational goods made the retails sales to decline further.

"If we exclude the Easter effect, we can see that ex-food retail sales over the last two months have been flat," ANZ economist Katie Dean wrote in a note to clients. "This confirms the economy is slowing and should put the RBA out of the game. The big uncertainty is whether this slowdown will continue when the July tax cuts arrive," she adds, reports The Age.

According to research analyst at Arth Business Research, “ This decline in retail sales is expected to improve in coming months as the Australian government is expect to cut the income taxes which would increase the income of the wage earners marginally. Also some expected relief from RBA would help the retail sales to regain the ground.”

Consumer Goods Demand Pushed China Retail Sales Up 22.0% in April

China's retail sales rose in April 2008 at the fastest pace since at least 1999, signaling that strong domestic consumption may help offset weak overseas demand.

China's retail sales of consumer goods in April 2008 rose 22.0 % year on year to 814.2 billion Yuan (USD 116.3 billion), the National Bureau of Statistics (NBS) said on Tuesday.

That brings China's retail sales of consumer goods in the first four months of this year (2008) to 3.3697 trillion Yuan, up 21.0 %, compared with 20.6 % growth rate recorded in the first quarter of this year, reports China Daily.

Retail sales of consumer goods in April in urban areas were up 22.9 % to 555.9 billion Yuan, while the retail sales of consumer goods at county level or below totaled 258.3 billion Yuan, up 20.1 %.

Rising inflation is the main reason which not only forced consumers to pay more for daily necessities, but also seemed to encourage spending on durable and luxury goods. Sales of consumer goods like garments, home appliances, furniture and recreational goods picked up due to inflation worries and hence pushed the retail sales to increase.

"With inflation at a decade-high level, it is not surprising to see nominal retail sales reaching a decade-high as well," Goldman Sachs' economists Song Yu and Liang Hong said in a research note, reports People’s Daily Online.

A heavy buying in foodstuff and beverages, grain and edible oil also helped the retail sales of china to rise amid rising food price inflation.

According to research analyst at Arth business Research, “As the demand for food prices is rising continuously with a greater pace than the supply and at the same the oil prices are hitting all time high, it is expected to force people to purchase more goods like garments, home appliances, and other luxury goods on the expectation that the price of these goods will go higher in near future which in turn will push the retail sales up further.”

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US Trade Deficit Narrowed As Import Dropped To a Record Level

US trade deficit shrunk as domestic demand for foreign made goods declined while foreign demand for US products increased due to weaken US dollar.

The US trade deficit shrank more than expected in March 2008 to USD 58.2 billion. The trade gap narrowed from a revised USD 61.7 billion in February 2008. Most economists had predicted that the deficit would narrow to 61.3 billion.

The trade gap shrank 5.7% in March 2008, the Commerce Department reported on Friday, much smaller than expected, reports The Age.

The reason for this record drop in US imports is slowing domestic demand due to inflating US economy is directly supporting the US trade balance in March 2008 despite record high oil prices. Also imports dropped as Americans; due to weak US dollar did not show interest to buy foreign-made cars and trucks, consumer goods, industrial supplies and certain foods among other goods.

The tumbling down dollar value against other world currencies had made US-made goods much more affordable for rest of the world and helped to create a big demand for US product in the international market and made the trade balance to shrink the deficit.

Also US exports which set records in 12 consecutive months helped the US economy afloat during a time of mayhem due to housing slump and spreading liquidity crisis and made the trade deficit to shrank.


"The weaker dollar against the euro, pound and Canadian dollar is boosting exports," said Peter Morici, a business professor at the University of Maryland, reports AFP.

As per the research analyst at Arth Business Research, “With increasing oil prices and inflating US economy the domestic demand for foreign made products are expected remain low by crushing down slightly improving US dollar. Hence with slowing domestic demands and increasing exports is expected to narrow the US trade deficit further.”

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Australian Trade Deficit Narrows as Export Rebound

Australia's trade deficit narrowed in March as exports jumped, stoking an economic expansion in its 17th year.

The seasonally adjusted balance on trade in goods and services narrowed to a deficit of AD 2.7 billion in March 2008 from a revised deficit of AD 3.3 billion in February 2008, the Australian Bureau of Statistics said today, reports The Australian.

Imports rose by 1.0 per cent and exports climbed 4 per cent to produce the narrower-than-expected deficit in March. Analysts had expected a deficit of AD 2.9 billion. However, imports of household electrical items were 7 per cent lower while textiles, clothing and footwear imports eased 3 per cent in March from February.

The reason behind improvement in trade balance is an upward movement in coal, metal and mineral export. Coal export soared as flood ravaged areas in central Queensland were able to resume coal production following heavy rainfall. Wheat and rural export which include cereal and meat also helped the overall export to rise.

Increased demand of Australian products from Asian countries like Japan and china is one among the reasons for improvement in Australian trade balance. At the same time slowing domestic demand is resulting in a slowdown in import growth and hence improving the trade balance for the country.

UBS senior economist Adam Carr said rising global demand for commodities could eventually lead to a trade surplus. "With domestic demand slowing, import growth will slow and given those bulk commodity price gains, we would be very surprised if exports value dosen’t continues to grow at a strong clip," he said, reports The West.

According to research analyst at Arth Business Research, “Improvement in coal and wheat production due to good rainfall and at the same time increasing demand from Asian countries is expected to improve the export level in the coming months of the year (2008). Also lowering domestic demand is expected to decrease the growth rate for imports which are expected improve the trade balance of the country for this year (2008).”

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American Automobile Sales Slump to Reach the Lowest Annual Rate in the Past 10 Years

Passenger car sales outpaced the SUV and trucks but this is not enough to stop the decline in American vehicle sales.

Automakers reported higher sales of small cars as oil and gasoline prices climbed to record highs in April 2008, but said Thursday (1 May, 2008) that overall vehicle sales in the United States plunged during the month, reports The New York Times.

Sales decreased 29 percent from April 2007 at Chrysler, 23 percent at General Motors and 19 percent at the Ford Motor Company. Toyota’s sales fell 4.5 percent, and both Honda and Nissan reported 2 percent declines. The numbers are adjusted to account for two more selling days in April this year. Overall, Americans purchased 1.25 million vehicles in April 2008, 110,000 fewer than in April 2007.

Rising prices of gasoline and lowered consumer confidence were key elements that ensured automobile sales in the U.S. for to plunged, reaching the lowest annual rate in the past 10 years.

“We think we’re in the trough of the downturn in the second quarter,” G.M.’s chief sales analyst, Michael C. DiGiovanni, said. “What we did not count on is oil being as high as almost USD 120 a barrel. That’s causing a very sharp shift to cars and crossovers from trucks, and it’s also lowering the overall industry.” reports The New York Times.

Consumers are looking much more interested in buying small car for fuel efficiency, attractive models and low price than SUV and Trucks. But at the same time this increase in small car sales is not enough to cover a steep decline in SUV and trucks, making the over all vehicle sales to go down.

According to analyst at Arth Business Research, “This decline in vehicle sales is expected to continue in the coming months of this year, with oil prices still hovering up and consumer confidence going down. But attractive models from automakers in small car segment with increasing demand are expected to cover the decline at some extent.

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Japan March Retail Sales Jumped For Eight Straight Month

Japan's retail sales rose in March as households paid more for gasoline and food, leaving them less to spend on clothing and furniture.

As per the news published by Market Watch, Japan retail sales climbed 1.1% in March, 2008 from a year earlier, after gaining 3.2% in February, 2008 and 1.3% in January, 2008, according to data released by the Ministry of Economy, Trade and Industry Monday.

Sales at fuel retailers rose 4.0% year-on-year, while sales at food and beverage retailers edged up 0.6%. Sales at large retail stores rose 0.2% after adjustments for the change in the number of stores, and rose 1.8% on an unadjusted basis. Sales at wholesalers rose 1.8%, while commercial sales (combined sales at wholesalers and retailers) were up 1.7%.

The figures reflect only sales in stores and shops, and excluded Internet retailing as well as spending at facilities such as gyms, restaurants and theaters.

“The gain in retail sales is a reflection of rising costs of fuel, not strong consumer spending,” said Mamoru Yamazaki, chief Japan economist at RBS Securities Japan Ltd. in Tokyo. “Consumption doesn't have momentum and downward risks are increasing as inflation outpaces wage growth.'”

This increase in retail sales is driven by household spending on food and gasoline. At the same time Japanese retail sales is supported by recent introduction of new models which increased the car sales. Sales of electronics also helped to climb the retail sale by increasing consumer appetite for flat-screen televisions.

According to industry expert the sales rise at fuel retailers may have weighed as investors probably waited for the gasoline surcharge expiration on April 1.

As per the research analyst at Arth Business Research, “The increase in retail sales is expected to go further up in the coming month due to increasing fuel prices. Also introduction of new models by the car manufacturing company and the increasing demand for electronic gadgets is expected to push up the retail sales”.

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Global Mobile Handset Sales Grew At 14.3% in the First Quarter of 2008

Despite Many Backdrops the mobile handset sales grew at 14.3% with strong demand in emerging markets, particularly in Africa and Asia.

Global mobile phone sales continued to surge in the first-quarter(January-March, 2008), with shipments reaching 282 million despite a global economic slowdown and skyrocketing food prices in poorer countries, research firm Strategy Analytics said Friday (24 April 2008).

Top handset maker Nokia Corp. kept its position at No. 1, slightly increasing market share to 41 percent in the three months through March 31. Korean handset maker Samsung Electronics remained at the No. 2 spot, boosting its market share to 16 percent, while U.S. handset maker Motorola Corp. fell just below 10 percent but stayed at No. 3.

The main reason for this worldwide growth is strong demand in emerging markets, particularly in Africa and Asia. Demand for handsets in this low cost segment was high in the first quarter (January-March) of 2008, driving worldwide shipment growth. Many emerging markets continue to offer tremendous growth potential and highly competitive pricing and innovative service plans which kept the overall market on track for this quarter (January-March) of 2008.

In contrast, more mature regions are increasingly characterized by highly competitive markets for replacement handsets and somewhat slower shipment growth.

According to industry analysts, disposable income is being eroded by inflating food and fuel prices and worries about global financial markets and slow economic growth are creating a cautious outlook for the months ahead to come in 2008.

According to research analyst at Arth Business Research, "In the months to come, it is expected that against many backdrops of slowing down world economy, skyrocketing inflation supported by high food and oil prices backdrop, many emerging markets will continue to offer tremendous growth potential and highly competitive pricing and innovative service plans will keep the overall market on track for the year. Demand for handsets in the low cost segment will still remain present in certain emerging markets throughout 2008, driving worldwide shipment growth."

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The U.S. Mobile Gaming Industry Is Getting Ready To Rock

The U.S. mobile gaming industry is getting ready to mark year 2008 as a turning point. Mobile gaming industries are going to go a level up to reach the casual consumers. The industry players are using various strategic steps to get the benefit of a good looking growth potential in the area.
That's because people are snapping up better handsets that offer a faster connection to the network.

Industry players are gearing up to bring new games and getting into various tie-ups. Greystripe is going to offer titles from Vivendi games mobile in new ''try before you buy'' preview games category whereas AOL is getting ready to launch Ad-Supported mobile gaming portal.
Also Hands-On Mobile Inc., the world's leading developer of connected games and applications, in partnership with Activision, Inc. announced highly successful Guitar Hero(R) III Mobile game to be available on BlackBerry smart phones from Research in Motion (RIM).

Leading Japanese mobile game developer DeNA Co., which is based in Toyko, has also decided to break into the U.S. market, and is having plans to launch its enormously successful "Mobage-town" in the U.S. this summer. Japanese consumers have flocked to "Mobage-town," a combination of a social networking and gaming site, since it opened there in February 2006. (In its first 26 days, 100,000 users signed up; membership has climbed steadily since then to reach more than 9 million users by the end of January 2008.)

Mobile handset producer Finland's Nokia is also betting on the U.S. mobile gaming market and is changing for the better. The Nokia N-Gage platform was released in the U.S. and globally in November 2007 on Nokia's N-series and S-60 third-edition phones.

Mobile games provide a quick distraction through casual games rather than the more involving experience found on the console. That distinction has made it a tricky endeavor for the major game developers.

The mobile gaming business is a tough one, but the rewards are there. According to analysts opportunities overseas and, in particular, the emerging markets, where the lower cost of production and distribution may make it a potentially more profitable than the console business.
According to the study by IDATE, mobile gaming will be one of the most sought-after applications for cellular phone users, in next five years.

By the end of 2012, annual revenue from mobile video game downloads should reach €3.3 billion (US$4.8 billion) in the three largest gaming markets (Europe, Japan, and the U.S.), and €6.5 billion (US$9.6 billion) worldwide.

“The main conditions for change are now becoming established: broadband networks are being deployed, usage is confirmed with new game genres, handsets can now compare with dedicated gaming platforms, publishers are perfecting their editorial strategies and digital distribution services are taking shape” reported IDATE Project Manager, Laurent Michaud.

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