Saturday, April 29, 2017
Weakest quarter for US economy in 3 years; Profits rise for US tech giants; China manufacturing slows
1 Weakest quarter for US economy in three years (The Guardian) The US economy turned in the weakest performance in three years in the January-March quarter as consumers sharply slowed their spending. The result repeats a pattern that has characterized the recovery: lacklustre beginnings to the year.
The Commerce Department says the gross domestic product, the total output of goods and services, grew by just 0.7% in the first quarter following a gain of 2.1% in the fourth quarter. The slowdown primarily reflected slower consumer spending, which grew by just 0.3% after a 3.5% gain in the fourth quarter. It was the poorest showing in more than seven years.
Economists believe the slowdown will be temporary. They forecast GDP growth will rebound to 3% or better in the current quarter. Donald Trump repeatedly attacked the weak GDP rates during the campaign as an example of the Obama administration’s failed economic policies. He said his program of tax cuts for individuals and businesses, deregulation and tougher enforcement of trade agreements would double growth to 4% or better.
2 Profits rise for US tech giants (BBC) Profits surged at four US tech giants in the first three months of the year. Profits at Google parent Alphabet increased 28% year-on-year to to $5.4bn, boosted by advertising on mobile phones and the popular YouTube video service.
Amazon profits climbed more than 40%, to $724m. It was its eighth quarter in a row of profit. Microsoft also had a strong quarter, with profits up nearly 28%, while chipmaker Intel's profits rose 45%.
Microsoft was lifted by its cloud computing products, such as Azure, which were $4.8bn, up 28% compared with the previous year. Microsoft also received a boost from social network LinkedIn, which it bought for $26bn in June last year.
Chipmaker Intel's profits rose 45% to $2.9bn, with revenue up 8%. The growth was driven by its memory division, which recently launched a new technology, with revenue up 55%.
3 China manufacturing growth slows (Straits Times) Growth in China's manufacturing sector slowed faster than expected in April, an official survey showed, as producer price inflation cooled and policymakers' efforts to reduce financial risks in the economy weighed on demand.
The National Bureau of Statistics' official Purchasing Managers' Index (PMI) fell to a six-month low of 51.2 in April from March's near five-year high of 51.8. Zhou Hao, an economist at Commerzbank, said recent sharp declines in iron ore and onshore steel prices point to some of the pressures the country's manufacturers are facing.
Chinese steel and iron ore futures tumbled to multi-month lows earlier this month as market sentiment turned bearish on demand outlook and worries mounted about a glut of steel later this year.
China's economy grew a faster-than-expected 6.9 per cent in the first quarter, boosted by higher government infrastructure spending and the nation's gravity-defying property boom. But growth is expected to slow as authorities step up a battle to cool the property sector and as the central bank and banking regulator take steps to contain financial risks.