Uncertainty still hangs over Europe, where politicians struggle to wring out near-term fixes for ongoing economic woes. However, consumers in some pockets of Europe recently shrugged off the malaise (at least for a little while) and pulled out their wallets.
Recently released retail sales reports from around Europe showed a general unexpected uptick in May. According to reports from Forbes and Bloomberg, gains in France, Ireland, Portugal, Sweden, and Switzerland from April helped offset decreasing demand in Germany and Spain. (Italy had not posted its May numbers when the reports came out, but it did have a down month in April.)
Coming into June, the Samsung Galaxy S3 phone topped the "hot" list and had mobile operators excited. According to Forbes, sales have been "remarkably strong," and the phone could have a blockbuster run during the summer, because of uncertainty about when Apple Inc. (Nasdaq: AAPL) will unveil its new iPhone.
But Samsung Electronics Co. Ltd. (Korea: SEC) took a more cautious view of the European market. Even though Galaxy smartphone sales fueled a record quarterly profit of $5.9 billion, the South Korean technology company says it is worried about how Europe's debt crisis will impact television and home appliance sales.
It's hard to say what tipped consumer spending in some places and not others, and the reports I read online didn't provide much insight. These numbers -- and broader consumer sentiment -- fluctuate frequently and often include some amount of seasonality. Nevertheless, given the overall depressing climate in Europe, they were welcome news.
Despite the May retail sales figures, which actually fell 1.7 percent from a year earlier, the economic outlook is grim -- or, at least as most people here are getting used to hearing, not much different from what it has been the last few years. Economists forecast unchanged sales, and Bloomberg reported that "Europe's economy probably failed to grow in the second quarter as budget cuts eroded consumer spending just as companies stepped up job cuts and global demand faltered." Then there's the issue of unemployment, which is a constant drag on the economy and hit a record high in the euro zone in May.
There was some euphoria in the stock market after Europe's 19th crisis conference in Brussels last week, which, according to the Economist offers "guarded optimism" for regional improvements. Nevertheless, it's questionable if political leaders have gone far enough with reform efforts. For instance, International Monetary Fund chief Christine Lagarde said again this week that even though she applauds the steps taken so far, more must be done to solve the euro zone crisis.
EBN will host a live Webchat next week on the economic situation in Europe and its impact on high-tech companies, many of which will be reporting second-quarter numbers in the coming weeks. Click here to register.
Jennifer, I run scared when I see anything about credit cards. So should anyone who doesn't have a lot in savings. But, in order for Europe to grow again consumers would have to start spending again. It's a double whammy.
Hi Nemos - I'm with you. Doesn't make much sense. But, I guess, just maybe, in places like Greece and Portgual people are tired of squandering away and constantly being told how bad their country is doing... maybe they think a little retail therapy will help chase away the bad news... it will, until they open their credit card bills next month.
Hi Anna - Yes, as you well know from living in this part of the world, caution seems to be the driving sentiment. And while Lagarde and many others think more could and should be done (and I don't necessarily disagee), it would be nice to see more creative thinking around job growth instead resorting to more budget cuts. It seems people here in the EU are more comfortable talking and complaining about the social service and government-worker pension cuts than the much-needed investment in entreprenuerial projects that could well bring longer-terms solutions to this mature geography. Either way, it could be a long time before the region as a whole is healthy again.
Anandvy, European leaders may have done whatever they need to do to solve the Euro-area crisis but it's not all on them alone. Citizens would have to take whatever steps necessary at the individual and family levels also. I don't believe this crisis will be solved by the various governments alone.
Christine Lagarde has said well that more must be done to solve the Euro Zone crisis.
@Anna, I feel european leaders have put lot of effort to solve the euro-zone crisis. I am not sure what else they can do to solve this ? According to you what other steps they can take solve this crisis ?
Uncertainty still hangs over Europe, where politicians struggle to wring out near-term fixes for ongoing economic woes.
@Jennifer, true uncertainty in Europe is far from over. Infact EUR-USD hit a two-year low of $1.2225 in early Monday Asian trade which shows that europe is still in deep trouble. Needs to be seen when will things start improving in europe.
"Europe's economy probably failed to grow in the second quarter as budget cuts eroded consumer spending just as companies stepped up job cuts and global demand faltered."
Jennifer great article. It is good to read that Samsung Electronics Co raked in a record profit from its latest smartphone device (deservedly so). The market seems to be buoyant in this market segment. The company is wise to have taken a cautious view regarding other electrical appliances sales as things haven't improved much in this area.
On the other hand, as you have correctly analysed, that Europe's economy probably failed to grow due to budget cuts and high unemployment record. I agree with your analysis – situation hasn't improved. It's clear from economic history that the rate of resource growth sets the speed limit of an economy. Thus, if the labour force growth is slow, then the consumers will be cautious to spend and this may have impacted slow growth.. Christine Lagarde has said well that more must be done to solve the Euro Zone crisis.
A new report shows that most of the worrisome issues that the supply chain industry has been dealing with for years are not new, but there are some new concerns that need answers. Here’s a look at what keeps supply chain professionals up at night.
When it comes to shipping supplies from China to Europe, trains might be the most cost-effective way companies have available to them. DHL is looking to jump on that bandwagon.
For many dealing with the enormous task of tracking,
reporting, and resolving issues associated with
potential counterfeit parts, there is a collective
hope that 2013 will bring clearer guidance on what
needs to be done by whom and when.
A necessary foundation for moving efficiently at real-time speed, supply chain analytics is still very much at the beginning stages of development at many companies.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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