We recently released the results of the second quarter 2012 PRI-DSF North American Digital Signage Index. The Index has two separate components. The first is the Current DS Index, which is a composite measure of changes in the reported level of business/industry activity, quarter-on-quarter. This release compares the first quarter 2012 to the fourth quarter 2011. The second is the Near-Term DS Index, which is a composite measure of changes in sentiment regarding business/industry activity for the next three-to-six-months.
Generally, the industry has slowed consistent with trends in the U.S. economy. The Current DS Index decreased by 6.23 percent, from 119.86 in the fourth quarter of 2011 to 112.39 in the first quarter of 2012. Comparing the first quarter 2012 to the first quarter of 2011, the Current DS Index decreased by 3.12 percent. The Near-Term DS Index was 129.69, a 15.39 percent increase in sentiment. Comparing the first quarter 2012 to the first quarter of 2011, the Near-Term DS Index decreased by 1.33 percent.
In the first quarter of 2012, the Current DS Index declined to its lowest level since this series began in the third quarter of 2009. For the second half of 2009 and most of 2010, the Current DS Index generally exhibited continuing strength quarter-to-quarter, consistent with a recovering U.S. economy. During the first quarter of 2011, the Current DS Index fell sharply (-11.2 percent), reflective of a slowing U.S. economy (GDP 0.4 percent vs. 2.3 percent in the fourth quarter of 2010). In the second quarter of 2011, the Current DS Index rose by 5.1 percent, again tracking the direction of GDP (1.3 percent). It may be that during the second quarter of 2011, the Current DS Index outperformed GDP as it was correcting/recovering from the first quarter’s sharp drop. During the third and fourth quarter of 2011, the Current DS Index essentially was flat, missing the jump exhibited in fourth quarter 2011 GDP (3.0 percent). As the economy ratcheted down in the first quarter 2012, the Current DS Index also reflected this. In the first quarter 2012, the Near-Term Index similarly recorded its lowest point since this series began.
The industry can generally be viewed as still growing, as the Current DS Index remains over 100. The rate of growth did, however, slow significantly in the first quarter of 2012. As we expect a weakening economy during the second quarter (GDP in the range of 1.4 to 1.5), we anticipate that the industry will similarly experience another slowing in activity. Looking into the second half of the year, continued weakness in employment and personal income, and spending that appears to be coming fromsavings, are among many other factors that lead us to believe that the economy will continue to grow at an anemic pace, with second half growth under 2 percent. Similarly, growth in the digital signage industry will generally remain subdued, with various sectors, including retail in general and banks, underperforming, while others, such as universities, will show higher levels of performance.
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