Apple signalled that the iPhone would see its first ever decline in sales in the current quarter, after growth was reduced to a rounding error in the three months to December.

The firm reported lower-than-expected iPhone sales in the latest quarter,as the company began to feel the effects of economic softness in the critical Chinese market.

Apple said it sold 74.8 million iPhones in the three months ended December 26th, the first full quarter of sales of the iPhone 6S and 6S Plus. The 0.4 per cent growth in shipments was the lowest since the product was launched in 2007. While revenue in Greater China rose 14 per cent in the quarter,

Apple is beginning to see a shift in the economy, particularly in Hong Kong, Apple Chief Financial Officer Luca Maestri said. "As we move into the March quarter it's becoming more apparent that there are some signs of economic softness," Maestri said. "We are starting to see something that we have not seen before."

Analysts have long feared that Apple’s sales in China, one of its top two markets, would falter amid a broad economic slowdown.

Apple’s iPhone shipments fell short of analyst expectations for 75.5 million, according to research firm FactSet StreetAccount.

The company’s first-quarter net profit rose 1.9 per cent to $18.36 billion, while revenue increased 1.7 per cent to $75.87 billion, both records for the company. The rise in iPhone shipments was the smallest since the second fiscal quarter of 2013, when they rose 6.8 per cent, according to data company Statista. Maestri attributed the lackluster revenue to foreign exchange headwinds, which he said knocked about $5 billion off the company’s revenue.

Reuters