World Inflation Waves, Stagnating United States Manufacturing, Global Economic Deceleration, International Financial Risks and the Global Recession Risk
Carlos M. Pelaez
© Carlos M. Pelaez, 2010, 2011, 2012
Executive Summary
I World Inflation Waves
IA Appendix: Transmission of Unconventional Monetary Policy
IA1 Theory
IA2 Policy
IA3 Evidence
IA4 Unwinding Strategy
II United States Inflation
IIA Long-term US Inflation
IIB Current US Inflation
III World Financial Turbulence
IIIA Financial Risks
IIIE Appendix Euro Zone Survival Risk
IIIF Appendix on Sovereign Bond Valuation
V World Economic Slowdown
VA United States
VB Japan
VC China
VD Euro Area
VE Germany
VF France
VG Italy
VH United Kingdom
VI Valuation of Risk Financial Assets
VII Economic Indicators
VIII Interest Rates
IX Conclusion
References
Appendixes
Appendix I The Great Inflation
IIIB Appendix on Safe Haven Currencies
IIIC Appendix on Fiscal Compact
IIID Appendix on European Central Bank Large Scale Lender of Last Resort
IIIG Appendix on Deficit Financing of Growth and the Debt Crisis
IIIGA Monetary Policy with Deficit Financing of Economic Growth
IIIGB Adjustment during the Debt Crisis of the 1980s
China is experiencing similar inflation behavior as the advanced economies in prior months in the form of declining commodity prices but differs in decreasing inflation of producer prices in Sep, as shown in Table IV-6. Inflation of the price indexes for industry in Sep 2012 is minus 0.1 percent; 12-month inflation is minus 3.6 percent in Sep; and inflation in Jan-Sep 2012 relative to Jan-Sep 2011 is minus 1.5 percent. Inflation of segments in Sep 2012 in China is provided in Table IV-6 in column “Month Sep ∆%.” There were increases of prices of mining & quarrying of 0.4 percent in Sep but decrease of 7.8 percent in 12 months. Prices of consumer goods increased 0.2 percent in Sep and increased 0.1 percent in 12 months. Prices of inputs in the purchaser price index increased 0.1 percent in Sep and declined 4.1 percent in 12 months. Fuel and power increased 0.7 percent in Sep and declined 1.8 percent in 12 months. An important category of inputs for exports is textile raw materials, decreasing 0.2 percent in Sep and 2.3 percent in 12 months.
Table IV-6, China, Price Indexes for Industry ∆%
| Month Sep ∆% | 12-Month Sep ∆% | Jan-Sep 2012/Jan-Sep 2011 ∆% | |
| I Producer Price Indexes | -0.1 | -3.6 | -1.5 |
| Means of Production | -0.1 | -4.7 | -2.3 |
| Mining & Quarrying | 0.4 | -7.8 | -1.2 |
| Raw Materials | 0.3 | -5.0 | -1.7 |
| Processing | -0.4 | -4.2 | -2.7 |
| Consumer Goods | 0.2 | 0.1 | 1.0 |
| Food | 0.4 | 0.3 | 1.7 |
| Clothing | 0.2 | 1.6 | 2.3 |
| Daily Use Articles | 0.2 | 0.3 | 0.9 |
| Durable Consumer Goods | -0.1 | -1.1 | -0.9 |
| II Purchaser Price Indexes | 0.1 | -4.1 | -1.5 |
| Fuel and Power | 0.7 | -1.8 | 1.8 |
| Ferrous Metals | -2.2 | -12.0 | -6.2 |
| Nonferrous Metals | 1.4 | -8.3 | -6.3 |
| Raw Chemical Materials | 0.2 | -6.5 | -3.7 |
| Wood & Pulp | 0.0 | -1.0 | 0.5 |
| Building Materials | -0.1 | -2.6 | 0.1 |
| Other Industrial Raw Materials | 0.1 | -2.0 | -0.9 |
| Agricultural | 0.9 | -1.3 | 0.1 |
| Textile Raw Materials | -0.2 | -2.3 | -0.6 |
Source: National Bureau of Statistics of China http://www.stats.gov.cn/enGliSH/
China’s producer price inflation follows waves similar to those around the world (Section II), as shown in Table IV-7. In the first wave, annual equivalent inflation was 6.4 percent in Jan-Jun 2011, driven by carry trades from zero interest rates to commodity futures. In the second wave, risk aversion unwound carry trades, resulting in annual equivalent inflation of minus 3.1 percent in Jul-Nov 2011. In the third wave, renewed risk aversion resulted in annual equivalent inflation of minus 2.4 percent in Dec 2011-Jan 2012. In the fourth wave, new carry trades resulted in annual equivalent inflation of 2.4 percent in Feb-Apr 2012. A fifth wave is beginning with annual equivalent minus 4.8 percent in May-Sep 2012. There are declining producer prices in China in Aug-Sep in contrast with increases worldwide.
Table IV-7, China, Month and 12-Month Rate of Change of Producer Price Index, ∆%
| 12-Month ∆% | Month ∆% | |
| Sep 2012 | -3.6 | -0.1 |
| Aug | -3.5 | -0.5 |
| Jul | -2.9 | -0.8 |
| Jun | -2.1 | -0.7 |
| May | -1.4 | -0.4 |
| AE ∆% May-Sep | -5.8 | |
| Apr | -0.7 | 0.2 |
| Mar | -0.3 | 0.3 |
| Feb | 0.0 | 0.1 |
| AE ∆% Feb-Apr | 2.4 | |
| Jan | 0.7 | -0.1 |
| Dec 2011 | 1.7 | -0.3 |
| AE ∆% Dec-Jan | -2.4 | |
| Nov | 2.7 | -0.7 |
| Oct | 5.0 | -0.7 |
| Sep | 6.5 | 0.0 |
| Aug | 7.3 | 0.1 |
| Jul | 7.5 | 0.0 |
| AE ∆% Jul-Nov | -3.1 | |
| Jun | 7.1 | 0.0 |
| May | 6.8 | 0.3 |
| Apr | 6.8 | 0.5 |
| Mar | 7.3 | 0.6 |
| Feb | 7.2 | 0.8 |
| Jan | 6.6 | 0.9 |
| AE ∆% Jan-Jun | 6.4 | |
| Dec 2010 | 5.9 | 0.7 |
AE: Annual Equivalent
Source: National Bureau of Statistics of China http://www.stats.gov.cn/enGliSH/
Chart IV-3 of the National Bureau of Statistics of China provides monthly and 12-month rates of inflation of the price indexes for the industrial sector. Negative monthly rates in Oct, Nov, Dec 2011, Jan, Mar, Apr, May, Jun, Jul, Aug and Sep 2012 pulled down the 12-month rates to 5.0 percent in Oct 2011, 2.7 percent in Nov, 1.7 percent in Dec, 0.7 percent in Jan 2012, 0.0 percent in Feb, minus 0.3 percent in Mar, minus 0.7 percent in Apr, minus 1.4 percent in May, 2.1 in Jun, minus 2.9 percent in Jul, minus 3.5 percent in Aug and minus 3.6 percent in Sep.
Chart IV-3, China, Producer Prices for the Industrial Sector Month and 12 months ∆%
Source: National Bureau of Statistics of China http://www.stats.gov.cn/enGliSH/
Chart IV-4 of the National Bureau of Statistics of China provides monthly and 12-month inflation of the purchaser product indices for the industrial sector. Decreasing monthly inflation with four successive contractions from Oct 2011 to Jan 2012 and May-Sep 2012 pulled down the 12-month rate to minus 4.1 percent in Aug.
Chart IV-4, China, Purchaser Product Indices for Industrial Sector
Source: National Bureau of Statistics of China http://www.stats.gov.cn/enGliSH/
China is highly conscious of food price inflation because of its high weight in the basket of consumption of the population. Consumer price inflation in China in Sep was 0.3 percent and 1.9 percent in 12 months, as shown in Table IV-8. Food prices increased 0.2 percent in Sep, increased 2.5 percent in 12 months and 5.5 percent in Jan-Sep 2012 relative to Jan-Sep 2011. Another area of concern is housing inflation which was 0.4 in Aug but increased 2.2 percent in 12 months. Prices of services increased 0.3 percent in Aug and gained 2.3 percent in 12 months.
Table IV-8, China, Consumer Price Index
| 2012 | Sep Month ∆% | Sep 12- Month ∆% | Jan-Sep 2012 ∆% Jan-Sep 2011 |
| Consumer Prices | 0.3 | 1.9 | 2.8 |
| Urban | 0.3 | 2.0 | 2.9 |
| Rural | 0.4 | 1.7 | 2.7 |
| Food | 0.2 | 2.5 | 5.5 |
| Non-food | 0.4 | 1.7 | 1.6 |
| Consumer Goods | 0.4 | 1.8 | 3.2 |
| Services | 0.3 | 2.3 | 1.9 |
| Commodity Categories: | |||
| Food | 0.2 | 2.5 | 5.5 |
| Tobacco, Liquor | 0.0 | 2.4 | 3.3 |
| Clothing | 1.1 | 3.4 | 3.4 |
| Household | 0.0 | 1.6 | 2.1 |
| Healthcare & Personal Articles | 0.3 | 1.4 | 2.1 |
| Transportation & Communication | 0.4 | -0.2 | -0.2 |
| Recreation, Education, Culture & Services | 0.3 | 1.0 | 0.3 |
| Residence | 0.3 | 2.3 | 2.0 |
Source: National Bureau of Statistics of China http://www.stats.gov.cn/enGliSH/
Month and 12-month rates of change of consumer prices are provided in Table IV-9. There are waves of consumer price inflation in China similar to those around the world (Section I World Inflation Waves). In the first wave, consumer prices increased at the annual equivalent rate of 8.3 percent in Jan-Mar 2011, driven by commodity price increases resulting from unconventional monetary policy of zero interest rates. In the second wave, risk aversion unwound carry trades with annual equivalent inflation falling to the rate of 2.0 percent in Apr-Jun 2011. In the third wave, inflation returned at 2.9 percent with renewed interest in commodity exposures in Jul-Nov 2011. In the fourth wave, inflation returned at a high 5.8 percent annual equivalent in Dec 2011 to Mar 2012. In the fifth wave, annual equivalent inflation was minus 3.9 percent in Apr to Jun 2012. In the sixth wave, annual equivalent inflation rose to 4.1 percent in Jul-Sep 2012. Inflation volatility originating in unconventional monetary policy clouds investment and consumption decisions by business and households.
Table IV-9, China, Month and 12-Month Rates of Change of Consumer Price Index ∆%
| Month ∆% | 12-Month ∆% | |
| Sep 2012 | 0.3 | 1.9 |
| Aug | 0.6 | 2.0 |
| Jul | 0.1 | 1.8 |
| AE ∆% Jul-Sep | 4.1 | |
| Jun | -0.6 | 2.2 |
| May | -0.3 | 3.0 |
| Apr | -0.1 | 3.4 |
| AE ∆% Apr to Jun | -3.9 | |
| Mar | 0.2 | 3.6 |
| Feb | -0.1 | 3.2 |
| Jan | 1.5 | 4.5 |
| Dec 2011 | 0.3 | 4.1 |
| AE ∆% Dec to Mar | 5.8 | |
| Nov | -0.2 | 4.2 |
| Oct | 0.1 | 5.5 |
| Sep | 0.5 | 6.1 |
| Aug | 0.3 | 6.2 |
| Jul | 0.5 | 6.5 |
| AE ∆% Jul to Nov | 2.9 | |
| Jun | 0.3 | 6.4 |
| May | 0.1 | 5.5 |
| Apr | 0.1 | 5.3 |
| AE ∆% Apr to Jun | 2.0 | 2.0 |
| Mar | -0.2 | 5.4 |
| Feb | 1.2 | 4.9 |
| Jan | 1.0 | 4.9 |
| AE ∆% Jan to Mar | 8.3 | |
| Dec 2010 | 0.5 | 4.6 |
AE: Annual Equivalent
Source: National Bureau of Statistics of China http://www.stats.gov.cn/enGliSH/
Chart IV-5 of the National Bureau of Statistics of China provides monthly and 12-month rates of consumer price inflation. In contrast with producer prices, consumer prices had not moderated at the monthly marginal rates. Consumer prices fell 0.2 percent in Nov 2011 after increasing only 0.1 percent in Oct but increased 0.3 percent in Dec and a high 1.5 percent in Jan 2012, declining 0.1 percent in Feb, rising 0.2 percent in Mar and declining 0.1 percent in Apr, 0.3 percent in May and 0.6 percent in Jun 2012 but increasing 0.1 percent in Jul, 0.6 percent in Aug 2012 and 0.3 percent in Sep 2012. The decline of 0.1 percent in Feb 2012 pulled down the 12-month rate to 3.2 percent, which bounced back to 3.6 percent in Mar with the monthly increase of 0.2 percent and fell to 2.2 percent in Jun with increasing monthly decline from Apr to Jun 2012. Even with increase of 0.1 percent in Jul 2012, consumer price inflation in 12 months fell to 1.8 percent in Jul 2012 but bounced back to 2.0 percent with increase of 0.6 percent in Aug. In Sep, increase of 0.3 percent still maintained 12-month inflation at 1.9 percent.
Chart IV-5, China, Consumer Prices ∆% Month and 12 Months Sep 2011 to Sep 2012
Source: National Bureau of Statistics of China
http://www.stats.gov.cn/enGliSH/
The harmonized index of consumer prices of the euro area in Table IV-12 has similar inflation waves as in most countries (see Section I World Inflation Waves). In the first wave, consumer prices in the euro area increased at the annual equivalent rate of 5.2 percent in Jan-Apr 2011. In the second wave, risk aversion caused unwinding of commodity carry trades with inflation decreasing at the annual equivalent rate of minus 2.4 percent in May-Jul 2011. In the third wave, improved risk appetite resulted in annual equivalent inflation in Aug-Dec at 4.3 percent. In the fourth wave, return of risk aversion caused decline of consumer prices at the annual equivalent rate of minus 3.0 percent in Dec 2011 to Jan 2012. In the fifth wave, improved attitudes toward risk aversion resulted in higher consumer price inflation at the high annual equivalent rate of 9.6 percent in Feb-Apr 2012. In the sixth wave, equivalent inflation fell to minus 2.8 percent in May-Jul 2012. In the seventh wave, increasing risk appetite caused new carry trade exposures that resulted in annual equivalent inflation of 6.8 percent in Aug-Sep 2012. Inflation volatility around the world is confusing the information required in investment and consumption decisions.
Table IV-10, Euro Area Harmonized Index of Consumer Prices Month and 12 Months ∆%
| Month ∆% | 12 Months ∆% | |
| Sep | 0.7 | 2.6 |
| Aug | 0.4 | 2.6 |
| AE ∆% Aug-Sep | 6.8 | |
| Jul 2012 | -0.5 | 2.4 |
| Jun | -0.1 | 2.4 |
| May | -0.1 | 2.4 |
| AE ∆% May-Jul | -2.8 | |
| Apr | 0.5 | 2.6 |
| Mar | 1.3 | 2.7 |
| Feb | 0.5 | 2.7 |
| AE ∆% Feb-Apr | 9.6 | |
| Jan | -0.8 | 2.7 |
| Dec 2011 | 0.3 | 2.7 |
| AE ∆% Dec-Jan | -3.0 | |
| Nov | 0.1 | 3.0 |
| Oct | 0.4 | 3.0 |
| Sep | 0.7 | 3.0 |
| Aug | 0.2 | 2.6 |
| AE ∆% Aug-Dec | 4.3 | |
| Jul | -0.6 | 2.6 |
| Jun | 0.0 | 2.7 |
| May | 0.0 | 2.7 |
| AE ∆% May-Jul | -2.4 | |
| Apr | 0.6 | 2.8 |
| Mar | 1.4 | 2.7 |
| Feb | 0.4 | 2.4 |
| Jan | -0.7 | 2.3 |
| AE ∆% Jan-Apr | 5.2 | |
| Dec 2010 | 0.6 | 2.2 |
AE: annual equivalent
Source: EUROSTAT http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database
Table IV-11 provides inflation, unemployment and real GDP growth in the euro area yearly from 1999 to 2011 together with growth forecasts of EUROSTAT for 2012 and 2013. Inflation in the euro zone remained subdued around 2 percent in the first five years of the euro zone from 1999 to 2004, as shown in Table IV-11. Inflation climbed above 2.0 percent after 2005, peaking at 3.3 percent in 2008 with the surge in commodity prices but falling to 0.3 percent in 2009 with the collapse of commodity prices. Inflation climbed back to 1.6 percent in 2010 and 2.7 percent in 2011. Under the regime of zero interest rates inflation returns worldwide during relaxation of risk aversion.
Table IV-11, Euro Area, Yearly Percentage Change of Harmonized Index of Consumer Prices, ∆%
| Year | HICP ∆% | Unemployment | GDP ∆% |
| 1999 | 1.2 | 9.6 | 2.9 |
| 2000 | 2.2 | 8.7 | 3.8 |
| 2001 | 2.4 | 8.1 | 2.0 |
| 2002 | 2.3 | 8.5 | 0.9 |
| 2003 | 2.1 | 9.0 | 0.7 |
| 2004 | 2.2 | 9.3 | 2.2 |
| 2005 | 2.2 | 9.2 | 1.7 |
| 2006 | 2.2 | 8.5 | 3.2 |
| 2007 | 2.1 | 7.6 | 3.0 |
| 2008 | 3.3 | 7.6 | 0.4 |
| 2009 | 0.3 | 9.6 | -4.4 |
| 2010 | 1.6 | 10.1 | 2.0 |
| 2011 | 2.7 | 10.1 | 1.4 |
| 2012* | -0.3 | ||
| 2013* | 1.0 |
*EUROSTAT forecast Source: EUROSTAT http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database
EUROSTAT provides the decomposition in percentage point contributions of the rate of inflation of 2.6 percent in the 12 months ending in Sep 2012 relative to Sep 2011 shown in Table IV-12. Energy-rich components dominate the 12-month rate of inflation with percentage point contributions: 0.41 by fuel for transport, 0.09 by both heating oil and gas and 0.10 by electricity. Table IV-12 only lists highest magnitudes of positive and negative contributions.
Table IV-12, Euro Area, Harmonized Index of Consumer Prices Sub-Indices with Most Important Impact %
| Sep 2012/ Sep 2011 ∆% 2.6 | Weight 2012 % | Rate ∆% | Impact |
| Positive Contribution | |||
| Fuel for Transport | 48.5 | 10.6 | 0.41 |
| Electricity | 26.4 | 6.4 | 0.10 |
| Gas | 18.3 | 7.8 | 0.09 |
| Heating Oil | 8.9 | 12.4 | 0.09 |
| Tobacco | 23.4 | 4.8 | 0.05 |
| Vegetables | 14.0 | 5.4 | 0.04 |
| Negative Contribution | |||
| Garments | 50.7 | 1.7 | -0.05 |
| Financial Services | 6.8 | -4.8 | -0.05 |
| Audio-visual Equipment | 5.0 | -7.9 | -0.05 |
| Cars | 36.2 | 0.8 | -0.07 |
| Rents | 60.5 | 1.5 | -0.07 |
| Telecom | 29.8 | -3.5 | -0.19 |
PP: percentage points
Source: EUROSTAT
http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/2-16102012-AP/EN/2-16102012-AP-EN.PDF
EUROSTAT provides the decomposition in percentage point contributions of the rate of inflation of 0.7 percent in Sep 2012 relative to Aug 2012 shown in Table IV-13. The increase of the HIPC by 0.7 percent was largely dominated by increase of prices of garments by 15.3 percent that added 0.66 percentage points, footwear increasing 12.6 percent for contribution of 0.14 percentage points and fuel for transport increasing 1.8 percent with contribution of 0.06 percentage points.
Table IV-13, Euro Area, Harmonized Index of Consumer Prices Sub-Indices with Most Important Impact %
| Sep 2012/Aug 2012 ∆ % 0.7 | Weight 2012 % | Rate ∆% | Impact Percentage Points |
| Positive Contribution | |||
| Garments | 50.7 | 15.3 | 0.66 |
| Footwear | 13.6 | 12.6 | 0.14 |
| Fuels for Transport | 48.5 | 1.8 | 0.06 |
| Other Personal Effects | 4.3 | 3.2 | 0.01 |
| Clothing Accessories | 2.0 | 5.3 | 0.01 |
| Household Textiles | 5.0 | 2.3 | 0.01 |
| Negative Contribution | |||
| Telecom | 29.8 | -0.5 | -0.04 |
| Restaurants and Cafés | 68.8 | 0.1 | -0.04 |
| Rents | 60.5 | -0.4 | -0.08 |
| Air Transport | 6.3 | -15.0 | -0.12 |
| Accommodation Services | 16.5 | -6.0 | -0.12 |
| Package Holidays | 14.2 | -9.9 | -0.16 |
Source: EUROSTAT
http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/2-16102012-AP/EN/2-16102012-AP-EN.PDF
The producer price index of Germany increased 0.3 percent in Sep 2012, calendar and seasonally adjusted (CSA) and increased 0.3 not seasonally adjusted (NS) in Sep 2012 and increased 1.7 percent in the 12 months ending in Sep, as shown in Table IV-14. The producer price index of Germany has similar waves of inflation as in many other countries (Section I and earlier http://cmpassocregulationblog.blogspot.com/2012/09/recovery-without-hiring-world-inflation.html). In the first wave from Jan to Apr 2011, the annual equivalent rate of producer price inflation was 10.4 percent NSA and 6.5 percent CSA, propelled by carry trades from zero interest rates to exposures in commodity futures in a mood of risk appetite. In the second wave in May and Jun 2011, the annual equivalent rate of producer price inflation was only 0.6 percent NSA because of the collapse of the carry trade in fear of risks of European sovereign debt but 3.7 percent CSA. In the third wave from Jul to Sep 2011, annual-equivalent producer price inflation in Germany was 2.8 percent NSA and 3.7 percent CSA with fluctuations in commodity prices resulting from perceptions of the sovereign risk crisis in Europe. In the fourth wave from Oct to Nov 2011, annual equivalent inflation was 1.8 percent NSA and 3.7 percent CSA as financial markets were shocked with strong risk aversion. In the fifth wave from Dec 2011 to Jan 2012, annual equivalent inflation was at 1.2 percent NSA and minus 0.6 percent CSA. In the sixth wave, annual equivalent inflation increased to 6.2 percent in Feb-Mar 2012 NSA and 4.9 percent in Feb-Apr and 1.2 percent CSA. In the seventh wave, annual equivalent inflation was minus 2.8 percent in May-Jul 2012 NSA and minus 0.8 percent SA. In the eighth wave, annual equivalent inflation was 4.9 percent in Aug-Sep NSA and 5.5 percent SA. Annual data in the bottom of Table IV-7 show that the producer price index fell 5.2 percent in the 12 months ending in Dec 2009 as a result of the fall of commodity prices originating in risk aversion after the panic of 2008.
Table IV-14, Germany, Index of Producer Prices for Industrial Products ∆%
| 12 Months ∆% NSA | Month ∆% Calendar and SA | Month ∆% NSA | |
| Sep 2012 | 1.7 | 0.3 | 0.3 |
| Aug 2012 | 1.6 | 0.6 | 0.5 |
| AE ∆% Aug-Sep | 5.5 | 4.9 | |
| Jul | 0.9 | -0.1 | 0.0 |
| Jun | 1.6 | -0.1 | -0.4 |
| May | 2.1 | 0.0 | -0.3 |
| AE ∆% May-Jul | -0.8 | -2.8 | |
| Apr | 2.4 | -0.2 | 0.2 |
| Mar | 3.3 | 0.3 | 0.6 |
| Feb | 3.2 | 0.2 | 0.4 |
| AE ∆% Feb-Apr | 1.2 | 4.9 | |
| Jan | 3.4 | 0.1 | 0.6 |
| Dec 2011 | 4.0 | -0.2 | -0.4 |
| AE ∆% Dec-Jan | -0.6 | 1.2 | |
| Nov | 5.2 | 0.3 | 0.1 |
| Oct | 5.3 | 0.3 | 0.2 |
| AE ∆% Oct-Nov | 3.7 | 1.8 | |
| Sep | 5.5 | 0.3 | 0.3 |
| Aug | 5.5 | 0.1 | -0.3 |
| Jul | 5.8 | 0.5 | 0.7 |
| AE ∆% Jul-Sep | 3.7 | 2.8 | |
| Jun | 5.6 | 0.3 | 0.1 |
| May | 6.1 | 0.3 | 0.0 |
| AE ∆% May-Jun | 3.7 | 0.6 | |
| Apr | 6.4 | 0.6 | 1.0 |
| Mar | 6.2 | 0.2 | 0.4 |
| Feb | 6.4 | 0.6 | 0.7 |
| Jan | 5.7 | 0.6 | 1.2 |
| AE ∆% Jan-Apr | 6.2 | 10.4 | |
| Dec 2010 | 5.3 | 0.8 | 0.7 |
| Nov | 4.4 | 0.4 | 0.2 |
| Oct | 4.3 | 0.5 | 0.4 |
| Sep | 3.9 | 0.5 | 0.3 |
| Aug | 3.2 | 0.2 | 0.0 |
| Jul | 3.7 | 0.6 | 0.5 |
| Jun | 1.7 | 0.5 | 0.6 |
| May | 0.9 | 0.3 | 0.3 |
| Apr | 0.6 | 0.5 | 0.8 |
| Mar | -1.5 | 0.6 | 0.7 |
| Feb | -2.9 | 0.1 | 0.0 |
| Jan | -3.4 | 0.4 | 0.8 |
| Dec 2009 | -5.2 | 0.2 | -0.1 |
| Dec 2008 | 4.0 | -0.2 | -0.8 |
| Dec 2007 | 1.9 | 0.4 | -0.1 |
| Dec 2006 | 4.2 | 0.2 | 0.1 |
| Dec 2005 | 4.8 | 0.2 | 0.3 |
| Dec 2004 | 2.9 | 0.2 | 0.1 |
| Dec 2003 | 1.8 | 0.0 | |
| Dec 2002 | 0.5 | 0.1 | |
| Dec 2001 | 0.1 | -0.2 |
Source: Statistisches Bundesamt Deutschland https://www.destatis.de/EN/FactsFigures/Indicators/ShortTermIndicators/ShortTermIndicators.html
Chart IV-6 of the Federal Statistical Agency of Germany Statistiche Bundesamt Deutschland provides the producer price index of Germany from 2003 to 2012. Producer price inflation peaked in 2008 with the rise of commodity prices induced by the carry trade from zero interest rates to commodity futures. Prices then declined with the flight away from risk financial assets to government obligations after the financial panic in Sep 2008. With zero interest rates and no risk aversion, the carry trade pushed commodity future prices upwardly resulting in new rising trend of the producer price index. The right-hand side of the chart shows moderation and even decline in prices because of severe risk aversion frustrating carry trades from zero interest rates to commodity futures but then return of risk appetite with another surge of the index in annual equivalent rate at 6.2 percent in Feb-Mar 2012 and 4.9 percent annual equivalent in Feb-Apr 2012 but decline of 0.3 percent in May 2012 and 0.4 percent in Jun 2012 with flat prices in Jul 2012 with the pace at annual equivalent rate of minus 4.1 percent in May-Jun 2012 and flat prices in Jul 2012. Inflation returned in Aug and Sep with carry trades into commodity futures.
Chart IV-6, Germany, Index of Producer Prices for Industrial Products, 2005=100
Source: Statistisches Bundesamt Deutschland
https://www.destatis.de/EN/FactsFigures/Indicators/ShortTermIndicators/ShortTermIndicators.html
Chart IV-4 of the US Bureau of Labor Statistics provides the US producer price index of finished goods from 2004 to 2012. Chart IV-7 of the US mirrors behavior in Chart IV-6 of Germany. Carry trades from zero interest rates to exposures in commodity futures and risk financial assets have synchronized worldwide inflation during periods of risk appetite and disinflation during periods of risk aversion.
Chart IV-7, US, Producer Price Index, Finished Goods, NSA, 2004-2012
Source: US Bureau of Labor Statstics
http://www.bls.gov/ppi/data.htm
Chart IV-8 of the Federal Statistical Agency of Germany Statistiche Bundesamt Deutschland provides the unadjusted producer price index, trend and trend ends. There is a clear upward trend of prices after the end of risk aversion with zero interest rates in 2009. The actual curve fell below trend in the current episode of severe risk aversion but rose again in Feb-Apr 2012, falling in May-Jun 2012 with flat prices in Jul 2012 and another increase in Aug-Sep 2012.
Chart IV-8, Germany, Producer Price Index, Non-adjusted Value and Trend, 2005=100
Source: Statistiche Bundesamt Deutschland
https://www.destatis.de/EN/FactsFigures/Indicators/ShortTermIndicators/ShortTermIndicators.html
Inflation in the UK is somewhat higher than in many advanced economies, deserving more detailed analysis. Table IV-15 provides 12-month percentage changes of UK output prices for all manufactured products, excluding food, beverage and petroleum and excluding duty. The 12-month rates rose significantly in 2011 in all three categories, reaching 6.3 percent for all manufactured products in Sep 2011 but declining to 5.7 percent in Oct, 5.4 in Nov and down to 1.8 percent in Jul 2012, increasing marginally to 2.3 percent in Aug 2012 and 2.5 percent in Sep 2012. Output price inflation is highly sensitive to commodity prices as shown by the increase by 6.7 percent in 2008 when oil prices rose over $140/barrel even in the midst of a global recession driven by the carry trade from zero interest rates to oil futures. The mirage episode of false deflation in 2001 and 2002 is also captured by output prices for the UK, which was originated in decline of commodity prices but was used as an argument for the unconventional monetary policy of zero interest rates and quantitative easing during the past decade.
Table IV-15, UK Output Prices 12 Months ∆% NSA
| All Manufactured Products | Excluding Food, Beverage and | All Excluding Duty | |
| Sep 2012 | 2.5 | 1.2 | 2.2 |
| Aug | 2.3 | 1.2 | 1.9 |
| Jul | 1.8 | 1.2 | 1.5 |
| Jun | 2.0 | 1.7 | 1.7 |
| May | 2.8 | 2.1 | 2.5 |
| Apr | 3.3 | 2.3 | 3.1 |
| Mar | 3.7 | 2.5 | 3.5 |
| Feb | 4.1 | 3.0 | 4.1 |
| Jan | 4.0 | 2.4 | 4.0 |
| Dec 2011 | 4.8 | 3.0 | 4.8 |
| Nov | 5.4 | 3.1 | 5.6 |
| Oct | 5.7 | 3.3 | 5.9 |
| Sep | 6.3 | 3.7 | 6.4 |
| Aug | 6.0 | 3.5 | 6.2 |
| Jul | 6.1 | 3.4 | 6.2 |
| Jun | 5.8 | 3.2 | 5.9 |
| May | 5.4 | 3.4 | 5.5 |
| Apr | 5.6 | 3.6 | 5.8 |
| Mar | 5.6 | 3.1 | 5.5 |
| Feb | 5.3 | 3.1 | 5.2 |
| Jan | 5.0 | 3.3 | 5.0 |
| Dec 2010 | 4.2 | 2.7 | 4.0 |
| Year ∆% | |||
| 2011 | 5.6 | 3.4 | 5.7 |
| 2010 | 4.2 | 3.0 | 3.9 |
| 2009 | 1.6 | 2.5 | 1.0 |
| 2008 | 6.7 | 3.7 | 6.7 |
| 2007 | 2.3 | 1.4 | 2.1 |
| 2006 | 2.0 | 1.5 | 2.0 |
| 2005 | 1.9 | 1.0 | 1.9 |
| 2004 | 1.0 | -0.3 | 0.6 |
| 2003 | 0.6 | 0.1 | 0.5 |
| 2002 | -0.1 | -0.4 | -0.1 |
| 2001 | -0.3 | -0.6 | -0.3 |
| 2000 | 1.4 | -0.5 | 0.8 |
| 1999 | 0.6 | -1.0 | -0.3 |
| 1998 | 0.0 | -0.9 | -0.9 |
| 1997 | 0.9 | 0.3 | 0.1 |
Source: UK Office for National Statistics
http://www.ons.gov.uk/ons/rel/ppi2/producer-prices-indices/september-2012/index.html
Monthly and annual equivalent rates of change of output prices are shown in Table IV-16. There are waves of inflation similar to those in other countries (Section I and earlier at http://cmpassocregulationblog.blogspot.com/2012/09/recovery-without-hiring-world-inflation.html). In the first wave, annual equivalent inflation was 12.0 percent in Jan-Apr 2011 with relaxed risk aversion in commodity markets. In the second wave, intermittent risk aversion resulted in annual equivalent inflation of 2.0 percent in May-Oct 2011. In the third wave, alternation of risk aversion resulted in annual equivalent inflation of 1.6 percent in Nov-Jan. In the fourth wave, the energy commodity shock processed through carry trades caused the jump of annual equivalent inflation to 7.9 percent in Feb-Apr 2012. A fifth wave occurred in May-Jun 2012 with decline of output inflation by 5.3 percent annual equivalent in an environment of risk aversion that caused decline of commodity prices. A sixth wave under commodity shocks induced by carry trades from zero interest rates resulted in annual equivalent inflation of 4.5 percent in Jul-Sep 2012.
Table IV-16, UK Output Prices Month ∆% NSA
| All Manufactured Products | Excluding Food, Beverage and | All Excluding Duty | |
| Sep 2012 | 0.5 | 0.3 | 0.5 |
| Aug | 0.5 | 0.1 | 0.6 |
| Jul | 0.1 | -0.1 | 0.1 |
| ∆% AE Jul-Sep | 4.5 | 1.2 | 4.9 |
| Jun | -0.6 | -0.2 | -0.6 |
| May | -0.3 | -0.1 | -0.4 |
| ∆% AE May-Jun | -5.3 | -1.8 | -5.8 |
| Apr | 0.7 | 0.6 | 0.5 |
| Mar | 0.6 | 0.1 | 0.5 |
| Feb | 0.6 | 0.5 | 0.6 |
| ∆% AE Feb-Apr | 7.9 | 4.9 | 6.6 |
| Jan | 0.4 | 0.3 | 0.3 |
| Dec 2011 | -0.2 | -0.1 | -0.2 |
| Nov | 0.2 | -0.1 | 0.2 |
| ∆% AE Nov-Jan | 1.6 | 0.4 | 1.2 |
| Oct | 0.0 | -0.1 | 0.1 |
| Sep | 0.3 | 0.3 | 0.2 |
| Aug | 0.0 | 0.1 | 0.1 |
| Jul | 0.3 | 0.4 | 0.3 |
| Jun | 0.2 | 0.2 | 0.2 |
| May | 0.2 | 0.2 | 0.2 |
| ∆% AE May-Oct | 2.0 | 2.2 | 2.2 |
| Apr | 1.1 | 0.8 | 0.9 |
| Mar | 1.1 | 0.5 | 1.1 |
| Feb | 0.5 | 0.0 | 0.5 |
| Jan | 1.1 | 0.8 | 1.1 |
| Jan-Apr | 12.0 | 6.5 | 11.4 |
| Dec 2010 | 0.5 | 0.0 | 0.6 |
Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/ppi2/producer-prices-indices/september-2012/index.html
Input prices in the UK have been more dynamic than output prices until the current event of risk aversion, as shown by Table IV-17, but with sharp oscillations because of the commodity and raw material content. The 12-month rates of increase of input prices, even excluding food, tobacco, beverages and petroleum, are very high, reaching 18.1 percent in Sep 2011 for materials and fuels purchased and 13.3 percent excluding food, beverages and petroleum. Inflation in 12 months of materials and fuels purchased moderated to 5.4 percent in Mar 2012 and 4.1 percent excluding food, tobacco, beverages and petroleum with the rates falling further in Apr to 1.1 percent for materials and fuels purchased and 2.2 percent excluding food, tobacco, beverages and petroleum. Input-price inflation collapsed in the 12 months ending in Jul 2012 to minus 2.6 percent for materials and fuels purchased and minus 1.5 percent excluding food, beverages and tobacco. Inflation returned at 1.1 percent in the 12 months ending in Aug 2012 but minus 0.6 percent excluding food, tobacco, beverages and petroleum. Inflation of input prices in Sep 2012 was minus 1.2 percent and minus 1.3 percent excluding food, beverages and petroleum. There is only comparable experience with 22.2 percent inflation of materials and fuels purchased in 2008 and 16.9 percent excluding food, beverages and petroleum followed in 2009 by decline of 3.8 percent by materials and fuels purchased and increase of 1.6 percent for the index excluding items. UK input and output inflation is sensitive to commodity price increases driven by carry trades from zero interest rates. The mirage of false deflation is also observed in input prices in 1997-9 and then again from 2001 to 2003.
Table IV-17, UK, Input Prices 12-Month ∆% NSA
| All Manufacturing Materials and Fuels Purchased | Excluding Food, Tobacco, Beverages and Petroleum | |
| Sep 2012 | -1.2 | -1.3 |
| Aug | 1.1 | -0.6 |
| Jul | -2.6 | -1.5 |
| Jun | -2.2 | -0.3 |
| May | 0.1 | 1.1 |
| Apr | 1.1 | 2.2 |
| Mar | 5.4 | 4.1 |
| Feb | 7.7 | 5.7 |
| Jan | 6.5 | 5.6 |
| Dec 2011 | 8.9 | 7.2 |
| Nov | 13.8 | 10.2 |
| Oct | 14.5 | 11.0 |
| Sep | 18.1 | 13.3 |
| Aug | 16.3 | 13.0 |
| Jul | 18.5 | 13.3 |
| Jun | 16.8 | 12.6 |
| May | 16.3 | 11.4 |
| Apr | 17.9 | 12.2 |
| Mar | 14.8 | 10.3 |
| Feb | 14.9 | 10.7 |
| Jan | 14.2 | 10.5 |
| Dec 2010 | 13.1 | 9.0 |
| Year ∆% | ||
| 2011 | 15.4 | 11.5 |
| 2010 | 9.9 | 5.7 |
| 2009 | -3.8 | 1.6 |
| 2008 | 22.2 | 16.9 |
| 2007 | 2.9 | 2.3 |
| 2006 | 9.8 | 7.3 |
| 2005 | 10.9 | 6.9 |
| 2004 | 3.3 | 1.6 |
| 2003 | 1.2 | -0.6 |
| 2002 | -4.4 | -4.8 |
| 2001 | -1.2 | -1.2 |
| 2000 | 7.4 | 3.7 |
| 1999 | -1.3 | -3.6 |
| 1998 | -9.1 | -4.6 |
| 1997 | -8.2 | -6.3 |
Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/ppi2/producer-prices-indices/september-2012/index.html
Table IV-18 provides monthly percentage changes of UK input prices for materials and fuels purchased and excluding food, tobacco, beverages and petroleum. There are strong waves of inflation of input prices in the UK similar to those worldwide (Section I and earlier http://cmpassocregulationblog.blogspot.com/2012/09/recovery-without-hiring-world-inflation.html). In the first wave, input prices rose at the high annual equivalent rate of 35.6 percent in Jan-Apr 2011, driven by carry trades from unconventional monetary policy into commodity exposures. In the second wave, alternating risk aversion caused annual equivalent inflation of minus 3.1 percent in May-Oct 2011. In the third wave, renewed risk aversion resulted in annual equivalent inflation of minus 1.2 percent in Nov-Dec 2011. In the fourth wave, annual equivalent inflation of input prices in the UK surged at 18.1 percent in Jan-Mar 2012 under relaxed risk aversion. In the fifth wave, annual equivalent inflation was minus 21.9 percent in Apr-Jun 2012 because of collapse of commodity prices during increasing risk aversion. In the sixth wave, annual equivalent inflation of materials and fuels purchased jumped to 7.8 percent in Jul-Sep 2012.
Table IV-18, UK Input Prices Month ∆%
| All Manufacturing Materials and Fuels Purchased NSA | Excluding Food, Tobacco, Beverages and Petroleum SA | |
| Sep 2012 | -0.2 | 0.0 |
| Aug | 1.9 | 0.9 |
| Jul | 0.2 | -0.3 |
| ∆% Jul-Sep | 7.8 | 2.4 |
| Jun | -2.1 | -0.2 |
| May | -2.6 | -0.8 |
| Apr | -1.4 | 0.1 |
| ∆% Apr-Jun | -21.9 | -3.2 |
| Mar | 1.6 | -0.7 |
| Feb | 2.5 | 1.0 |
| Jan | 0.1 | -0.1 |
| ∆% AE Jan-Mar | 18.1 | 0.8 |
| Dec 2011 | -0.6 | -0.7 |
| Nov | 0.4 | 0.1 |
| ∆% AE Nov-Dec | -1.2 | -3.6 |
| Oct | -0.8 | -0.6 |
| Sep | 2.1 | 0.6 |
| Aug | -1.9 | 0.1 |
| Jul | 0.6 | 0.9 |
| Jun | 0.1 | 1.0 |
| May | -1.6 | -0.1 |
| ∆% AE May-Oct | -3.1 | 3.9 |
| Apr | 2.8 | 2.0 |
| Mar | 3.8 | 1.0 |
| Feb | 1.4 | 1.0 |
| Jan | 2.3 | 1.5 |
| ∆% AE Jan-Apr | 35.6 | 17.8 |
| Dec 2010 | 3.9 | 1.9 |
Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/ppi2/producer-prices-indices/september-2012/index.html
The UK Office for National Statistics also provides contributions in percentage points to the monthly and 12-month rates of inflation of manufactured products, shown in Table IV-19. There are high contributions of 0.36 percentage points by food products, 0.90 percentage points by tobacco and alcohol, 0.40 percentage points by petroleum, 0.25 percentage points by computer, electrical and optical and 0.46 percentage points by other manufactured products. There are diversified sources of contributions to 12 months output price inflation such as 0.23 percentage points by clothing, textile and leather and 0.06 percentage points by transport equipment. In general, contributions by products rich in commodities are the drivers of inflation. There were diversified contributions in percentage points to monthly inflation: 0.08 by food products, 0.03 percentage points by clothing and 0.03 percentage points by transport equipment. The increase of petroleum prices by 2.0 percent added 0.27 percentage points to monthly inflation of manufactured products and increase of 0.8 percent by chemical and pharmaceutical added 0.08 percentage points.
Table IV-19, Contributions to Month and 12-Month Change in Prices of All Manufactured Products, Percentage Points
| Sep 2012 | 12 Months | 12 Months ∆% | Month % Points | Month ∆% |
| Total % | 2.5 | 0.5 | ||
| Food Products | 0.36 | 2.3 | 0.08 | 0.5 |
| Tobacco & Alcohol | 0.90 | 8.7 | 0.01 | 0.1 |
| Clothing, Textile & Leather | 0.23 | 2.2 | 0.03 | 0.2 |
| Paper and Printing | -0.03 | -1.0 | 0.00 | -0.1 |
| Petroleum | 0.40 | 3.4 | 0.27 | 2.0 |
| Chemical & Pharmaceutical | -0.13 | -1.6 | 0.08 | 0.8 |
| Metal, Machinery & Equipment | 0.01 | 0.4 | 0.00 | 0.0 |
| Computer, Electrical & Optical | 0.25 | 2.9 | 0.00 | -0.1 |
| Transport Equipment | 0.06 | 0.6 | 0.03 | 0.3 |
| Other Manufactured Products | 0.46 | 2.8 | 0.01 | 0.1 |
Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/ppi2/producer-prices-indices/september-2012/index.html
The UK Office for National Statistics also provides contributions in percentage points to the monthly and 12-month rates of inflation of input prices, shown in Table IV-20. Crude oil is a large factor with deduction of 0.67 percentage points to the 12-month rate deduction of 0.08 percentage points to the monthly rate in Sep. Inflation also transfers to the domestic economy through the prices of imported inputs: imported metals deducted 1.11 percentage points from the 12-month rate and added 0.06 percentage points to the Sep rate. Domestic food added 1.02 percentage points to the 12-month rate and deducted 0.11 percentage points from the Sep rate. Reversals of commodity exposures in carry trades during risk aversion are a major source of financial instability.
Table IV-20, UK, Contributions to Month and 12-Month Change in Prices of Inputs, Percentage Points
| Sep 2012 | 12 Months | 12 Months ∆% | Month % Points | Month ∆% |
| Total | -1.2 | -0.2 | ||
| Fuel | 0.68 | 7.4 | 0.16 | 1.3 |
| Crude Oil | -0.67 | -2.3 | -0.08 | -0.2 |
| Domestic Food Materials | 1.02 | 10.1 | -0.11 | -0.8 |
| Imported Food Materials | 0.19 | 3.4 | 0.05 | 0.7 |
| Other Domestic Produced Materials | -0.17 | -4.2 | 0.00 | 0.1 |
| Imported Metals | -1.11 | -12.8 | 0.06 | 0.7 |
| Imported Chemicals | -0.42 | -3.6 | -0.04 | -0.3 |
| Imported Parts and Equipment | -0.49 | -3.0 | -0.14 | -0.7 |
| Other Imported Materials | -0.23 | -2.2 | -0.09 | -0.7 |
Source: http://www.ons.gov.uk/ons/rel/ppi2/producer-prices-indices/september-2012/index.html
Consumer price inflation in the UK is shown in Table IV-21. The CPI index increased 0.4 percent in Sep and 2.2 percent in 12 months. The same inflation waves (Section I and earlier at http://cmpassocregulationblog.blogspot.com/2012/09/recovery-without-hiring-world-inflation.html) are present in UK CPI inflation. In the first wave in Jan-Apr 2011, annual equivalent inflation was at a high 6.5 percent. In the second wave in May-Jul, annual equivalent inflation fell to only 0.4 percent. In the third wave in Aug-Nov 2011, annual equivalent inflation returned at 4.6 percent. In the fourth wave in Dec 2011 to Jan 2012, annual equivalent inflation was minus 0.6 percent because of decline of 0.5 percent in Jan 2012. In the fifth wave, annual equivalent inflation increased to 6.2 percent in Feb-Apr 2012. In the seventh wave, annual equivalent inflation was minus 3.0 percent in May-Jun 2012. In the eighth wave, annual equivalent inflation in Jul-Sep 2012 was 4.1 percent.
Table IV-21, UK, Consumer Price Index All Items, Month and 12-Month ∆%
| Month ∆% | 12 Months ∆% | |
| Sep 2012 | 0.4 | 2.2 |
| Aug | 0.5 | 2.5 |
| Jul | 0.1 | 2.6 |
| AE ∆% Jul-Sep | 4.1 | |
| Jun | -0.4 | 2.4 |
| May | -0.1 | 2.8 |
| AE ∆% May-Jun | -3.0 | |
| Apr | 0.6 | 3.0 |
| Mar | 0.3 | 3.5 |
| Feb | 0.6 | 3.4 |
| AE ∆% Feb-Apr | 6.2 | |
| Jan | -0.5 | 3.6 |
| Dec 2011 | 0.4 | 4.2 |
| AE ∆% Dec-Jan | -0.6 | |
| Nov | 0.2 | 4.8 |
| Oct | 0.1 | 5.0 |
| Sep | 0.6 | 5.2 |
| Aug | 0.6 | 4.5 |
| AE ∆% Aug-Nov | 4.6 | |
| Jul | 0.0 | 4.4 |
| Jun | -0.1 | 4.2 |
| May | 0.2 | 4.5 |
| May-Jul | 0.4 | |
| Apr | 1.0 | 4.5 |
| Mar | 0.3 | 4.0 |
| Feb | 0.7 | 4.4 |
| Jan | 0.1 | 4.0 |
| AE ∆% Jan-Apr | 6.5 | |
| Dec 2010 | 1.0 | 3.7 |
| Nov | 0.4 | 3.3 |
| Oct | 0.3 | 3.2 |
| Sep | 0.0 | 3.1 |
| Aug | 0.5 | 3.1 |
| Jul | -0.2 | 3.1 |
| Jun | 0.1 | 3.2 |
| May | 0.2 | 3.4 |
| Apr | 0.6 | 3.7 |
| Mar | 0.6 | 3.4 |
| Feb | 0.4 | 3.0 |
| Jan | -0.2 | 3.5 |
Source: UK Office for National Statistics
http://www.ons.gov.uk/ons/rel/cpi/consumer-price-indices/september-2012/index.html
Inflation has been unusually high in the UK since 2006, as shown in Table IV-22. There were no rates of inflation close to 2.0 percent in the period from 1997 to 2004. Inflation has exceeded 2 percent since 2005, reaching 3.6 percent in 2008, 3.3 percent in 2010 and 4.5 percent in 2011.
Table IV-22, UK, Consumer Price Index, Annual ∆%
| 1997 | 1.8 |
| 1998 | 1.6 |
| 1999 | 1.3 |
| 2000 | 0.8 |
| 2001 | 1.2 |
| 2002 | 1.3 |
| 2003 | 1.4 |
| 2004 | 1.3 |
| 2005 | 2.1 |
| 2006 | 2.3 |
| 2007 | 2.3 |
| 2008 | 3.6 |
| 2009 | 2.2 |
| 2010 | 3.3 |
| 2011 | 4.5 |
Source: UK Office for National Statistics
http://www.ons.gov.uk/ons/rel/cpi/consumer-price-indices/september-2012/index.html
Table IV-23 provides the analysis of inflation in Sep 2012 by the UK Office for National Statistics. The drivers of monthly inflation of 0.4 percent are increase of the price of clothing by 4.7 percent with contribution of 0.30 percentage points and decrease of transport of 1.3 percent with deduction of 0.21 percentage points. Contributions of percentage points to the 12-month rate of consumer price inflation of 2.2 percent are provided by the final two columns in Table IV-23. The UK Office for National Statistics explains as follows (http://www.ons.gov.uk/ons/dcp171778_282923.pdf pages 8-9):
“The most significant upward contributions to the CPI 12-month rate to September 2012 came from:
Transport: which contributed 0.41 percentage points, with the main upward effects coming from air fares and motor fuels, where charges, overall, rose by 5.7 per cent and 2.8 per cent respectively.
Restaurants & hotels: which contributed 0.34 percentage points, with the main upward effect coming from catering where prices, overall, rose by 3.0 per cent over the year.
Housing & household services: which contributed 0.30 percentage points, with the majority of the upward effect coming from rent, where charges, overall, rose by 3.3 per cent over the year.”
Table IV-23, UK, Consumer Price Index Month and Twelve-month ∆% and Percentage Point Contributions to Change by Components
| Sep 2012 | Month ∆% | Percentage Point Contribution | 12 Months ∆% | Percentage Point Contribution |
| CPI All Items | 0.4 | 2.2 | ||
| Food & Non-Alcoholic Beverages | 0.0 | 0.00 | 2.0 | -0.03 |
| Alcohol & Tobacco | 1.1 | 0.05 | 6.1 | 0.01 |
| Clothing & Footwear | 4.7 | 0.30 | -0.5 | 0.03 |
| Housing & Household Services | 0.1 | 0.02 | 2.2 | -0.43 |
| Furniture & Household Goods | 0.5 | 0.03 | 1.7 | -0.04 |
| Health | 0.2 | 0.00 | 2.4 | 0.00 |
| Transport | -1.3 | -0.21 | 2.5 | 0.12 |
| Communication | 0.0 | 0.00 | 3.4 | -0.03 |
| Recreation & Culture | 0.6 | 0.08 | 1.2 | 0.07 |
| Education | 0.5 | 0.01 | 3.2 | -0.03 |
| Restaurants & Hotels | 0.3 | 0.03 | 3.0 | -0.02 |
| Miscellaneous Goods & Services | 0.7 | 0.07 | 2.3 | 0.07 |
Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/cpi/consumer-price-indices/september-2012/index.html
V World Economic Slowdown. Table V-1 is constructed with the database of the IMF (http://www.imf.org/external/datamapper/index.php?db=WEO) to show GDP in dollars in 2011 and the growth rate of real GDP of the world and selected regional countries from 2012 to 2015. The data illustrate the concept often repeated of “two-speed recovery” of the world economy from the recession of 2007 to 2009. The IMF has lowered its forecast of the world economy to 3.3 percent in 2012 but accelerating to 3.6 percent in 2013, 4.2 percent in 2014 and 4.4 percent in 2015. Slow-speed recovery occurs in the “major advanced economies” of the G7 that account for $33,697 billion of world output of $69,899 billion, or 48.2 percent, but are projected to grow at much lower rates than world output, 1.9 percent on average from 2012 to 2015 in contrast with 3.9 percent for the world as a whole. While the world would grow 16.4 percent in the four years from 2012 to 2015, the G7 as a whole would grow 7.8 percent. The difference in dollars of 2011 is rather high: growing by 16.4 percent would add $11.5 trillion of output to the world economy, or roughly two times the output of the economy of Japan of $5,867 but growing by 7.8 percent would add $5.2 trillion of output to the world, or somewhat below the output of Japan in 2011. The “two speed” concept is in reference to the growth of the 150 countries labeled as emerging and developing economies (EMDE) with joint output in 2011 of $25,438 billion, or 36.4 percent of world output. The EMDEs would grow cumulatively 24.9 percent or at the average yearly rate of 5.7 percent, contributing $6.3 trillion from 2012 to 2015 or the equivalent of 86.8 percent of $7,298 billion of China in 2011. The final four countries in Table V-1 often referred as BRIC (Brazil, Russia, India, China), are large, rapidly growing emerging economies. Their combined output adds to $13,468 billion, or 19.3 percent of world output, which is equivalent to 39.9 percent of the combined output of the major advanced economies of the G7.
Table V-1, IMF World Economic Outlook Database Projections of Real GDP Growth
| GDP USD 2011 | Real GDP ∆% | Real GDP ∆% | Real GDP ∆% | Real GDP ∆% | |
| World | 69,899 | 3.3 | 3.6 | 4.2 | 4.4 |
| G7 | 33,697 | 1.4 | 1.5 | 2.2 | 2.5 |
| Canada | 1,739 | 1.9 | 2.0 | 2.4 | 2.4 |
| France | 2,778 | 0.1 | 0.4 | 1.1 | 1.5 |
| DE | 3,607 | 0.9 | 0.9 | 1.4 | 1.4 |
| Italy | 2,199 | -2.3 | -0.7 | 0.5 | 1.2 |
| Japan | 5,867 | 2.2 | 1.2 | 1.1 | 1.2 |
| UK | 2,431 | -0.4 | 1.1 | 2.2 | 2.6 |
| US | 15,076 | 2.2 | 2.1 | 2.9 | 3.4 |
| Euro Area | 13,114 | -0.4 | 0.2 | 1.2 | 1.5 |
| DE | 3,607 | 0.9 | 0.9 | 1.4 | 1.4 |
| France | 2,778 | 0.1 | 0.4 | 1.1 | 1.5 |
| Italy | 2,199 | -2.3 | -0.7 | 0.5 | 1.2 |
| POT | 238 | -3.0 | -1.0 | 1.2 | 1.9 |
| Ireland | 221 | 0.4 | 1.4 | 2.5 | 2.9 |
| Greece | 299 | -6.0 | -4.0 | 0.0 | 2.8 |
| Spain | 1,480 | -1.5 | -1.3 | 1.0 | 1.6 |
| EMDE | 25,438 | 5.3 | 5.6 | 5.9 | 6.1 |
| Brazil | 2,493 | 1.5 | 3.9 | 4.2 | 4.2 |
| Russia | 1,850 | 3.7 | 3.8 | 3.9 | 3.9 |
| India | 1,827 | 4.9 | 6.0 | 6.4 | 6.7 |
| China | 7,298 | 7.8 | 8.2 | 8.5 | 8.5 |
Notes; DE: Germany; EMDE: Emerging and Developing Economies (150 countries); POT: Portugal
Source: IMF World Economic Outlook databank http://www.imf.org/external/datamapper/index.php?db=WEO
Continuing high rates of unemployment in advanced economies constitute another characteristic of the database of the WEO (http://www.imf.org/external/datamapper/index.php?db=WEO). Table V-2 is constructed with the WEO database to provide rates of unemployment from 2011 to 2015 for major countries and regions. In fact, unemployment rates for 2011 in Table V-2 are high for all countries: unusually high for countries with high rates most of the time and unusually high for countries with low rates most of the time. Estimated rates of unemployment for 2012 are particularly high for the countries with sovereign debt difficulties in Europe: 15.5 percent for Portugal (POT), 14.8 percent for Ireland, 23.8 percent for Greece, 24.9 percent for Spain and 10.6 percent for Italy, which is lower but still high. The G7 rate of unemployment is estimated at 7.5 percent. Unemployment rates are not likely to decrease substantially if slow growth persists in advanced economies.
Table V-2, IMF World Economic Outlook Database Projections of Unemployment Rate as Percent of Labor Force
| % Labor Force 2011 | % Labor Force 2012 | % Labor Force 2013 | % Labor Force 2014 | % Labor Force 2015 | |
| World | NA | NA | NA | NA | NA |
| G7 | 7.7 | 7.5 | 7.5 | 7.3 | 6.9 |
| Canada | 7.5 | 7.3 | 7.3 | 7.1 | 6.9 |
| France | 9.6 | 10.1 | 10.5 | 10.3 | 9.8 |
| DE | 6.0 | 5.2 | 5.3 | 5.2 | 5.2 |
| Italy | 8.4 | 10.6 | 11.1 | 11.3 | 11.0 |
| Japan | 4.6 | 4.5 | 4.4 | 4.5 | 4.4 |
| UK | 8.0 | 8.1 | 8.1 | 7.9 | 7.6 |
| US | 8.9 | 8.2 | 8.1 | 7.7 | 7.1 |
| Euro Area | 10.2 | 11.2 | 11.5 | 11.2 | 10.8 |
| DE | 6.0 | 5.2 | 5.3 | 5.2 | 5.2 |
| France | 9.6 | 10.1 | 10.5 | 10.3 | 9.8 |
| Italy | 8.4 | 10.6 | 11.1 | 11.3 | 11.0 |
| POT | 12.7 | 15.5 | 16.0 | 15.3 | 14.7 |
| Ireland | 14.4 | 14.8 | 14.4 | 13.7 | 13.1 |
| Greece | 17.3 | 23.8 | 25.4 | 24.5 | 22.4 |
| Spain | 21.7 | 24.9 | 25.1 | 24.1 | 23.2 |
| EMDE | NA | NA | NA | NA | NA |
| Brazil | 6.0 | 6.0 | 6.5 | 7.0 | 7.0 |
| Russia | 6.5 | 6.0 | 6.0 | 6.0 | 6.0 |
| India | NA | NA | NA | NA | NA |
| China | 4.1 | 4.1 | 4.1 | 4.1 | 4.1 |
Notes; DE: Germany; EMDE: Emerging and Developing Economies (150 countries)
Source: IMF World Economic Outlook databank http://www.imf.org/external/datamapper/index.php?db=WEO
Table V-3 provides the latest available estimates of GDP for the regions and countries followed in this blog for IQ2012, IIQ2012 and IIIQ2012 available now only for China. Growth is weak throughout most of the world. Japan’s GDP increased 1.3 percent in IQ2012 and 2.9 percent relative to a year earlier but part of the jump could be the low level a year earlier because of the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Japan is experiencing difficulties with the overvalued yen because of worldwide capital flight originating in zero interest rates with risk aversion in an environment of softer growth of world trade. Japan’s GDP grew 0.2 percent in IIQ2012 at the seasonally adjusted annual rate (SAAR) of 0.7 percent, which is much lower than 5.3 percent in IQ2012. Growth of 3.2 percent in IIQ2012 in Japan relative to IIQ2011 has effects of the low level of output because of Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. China grew at 1.8 percent in IIQ2012, which annualizes to 7.4 percent. China grew at 2.2 percent in IIIQ2012, which annualizes at 7.4 percent. Xinhuanet informs that Premier Wen Jiabao considers the need for macroeconomic stimulus, arguing that “we should continue to implement proactive fiscal policy and a prudent monetary policy, while giving more priority to maintaining growth” (http://news.xinhuanet.com/english/china/2012-05/20/c_131599662.htm). Premier Wen elaborates that “the country should properly handle the relationship between maintaining growth, adjusting economic structures and managing inflationary expectations” (http://news.xinhuanet.com/english/china/2012-05/20/c_131599662.htm). China’s GDP grew 7.6 percent in IIQ2012 relative to IIQ2011. Growth rates of GDP of China in a quarter relative to the same quarter a year earlier have been declining from 2011 to 2012. China’s GDP grew 8.1 percent in IQ2012 relative to a year earlier but only 7.6 percent in IIQ2012 relative to a year earlier. GDP was flat in the euro area in IQ2012 and also in IQ2012 relative to a year earlier. Euro area GDP contracted 0.2 percent IIQ2012 and fell 0.4 percent relative to a year earlier. Germany’s GDP increased 0.5 percent in IQ2012 and 1.7 percent relative to a year earlier. In IIQ2012, Germany’s GDP increased 0.3 percent and 0.5 percent relative to a year earlier but 1.0 percent relative to a year earlier when adjusted for calendar (CA) effects. Growth of US GDP in IQ2012 was 0.5 percent, at SAAR of 2.0 percent and higher by 2.4 percent relative to IQ2011. US GDP increased 0.3 percent in IIQ2012, 1.3 percent at SAAR and 2.1 percent relative to a year earlier (Section IA Mediocre and Decelerating United States Economic Growth at http://cmpassocregulationblog.blogspot.com/2012/09/historically-sharper-recoveries-from.html) but with substantial unemployment and underemployment (Section I at http://cmpassocregulationblog.blogspot.com/2012/10/twenty-nine-million-unemployed-or.html) and weak hiring (Section I at http://cmpassocregulationblog.blogspot.com/2012/10/recovery-without-hiring-imf-view-united.html). UK GDP fell 0.4 percent in IIQ2012, declining 0.5 percent relative to IIQ2011. In IQ2011, UK GDP fell 0.3 percent, declining 0.1 percent relative to a year earlier. UK GDP fell 0.5 percent in IIQ2012 and 0.5 percent relative to a year earlier. Italy has experienced decline of GDP in four consecutive quarters from IIIQ2011 to IIQ2012. Italy’s GDP fell 0.8 percent in IIQ2012 and declined 2.6 percent relative to IIQ2011. France’s GDP stagnated in both IQ2012 and IIQ2012 and increased 0.3 percent relative to a year earlier in IIQ2012.
Table V-3, Percentage Changes of GDP Quarter on Prior Quarter and on Same Quarter Year Earlier, ∆%
| IQ2012/IVQ2011 | IQ2012/IQ2011 | |
| United States | QOQ: 0.5 SAAR: 2.0 | 2.4 |
| Japan | QOQ: 1.3 SAAR: 5.3 | 2.9 |
| China | 1.8 | 8.1 |
| Euro Area | 0.0 | 0.0 |
| Germany | 0.5 | 1.7 |
| France | 0.0 | 0.4 |
| Italy | -0.8 | -1.4 |
| United Kingdom | -0.3 | -0.1 |
| IIQ2012/IQ2012 | IIQ2012/IIQ2011 | |
| United States | QOQ: 0.3 SAAR: 1.3 | 2.1 |
| Japan | QOQ: 0.2 | 3.2 |
| China | 1.8 | 7.6 |
| Euro Area | -0.2 | -0.4 |
| Germany | 0.3 | 0.5 1.0 CA |
| France | 0.0 | 0.3 |
| Italy | -0.8 | -2.6 |
| United Kingdom | -0.4 | -0.5 |
| IIIQ2012/ IIQ2012 | IIIQ2012/ IIIQ2011 | |
| China | 2.2 | 7.4 |
QOQ: Quarter relative to prior quarter; SAAR: seasonally adjusted annual rate
Source: Country Statistical Agencies
http://www.bea.gov/national/index.htm#gdp
There is evidence of deceleration of growth of world trade and even contraction in more recent data. Table V-4 provides two types of data: growth of exports and imports in the latest available months and in the past 12 months; and contributions of net trade (exports less imports) to growth of real GDP. Japan provides the most worrisome data (Section VB at http://cmpassocregulationblog.blogspot.com/2012/09/collapse-of-united-states-creation-of_23.html and for GDP http://cmpassocregulationblog.blogspot.com/2012/09/recovery-without-hiring-world-inflation_16.html). Japan’s exports decreased 5.8 percent in the 12 months ending in Aug and 8.1 percent in 12 months ending in Jul while imports decreased 5.4 percent in the 12 months ending in Aug and increased 2.1 percent in the 12 months ending in Jul. The second part of Table V-4 shows that net trade deducted 0.3 percentage points from Japan’s growth of GDP in IIQ2012. China’s exports fell 1.8 percent in the month of Jul and increased 1.0 percent in 12 months. In Aug 2012, China’s exports increased 0.6 percent and increased 2.7 percent in 12 months. Trade rebounded in China in Sep with growth of exports of 9.9 percent in the 12 months ending in Sep and 2.4 percent for imports. Germany’s exports increased 2.4 percent in the month of Aug and increased 5.8 percent in the 12 months ending in Aug while imports increased 0.3 percent in the month of Aug and increased 0.4 percent in the 12 months ending in Aug. Net trade contributed 1.1 percentage points to growth of Germany’s GDP in IIQ2012. The Markit/BME Germany Purchasing Managers’ Index® (PMI®), showing close association with Germany’s manufacturing output, increased from 44.7 in Aug to 47.3 in Sep, which is the most moderate deterioration since Mar (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10119). New export orders fell sharply but at a slower pace than in Aug when new export orders fell at a record in the past three and a half years. UK’s exports fell 2.4 percent in Aug and 1.3 percent in Jun-Aug 2012 relative to a year earlier while imports increased 3.4 percent in Aug and 0.8 percent in Jun-Aug 2012 relative to a year earlier. Net trade deducted 1.0 percentage points from UK GDP growth in IIQ2012. France’s exports increased 3.6 percent in Aug while imports increased 6.3 percent and net trade deducted 0.4 percentage points from GDP growth in IIQ2012. US exports decreased 1.0 percent in Aug 2012 and increased 5.6 percent in Jan-Aug relative to a year earlier but net trade added 0.23 percentage points to GDP growth in IIQ2012. The Markit US Manufacturing Purchasing Managers’ Index™ (PMI™) declined to the weakest reading in three years to 51.1 in Sep from 51.5 in Aug, indicating moderate expansion of US manufacturing (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10144). The PMI reading at 51.4 is lower than 54.2 for IIQ2012. New export orders declined at the highest rate in 11 months with the index of new exports orders falling from 48.8 in Aug to 48.0 in Sep while total new orders increased from 51.9 in Aug to 52.3 in Sep because of orders from the internal market. In the six months ending in Sep, United States national industrial production accumulated increase of 0.6 percent at the annual equivalent rate of 1.2 percent, which is much lower than 2.8 percent growth in 12 months. Capacity utilization for total industry in the United States fell 1.1 percentage points in Sep to 78.2 percent from 79.2 percent in Jul, which is 2.0 percentage points lower than the long-run average from 1972 to 2011. Manufacturing increased 0.2 percent in Sep seasonally adjusted, increasing 3.2 percent not seasonally adjusted in 12 months, and increased 0.1 percent in the six months ending in Sep or at the annual equivalent stagnating rate of 0.2 percent (Section VA). Trade values incorporate both price and quantity effects that are difficult to separate. Data do suggest that world trade slowdown is accompanying world economic slowdown.
Table V-4, Growth of Trade and Contributions of Net Trade to GDP Growth, ∆% and % Points
| Exports | Exports 12 M ∆% | Imports | Imports 12 M ∆% | |
| USA | -1.0 Aug | 5.6 Jan-Aug | -0.1 Aug | 4.7 Jan-Aug |
| Japan Aug Jul | -5.8 -8.1 | -5.4 2.1 | ||
| China | -1.8 Jul 0.6 Aug 4.7 Sep | 1.0 Jul 7.8 Jan-Jul 2.7 Aug 7.1 Jan-Aug 9.9 Sep Jan-Sep 7.4 | 2.2 Jul -0.3 Aug 4.9 Sep | 4.7 Jul 6.5 Jan-Jul -2.6 Aug 5.2 Jan-Aug 2.4 Sep 4.8 Jan-Sep |
| Euro Area | 10.4 12-M Aug | 9.0 Jan-Aug | 1.3 12-M Aug | 2.5 Jan-Aug |
| Germany | 2.4 Aug CSA | 5.8 Aug | 0.3 Aug CSA | 0.4 Aug |
| France Aug | 3.6 | 2.8 | 6.3 | 3.4 |
| Italy Aug | 3.9 | 8.4 | 4.4 | -1.1 |
| UK | -2.4 Aug | -1.3 Jun-Aug 12/Jun-Aug 11 | 3.4 Aug | 0.8 Jun-Aug 12/Jun-Aug 11 |
| Net Trade % Points GDP Growth | % Points | |||
| USA IIQ2012 | 0.23 | |||
| Japan IIQ2012 | -0.3 | |||
| Germany IIQ2012 | 1.1 | |||
| France IIQ2012 | -0.4 | |||
| UK IIQ2012 | -1.0 |
Sources: http://www.census.gov/foreign-trade/ http://www.bea.gov/iTable/index_nipa.cfm
http://www.customs.go.jp/toukei/latest/index_e.htm http://www.esri.cao.go.jp/en/sna/sokuhou/sokuhou_top.html
http://english.customs.gov.cn/publish/portal191/ http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home
https://www.destatis.de/EN/PressServices/Press/pr/2012/08/PE12_287_811.html;jsessionid=A761BC574543A771416A9CF81034F7BA.cae1 http://lekiosque.finances.gouv.fr/AppChiffre/Portail_default.asp
http://www.statistics.gov.uk/hub/index.html
The geographical breakdown of exports by imports of Japan with selected regions and countries is provided in Table V-5 for Aug 2012. The share of Asia in Japan’s trade is more than one half, 56.3 percent of exports and 43.6 percent of imports. Within Asia, exports to China are 19.2 percent of total exports and imports from China 20.8 percent of total imports. The second largest export market for Japan in Aug 2012 is the US with share of 17.6 percent of total exports and share of imports from the US of 8.7 percent in total imports. Western Europe has share of 9.6 percent in Japan’s exports and of 10.8 percent in imports. Rates of growth of exports of Japan in Aug are sharply negative for most countries and regions with the exception of 10.3 percent for exports to the US, 18.7 percent to Canada, 6.5 percent for exports to Mexico and 0.3 percent to Brazil. Comparisons relative to 2011 may have some bias because of the effects of the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Deceleration of growth in China and the US and threat of recession in Europe can reduce world trade and economic activity, which could be part of the explanation for the decline of Japan’s exports by 5.8 percent in Aug 2012 while imports decreased by 5.4 percent but higher levels after the earthquake and declining prices may be another factor. Growth rates of imports in the 12 months ending in Aug are sharply higher with exception of declines in imports mostly of raw materials: minus 9.3 percent for Middle East, minus 13.2 percent for Australia and minus 27.3 percent for Brazil. Imports from Asia decreased 5.8 percent in the 12 months ending in Aug while imports from China decreased 7.3 percent.
Table V-5, Japan, Value and 12-Month Percentage Changes of Exports and Imports by Regions and Countries, ∆% and Millions of Yens
| Aug 2012 | Exports | 12 months ∆% | Imports Millions Yens | 12 months ∆% |
| Total | 5,045,868 | -5.8 | 5,799,995 | -5.4 |
| Asia | 2,839,710 | -6.7 | 2,526,870 | -5.8 |
| China | 966,299 | -9.9 | 1,208,214 | -7.3 |
| USA | 886,922 | 10.3 | 503,962 | -0.1 |
| Canada | 62,393 | 18.7 | 80,017 | -17.3 |
| Brazil | 42,396 | 0.3 | 67,127 | -27.3 |
| Mexico | 68,528 | 6.5 | 26,944 | 9.1 |
| Western Europe | 484,858 | -28.3 | 624,333 | 2.9 |
| Germany | 125,729 | -17.8 | 174,050 | 8.7 |
| France | 36,868 | -29.8 | 85,122 | 10.3 |
| UK | 72,065 | -42.1 | 48,348 | -5.1 |
| Middle East | 167,393 | -1.2 | 1,083,162 | -9.3 |
| Australia | 117,080 | -1.6 | 408,332 | -13.2 |
Source: http://www.customs.go.jp/toukei/latest/index_e.htm
Table V-6 of the World Trade Organization provides actual volume of world trade from 2008 to 2011 and projections of the World Trade Organization Secretariat for 2012 and 2013. Trade was weak during the global recession, increasing 2.3 percent in 2008 and decreasing 12.5 percent in 2009. Trade growth was 13.8 percent in 2010 and 5.0 percent in 2011. The World Trade Organization has reduced its projection of growth of world trade in 2012 to 2.5 percent.
Table V-6, World Trade Organization Projections of Growth of Volume of World Merchandise Trade and GDP, ∆%, 2008-2013
| 2008 | 2009 | 2010 | 2011 | 2012* | 2013* | |
| World | 2.3 | -12.5 | 13.9 | 5.0 | 2.5 | 4.5 |
| Exports | ||||||
| DE | 0.9 | -15.2 | 13.0 | 4.6 | 1.5 | 3.3 |
| DINGE | 4.3 | -7.8 | 15.3 | 5.3 | 3.5 | 5.7 |
| Imports | ||||||
| DE | -1.1 | -14.4 | 11.0 | 2.9 | 0.4 | 3.4 |
| DINGE | 8.6 | -10.5 | 18.3 | 8.3 | 5.4 | 6.1 |
| Real GDP** | 1.3 | -2.4 | 3.8 | 2.4 | 2.1 | 2.4 |
| DE | 0.0 | -3.8 | 2.7 | 1.5 | 1.2 | 1.5 |
| DINGE | 5.6 | 2.2 | 7.3 | 5.3 | 4.9 | 5.2 |
Notes: World Trade Volume: average of exports and imports; *Projections; **At market exchange rates; DE: Developed economies; DINGE: developing economies
Source: World Trade Organization Secretariat for trade, Consensus estimates of GDP forecasts
http://www.wto.org/english/news_e/pres12_e/pr676_e.htm
The JP Morgan Global All-Industry Output Index of the JP Morgan Manufacturing and Services PMI™, produced by JP Morgan and Markit in association with ISM and IFPSM, with high association with world GDP, increased to 52.5 in Sep from 50.9 in Aug, indicating expansion at a moderate rate (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10177). This index has remained above the contraction territory of 50.0 during 36 months. Both global manufacturing and services have slowed down considerably with services increasing marginally because of activity in the US while manufacturing deepened its decline. The average of the reading in IIIQ2012 at 51.7 was almost unchanged relative to 51.6 in IIQ2012, which is a thee-year low and below the trend started with recovery in Aug 2009 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10177). Stronger service activity in the US supported expansion of global output with increases also in the UK, Brazil, Russia and Ireland. The employment index fell from 50.9 in Aug to 49.9 in Sep under constraint by sharp increases in input prices. The JP Morgan Global Manufacturing PMI™, produced by JP Morgan and Markit in association with ISM and IFPSM, increased to 52.8 in Sep from 48.1 in Aug, which was higher than the 38-month low in Aug and four consecutive months below 50.0 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10159). The PMI is at 48.5 in IIIQ2012, which is lower than 50.4 in IIQ2012 and the weakest reading since IIQ2009. New export orders declined for the fifth consecutive month. The HSBC Brazil Composite Output Index, compiled by Markit, increased away from contraction territory to 52.8 in Sep from 48.1 in Aug with stronger demand for services than for manufacturing (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10159). Andre Loes, Chief Economist, Brazil, at HSBC, finds that increasing activity in services could signal the rebound of economic activity expected for the second half of 2012 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10159). The HSBC Brazil Purchasing Managers’ IndexTM (PMI™) increased slightly to 49.8 in Sep from 49.3 in Aug, indicating marginal deterioration of business conditions in Brazilian manufacturing (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10135). Andre Loes, Chief Economist, Brazil at HSBC, finds recovery of Brazil’s manufacturing in IIIQ2012, improving the outlook for IVQ2012 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10005).
VA United States. The Markit Flash US Manufacturing Purchasing Managers’ Index™ (PMI™) seasonally adjusted was unchanged at 51.5 in Sep from 51.5 in Aug, indicating the third weakest reading since Oct 2009 in the beginning of the current recovery with the lowest in Dec 2010; the PMI average in the three months ending in Sep was 51.5, which is lower than 54.2 in the three months ending in Jun and the lowest quarterly reading since IIIQ2009 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10081). New export orders registered 47.9 in Sep still in contraction territory with 48.8 in Aug, which is the fastest decline in new export orders since Oct 2011. Chris Williams, Chief Economist at Markit, finds that manufacturing could have restrained the US economy in IIIQ2012 that could possibly result in weaker growth than 1.7 percent at seasonally-adjusted annual rate in IIQ2012 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10081). The Markit US Manufacturing Purchasing Managers’ Index™ (PMI™) declined to the weakest reading in three years to 51.1 in Sep from 51.5 in Aug, indicating moderate expansion of US manufacturing (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10144). The PMI reading at 51.4 is lower than 54.2 for IIQ2012. New export orders declined at the highest rate in 11 months with the index of new exports orders falling from 48.8 in Aug to 48.0 in Sep while total new orders increased from 51.9 in Aug to 52.3 in Sep because of orders from the internal market. Chris Williamson, Chief Economist at Markit, finds that the data suggest deterioration of manufacturing toward the end of Sep, which could result in further decline that could cause stagnation of the US economy or growth at a rate lower than 1.3 for GDP in IIQ2012 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10144). The purchasing managers’ index (PMI) of the Institute for Supply Management (ISM) Report on Business® increased 1.9 percentage points from 49.6 in Aug to 51.5 in Sep, (http://www.ism.ws/ISMReport/MfgROB.cfm?navItemNumber=12942). The index of new orders increased 5.2 percentage points from 47.1 in Aug to 52.3 in Sep. The index of exports increased 1.5 percentage points from 47.0 in Aug to 48.5 in Sep, remaining in mild contraction territory. The Non-Manufacturing ISM Report on Business® PMI increased 1.4 percentage points from 53.7 in Aug to 53.7 in Sep, indicating growth during 38 consecutive months, while the index of new orders increased 4.3 percentage points from 55.6 in Aug to 59.9 in Sep (http://www.ism.ws/ISMReport/NonMfgROB.cfm?navItemNumber=12943). Table USA provides the country economic indicators for the US.
Table USA, US Economic Indicators
| Consumer Price Index | Sep 12 months NSA ∆%: 2.0; ex food and energy ∆%: 2.0 Sep month ∆%: 0.6; ex food and energy ∆%: 0.1 |
| Producer Price Index | Sep 12-month NSA ∆%: 2.1; ex food and energy ∆% 2.3 |
| PCE Inflation | Aug 12-month NSA ∆%: headline 1.5; ex food and energy ∆% 1.6 |
| Employment Situation | Household Survey: Sep Unemployment Rate SA 7.8% |
| Nonfarm Hiring | Nonfarm Hiring fell from 63.8 million in 2006 to 50.1 million in 2011 or by 13.7 million |
| GDP Growth | BEA Revised National Income Accounts IIQ2012/IIQ2011 2.1 IQ2012 SAAR 2.0 IIQ2012 SAAR 1.3 |
| Personal Income and Consumption | Aug month ∆% SA Real Disposable Personal Income (RDPI) SA ∆% -0.3 |
| Quarterly Services Report | IQ12/IQ11 SA ∆%: |
| Employment Cost Index | IIQ2012 SA ∆%: 0.5 |
| Industrial Production | Sep month SA ∆%: 0.4 Manufacturing Sep SA ∆% 0.2 Sep 12 months SA ∆% 3.2, NSA 3.2 |
| Productivity and Costs | Nonfarm Business Productivity IIQ2012∆% SAAE 2.2; IIQ2012/IIQ2011 ∆% 1.2; Unit Labor Costs SAAE IIQ2012 ∆% 1.5; IIQ2012/IIQ2011 ∆%: 0.9 Blog 9/9/2012 |
| New York Fed Manufacturing Index | General Business Conditions From Sep -10.41 to Oct -6.16 |
| Philadelphia Fed Business Outlook Index | General Index from Sep minus 1.9 to Oct 5.7 |
| Manufacturing Shipments and Orders | Aug New Orders SA ∆%: -5.2; ex transport ∆%: 0.7 |
| Durable Goods | Jul New Orders SA ∆%: 4.2; ex transport ∆%: -0.4 |
| Sales of New Motor Vehicles | Jan-Sep 2012 10,899,949; Jan-Sep 2011 9,518,172. Sep SAAR 14.94 million, Aug SAAR 14.52 million, Sep 2011 SAAR 13.4 million Blog 10/7/12 |
| Sales of Merchant Wholesalers | Jan-Aug 2012/Jan-Aug 2011 NSA ∆%: Total 6.1; Durable Goods: 7.6; Nondurable |
| Sales and Inventories of Manufacturers, Retailers and Merchant Wholesalers | Aug 12/Aug 11 NSA ∆%: Sales Total Business 3.2; Manufacturers 2.5 |
| Sales for Retail and Food Services | Jan-Sep 2012/Jan-Sep 2011 ∆%: Retail and Food Services 5.6; Retail ∆% 5.3 |
| Value of Construction Put in Place | Aug SAAR month SA ∆%: -0.6 Aug 12-month NSA: 6.5 Jan-Aug 2012 ∆% 9.0 |
| Case-Shiller Home Prices | Jul 2012/Jul 2011 ∆% NSA: 10 Cities 0.6; 20 Cities: 1.2 |
| FHFA House Price Index Purchases Only | Jul SA ∆% 0.2; |
| New House Sales | Aug 2012 month SAAR ∆%: |
| Housing Starts and Permits | Sep Starts month SA ∆%: 15.0 ; Permits ∆%: -11.6 |
| Trade Balance | Balance Aug SA -$44217 million versus Jul -$42466 million |
| Export and Import Prices | Sep 12-month NSA ∆%: Imports -0.6; Exports -0.5 |
| Consumer Credit | Aug ∆% annual rate: 8.0 |
| Net Foreign Purchases of Long-term Treasury Securities | Aug Net Foreign Purchases of Long-term Treasury Securities: $90.0 billion |
| Treasury Budget | Fiscal Year 2012/2011 ∆%: Receipts 6.4; Outlays -1.7; Individual Income Taxes 3.7 Deficit Fiscal Year 2012 $1,089,353 million CBO Forecast 2012FY Deficit $1.171 trillion Blog 10/14/2012 |
| CBO Budget and Economic Outlook | 2012 Deficit $1128 B 7.3% GDP Debt 11,318 B 72.8% GDP 2013 Deficit $614 B, Debt 12,064 B 76.1% GDP Blog 8/26/12 |
| Commercial Banks Assets and Liabilities | Aug 2012 SAAR ∆%: Securities 2.8 Loans 2.9 Cash Assets 30.3 Deposits 5.4 Blog 9/30/12 |
| Flow of Funds | IIQ2012 ∆ since 2007 Assets -$4193B Real estate -$4451B Financial $-157 MM Net Worth -$3389B Blog 9/23/12 |
| Current Account Balance of Payments | IIQ2012 -$1285 B %GDP 3.0 Blog 9/23/12 |
Links to blog comments in Table USA: 10/14/12 http://cmpassocregulationblog.blogspot.com/2012/10/recovery-without-hiring-imf-view-united.html
10/7/12 http://cmpassocregulationblog.blogspot.com/2012/10/twenty-nine-million-unemployed-or.html
9/30/12 http://cmpassocregulationblog.blogspot.com/2012/09/historically-sharper-recoveries-from.html
9/23/12 http://cmpassocregulationblog.blogspot.com/2012/09/collapse-of-united-states-creation-of.html
9/9/12 http://cmpassocregulationblog.blogspot.com/2012/09/twenty-eight-million-unemployed-or_10.html
8/26/12 http://cmpassocregulationblog.blogspot.com/2012/08/expanding-bank-cash-and-deposits-with_26.html
8/5/12 http://cmpassocregulationblog.blogspot.com/2012/08/twenty-nine-million-unemployed-or.html
Industrial production decreased 1.4 percent in Aug 2012 and increased 0.4 percent in Sep, as shown in Table VA-1, with all data seasonally adjusted. In the six months ending in Sep, industrial production accumulated increase of 0.6 percent at the annual equivalent rate of 1.2 percent, which is substantially lower than 2.8 percent growth in 12 months. Business equipment fell 0.9 percent in Aug 2012 but increased 0.8 percent in Sep, growing 10.9 percent in the 12 months ending in Sep and at the annual equivalent rate of 7.4 percent in the six months ending in Sep, which is substantially lower than 10.9 percent in 12 months. Capacity utilization of total industry is analyzed by the Fed in its report (http://www.federalreserve.gov/releases/g17/current/): “Capacity utilization for total industry moved up 0.3 percentage point to 78.3 percent, a rate 2.0 percentage points below its long-run (1972-2011) average.” United States industry is decelerating.
Table VA-1, US, Industrial Production and Capacity Utilization, SA, ∆%, %
| 2012 | Sep | Aug | Jul | Jun | May | Apr | Sep 12/ Sep 11 |
| Total | 0.4 | -1.4 | 0.7 | 0.0 | 0.1 | 0.8 | 2.8 |
| Market | |||||||
| Final Products | 0.3 | -1.3 | 0.6 | 0.3 | 0.5 | 0.8 | 2.9 |
| Consumer Goods | 0.0 | -1.5 | 0.8 | -0.3 | 0.7 | 0.7 | 0.1 |
| Business Equipment | 0.8 | -0.9 | 0.1 | 1.9 | 0.3 | 1.4 | 10.9 |
| Non | 0.7 | -0.9 | 0.0 | -0.2 | -0.3 | 0.9 | 1.9 |
| Construction | 1.3 | 0.1 | -0.4 | -0.7 | -1.6 | 0.8 | 4.7 |
| Materials | 0.4 | -1.6 | 0.9 | -0.1 | -0.2 | 0.9 | 3.0 |
| Industry Groups | |||||||
| Manufacturing | 0.2 | -0.9 | 0.3 | 0.4 | -0.6 | 0.7 | 3.2 |
| Mining | 0.9 | -1.6 | 1.0 | 0.3 | -0.2 | 0.6 | 3.8 |
| Utilities | 1.5 | -4.3 | 2.8 | -2.7 | 5.4 | 2.3 | -1.4 |
| Capacity | 78.3 | 78.0 | 79.2 | 78.8 | 78.9 | 79.0 | 1.4 |
Sources: Board of Governors of the Federal Reserve System http://www.federalreserve.gov/releases/g17/current/
Manufacturing increased 0.2 percent in Sep seasonally adjusted, increasing 3.2 percent not seasonally adjusted in 12 months, and increased 0.1 percent in the six months ending in Sep or at the annual equivalent rate of 0.2 percent. A longer perspective of manufacturing in the US is provided by Table VA-2. There has been evident deceleration of manufacturing growth in the US from 2010 and the first three months of 2011 as shown by 12 months rates of growth. Growth rates appeared to be increasing again closer to 5 percent but deteriorated. The rates of decline of manufacturing in 2009 are quite high with a drop of 18.4 percent in the 12 months ending in Apr 2009. Manufacturing recovered from this decline and led the recovery from the recession. Rates of growth appeared to be returning to the levels at 3 percent or higher in the annual rates before the recession but the pace of manufacturing fell in the past six months.
Table VA-2, US, Monthly and 12-Month Rates of Growth of Manufacturing ∆%
| Month SA ∆% | 12-Month NSA ∆% | |
| Sep 2012 | 0.2 | 3.2 |
| Aug | -0.9 | 3.7 |
| Jul | 0.3 | 4.3 |
| Jun | 0.4 | 5.2 |
| May | -0.6 | 5.1 |
| Apr | 0.7 | 5.7 |
| Mar | -0.7 | 4.3 |
| Feb | 0.9 | 5.9 |
| Jan | 1.1 | 4.9 |
| Dec 2011 | 1.5 | 4.4 |
| Nov | 0.0 | 4.0 |
| Oct | 0.5 | 4.3 |
| Sep | 0.4 | 4.0 |
| Aug | 0.2 | 3.4 |
| Jul | 0.8 | 3.2 |
| Jun | 0.1 | 3.1 |
| May | 0.2 | 2.9 |
| Apr | -0.6 | 4.1 |
| Mar | 0.7 | 6.0 |
| Feb | 0.3 | 6.3 |
| Jan | 0.4 | 6.3 |
| Dec 2010 | 1.0 | 6.6 |
| Nov | 0.2 | 5.5 |
| Oct | 0.1 | 6.6 |
| Sep | 0.2 | 6.7 |
| Aug | 0.0 | 7.1 |
| Jul | 0.8 | 7.3 |
| Jun | 0.0 | 9.0 |
| May | 1.4 | 8.3 |
| Apr | 1.0 | 6.5 |
| Mar | 1.1 | 4.2 |
| Feb | 0.2 | 0.6 |
| Jan | 0.9 | 0.5 |
| Dec 2009 | 0.1 | -3.7 |
| Nov | 0.9 | -6.6 |
| Oct | -0.1 | -9.4 |
| Sep | 0.7 | -10.7 |
| Aug | 1.0 | -13.7 |
| Jul | 1.2 | -15.3 |
| Jun | -0.3 | -17.8 |
| May | -1.2 | -17.8 |
| Apr | -0.8 | -18.4 |
| Mar | -2.1 | -17.5 |
| Feb | 0.0 | -16.3 |
| Jan | -2.9 | -16.6 |
| Dec 2008 | -3.3 | -14.1 |
| Nov | -2.3 | -11.4 |
| Oct | -0.7 | -9.1 |
| Sep | -3.4 | -8.8 |
| Aug | -1.4 | -5.3 |
| Jul | -1.1 | -3.8 |
| Jun | -0.6 | -3.2 |
| May | -0.6 | -2.5 |
| Apr | -1.1 | -1.3 |
| Mar | -0.4 | -0.7 |
| Feb | -0.4 | 0.8 |
| Jan | -0.4 | 2.1 |
| Dec 2007 | 0.3 | 1.9 |
| Nov | 0.4 | 3.2 |
| Oct | -0.5 | 2.7 |
| Sep | 0.5 | 2.9 |
| Aug | -0.5 | 2.6 |
| Jul | 0.2 | 3.4 |
| Jun | 0.3 | 2.9 |
| May | -0.2 | 3.1 |
| Apr | 0.8 | 3.6 |
| Mar | 0.6 | 2.5 |
| Feb | 0.6 | 1.7 |
| Jan | -0.5 | 1.4 |
| Dec 2006 | 2.8 | |
| Dec 2005 | 3.4 | |
| Dec 2004 | 4.0 | |
| Dec 2003 | 1.8 | |
| Dec 2002 | 2.3 | |
| Dec 2001 | -5.5 | |
| Dec 2000 | 0.4 | |
| Dec 1999 | 5.4 | |
| Average ∆% Dec 1986-Dec 2011 | 2.3 | |
| Average ∆% Dec 1986-Dec 1999 | 4.3 | |
| Average ∆% Dec 1999-Dec 2006 | 1.3 | |
| Average ∆% Dec 1999-Dec 2011 | 0.2 |
Source: Board of Governors of the Federal Reserve System http://www.federalreserve.gov/releases/g17/current/
Chart VA-1 of the Board of Governors of the Federal Reserve System provides industrial production, manufacturing and capacity since the 1970s. There was acceleration of growth of industrial production, manufacturing and capacity in the 1990s because of rapid growth of productivity in the US (Cobet and Wilson (2002); see Pelaez and Pelaez, The Global Recession Risk (2007), 135-44). The slopes of the curves flatten in the 2000s. Production and capacity have not recovered to the levels before the global recession.
Chart VA-1, US, Industrial Production, Capacity and Utilization
Source: Board of Governors of the Federal Reserve System
http://www.federalreserve.gov/releases/g17/current/ipg1.gif
The modern industrial revolution of Jensen (1993) is captured in Chart VA-2 of the Board of Governors of the Federal Reserve System (for the literature on M&A and corporate control see Pelaez and Pelaez, Regulation of Banks and Finance (2009a), 143-56, Globalization and the State, Vol. I (2008a), 49-59, Government Intervention in Globalization (2008c), 46-49). The slope of the curve of total industrial production accelerates in the 1990s to a much higher rate of growth than the curve excluding high-technology industries. Growth rates decelerate into the 2000s and output and capacity utilization have not recovered fully from the strong impact of the global recession. Growth in the current cyclical expansion has been more subdued than in the prior comparably deep contractions in the 1970s and 1980s. Chart VA-2 shows that the past recessions after World War II are the relevant ones for comparison with the recession after 2007 instead of common comparisons with the Great Depression (http://cmpassocregulationblog.blogspot.com/2012/09/historically-sharper-recoveries-from.html). The bottom left-hand part of Chart VA-2 shows the strong growth of output of communication equipment, computers and semiconductor that continued from the 1990s into the 2000s. Output of semiconductors has already surpassed the level before the global recession.
Chart VA-2, US, Industrial Production, Capacity and Utilization of High Technology Industries
Source: Board of Governors of the Federal Reserve System
http://www.federalreserve.gov/releases/g17/current/ipg3.gif
Additional detail on industrial production and capacity utilization is provided in Chart VA-3 of the Board of Governors of the Federal Reserve System. Production of consumer durable goods fell sharply during the global recession by more than 30 percent and is still around 5 percent below the level before the contraction. Output of nondurable consumer goods fell around 10 percent and is some 5 percent below the level before the contraction. Output of business equipment fell sharply during the contraction of 2001 but began rapid growth again after 2004. An important characteristic is rapid growth of output of business equipment in the cyclical expansion after sharp contraction in the global recession. Output of defense and space only suffered reduction in the rate of growth during the global recession and surged ahead of the level before the contraction. Output of construction supplies collapsed during the global recession and is well below the level before the contraction. Output of energy materials was stagnant before the contraction but has recovered sharply above the level before the contraction.
Chart VA-3, US, Industrial Production and Capacity Utilization
Source: Board of Governors of the Federal Reserve System
http://www.federalreserve.gov/releases/g17/current/ipg2.gif
United States manufacturing output from 1919 to 2012 on a monthly basis is provided by Chart VA-4 of the Board of Governors of the Federal Reserve System. The second industrial revolution of Jensen (1993) is quite evident in the acceleration of the rate of growth of output given by the sharper slope in the 1980s and 1990s. Growth was robust after the shallow recession of 2001 but dropped sharply during the global recession after IVQ2007. Manufacturing output recovered sharply but has not reached earlier levels and is stagnating at the margin.
Chart VA-4, US, Manufacturing Output, 1919-2012
Source: Board of Governors of the Federal Reserve System
http://www.federalreserve.gov/releases/g17/current/
Manufacturing jobs fell by 16,000 in Sep 2012 relative to Aug 2012, seasonally adjusted, and fell 40,000 in Sep 2012 relative to Aug 2012, not seasonally adjusted, as shown in Table I-10 in the text at http://cmpassocregulationblog.blogspot.com/2012/10/twenty-nine-million-unemployed-or.html, because of the weaker economy and international trade. In the six months ending in Sep 2012, United States national industrial production accumulated growth of 0.6 percent at the annual equivalent rate of 1.2 percent, which is substantially lower than 2.8 percent growth in 12 months. Capacity utilization for total industry in the United States is 2.0 percentage points lower than the long-run average from 1972 to 2011. Manufacturing increased 0.1 percent in the six months ending in Sep or at the annual equivalent rate of 0.2 percent. Table VA-3 provides national income by industry without capital consumption adjustment (WCCA). “Private industries” or economic activities have share of 86.5 percent in US national income in IQ2012 and 86.3 percent in IIQ2012. Most of US national income is in the form of services. In Sep 2012, there were 133.797 million nonfarm jobs NSA in the US, according to estimates of the establishment survey of the Bureau of Labor Statistics (BLS) (http://www.bls.gov/news.release/empsit.nr0.htm Table B-1). Total private jobs of 111.989 million NSA in Sep 2012 accounted for 83.7 percent of total nonfarm jobs of 133.797 million, of which 12.028 million, or 10.7 percent of total private jobs and 9.0 percent of total nonfarm jobs, were in manufacturing. Private service-producing jobs were 93.334 million NSA in Sep 2012, or 69.8 percent of total nonfarm jobs and 83.3 percent of total private-sector jobs. Manufacturing has share of 11.0 percent in US national income in IIQ2012, as shown in Table VA-3. Most income in the US originates in services. Subsidies and similar measures designed to increase artificially and temporarily manufacturing jobs will not increase economic growth and employment and may actually reduce growth by diverting resources away from currently employment-creating activities because of the drain of taxation.
Table VA-3, US, National Income without Capital Consumption Adjustment by Industry, Seasonally Adjusted Annual Rates, Billions of Dollars, % of Total
| SAAR IQ2012 | % Total | SAAR | % Total | |
| National Income WCCA | 13,788.3 | 100.0 | 13,867.8 | 100.0 |
| Domestic Industries | 13,573.4 | 98.4 | 13,620.5 | 98.2 |
| Private Industries | 11,922.7 | 86.5 | 11,967.5 | 86.3 |
| Agriculture | 134.0 | 1.0 | 132.8 | 0.9 |
| Mining | 211.0 | 1.5 | 208.7 | 1.5 |
| Utilities | 211.9 | 1.5 | 214.7 | 1.6 |
| Construction | 585.6 | 4.3 | 585.8 | 4.2 |
| Manufacturing | 1521.9 | 11.0 | 1530.4 | 11.0 |
| Durable Goods | 865.2 | 6.3 | 877.3 | 6.3 |
| Nondurable Goods | 656.6 | 4.8 | 653.1 | 4.7 |
| Wholesale Trade | 831.6 | 6.0 | 852.8 | 6.2 |
| Retail Trade | 947.5 | 6.9 | 947.2 | 6.8 |
| Transportation & WH | 416.5 | 3.0 | 417.7 | 3.0 |
| Information | 486.7 | 3.5 | 497.0 | 3.6 |
| Finance, insurance, RE | 2301.3 | 16.7 | 2271.1 | 16.4 |
| Professional, BS | 1955.0 | 14.2 | 1983.5 | 14.3 |
| Education, Health Care | 1380.8 | 10.0 | 1832.7 | 13.2 |
| Arts, Entertainment | 541.1 | 3.9 | 542.7 | 3.9 |
| Other Services | 397.9 | 2.9 | 400.3 | 2.9 |
| Government | 1650.7 | 12.0 | 1653.0 | 11.9 |
| Rest of the World | 214.9 | 1.6 | 247.3 | 1.8 |
Notes: SSAR: Seasonally-Adjusted Annual Rate; WCCA: Without Capital Consumption Adjustment by Industry; WH: Warehousing; RE, includes rental and leasing: Real Estate; Art, Entertainment includes recreation, accommodation and food services; BS: business services
Source: US Bureau of Economic Analysis http://www.bea.gov/iTable/index_nipa.cfm
Chart VA-5 of the Board of Governors of the Federal Reserve provides output of motor vehicles and parts in the United States from 1972 to 2012. Output has stagnated since the late 1990s.
Chart VA-5, US, Motor Vehicles and Parts Output, 1972-2012
http://www.federalreserve.gov/releases/g17/current/
Motor vehicle sales and production in the US have been in long-term structural change. Table VA-4 provides the data on new motor vehicle sales and domestic car production in the US from 1990 to 2010. New motor vehicle sales grew from 14,137 thousand in 1990 to the peak of 17,806 thousand in 2000 or 29.5 percent. In that same period, domestic car production fell from 6,231 thousand in 1990 to 5,542 thousand in 2000 or -11.1 percent. New motor vehicle sales fell from 17,445 thousand in 2005 to 11,772 in 2010 or 32.5 percent while domestic car production fell from 4,321 thousand in 2005 to 2,840 thousand in 2010 or 34.3 percent. In Jan-Sep 2012, light vehicle sales accumulated to 10,899,949, which is higher by 14.5 percent relative to 9,518,172 a year earlier (http://motorintelligence.com/m_frameset.html). The seasonally-adjusted annual rate of light vehicle sales in the US reached 14.94 million in Sep 2012, higher than 14.52 million in Aug 2012 and higher than 13.14 million in Sep 2011 (http://motorintelligence.com/m_frameset.html).
Table VA-4, US, New Motor Vehicle Sales and Car Production, Thousand Units
| New Motor Vehicle Sales | New Car Sales and Leases | New Truck Sales and Leases | Domestic Car Production | |
| 1990 | 14,137 | 9,300 | 4,837 | 6,231 |
| 1991 | 12,725 | 8,589 | 4,136 | 5,454 |
| 1992 | 13,093 | 8,215 | 4,878 | 5,979 |
| 1993 | 14,172 | 8,518 | 5,654 | 5,979 |
| 1994 | 15,397 | 8,990 | 6,407 | 6,614 |
| 1995 | 15,106 | 8,536 | 6,470 | 6,340 |
| 1996 | 15,449 | 8,527 | 6,922 | 6,081 |
| 1997 | 15,490 | 8,273 | 7,218 | 5,934 |
| 1998 | 15,958 | 8,142 | 7,816 | 5,554 |
| 1999 | 17,401 | 8,697 | 8,704 | 5,638 |
| 2000 | 17,806 | 8,852 | 8,954 | 5,542 |
| 2001 | 17,468 | 8,422 | 9,046 | 4,878 |
| 2002 | 17,144 | 8,109 | 9,036 | 5,019 |
| 2003 | 16,968 | 7,611 | 9,357 | 4,510 |
| 2004 | 17,298 | 7,545 | 9,753 | 4,230 |
| 2005 | 17,445 | 7,720 | 9,725 | 4,321 |
| 2006 | 17,049 | 7,821 | 9,228 | 4,367 |
| 2007 | 16,460 | 7,618 | 8,683 | 3,924 |
| 2008 | 13,494 | 6,814 | 6.680 | 3,777 |
| 2009 | 10,601 | 5,456 | 5,154 | 2,247 |
| 2010 | 11,772 | 5,729 | 6,044 | 2,840 |
Source: US Census Bureau http://www.census.gov/compendia/statab/cats/wholesale_retail_trade/motor_vehicle_sales.html
Chart VA-6 of the Board of Governors of the Federal Reserve System provides output of computers and electronic products in the United States from 1972 to 2012. Output accelerated sharply in the 1990s and 2000s and has surpassed the level before the global recession beginning in IVQ2007.
Chart VA-6, US, Output of Computers and Electronic Products, 1972-2012
http://www.federalreserve.gov/releases/g17/current/
Chart VA-7 of the Board of Governors of the Federal Reserve System. Output accelerated in the 1980s and 1990s with slower growth in the 2000s perhaps because processes matured. Growth was robust after the major drop during the global recession but appears to vacillate in the final segment.
Chart VA-7, US, Output of Durable Manufacturing, 1972-2012
http://www.federalreserve.gov/releases/g17/current/
Chart VA-8 of the Board of Governors of the Federal Reserve System provides output of aerospace and miscellaneous transportation equipment from 1972 to 2012. There is long-term upward trend with oscillations around the trend and cycles of large amplitude.
Chart VA-8, US, Output of Aerospace and Miscellaneous Transportation Equipment, 1972-2012
http://www.federalreserve.gov/releases/g17/current/
In the six months ending in Aug, United States national industrial production accumulated increase of 0.6 percent at the annual equivalent rate of 1.2 percent, which is substantially lower than 2.8 percent growth in 12 months. Capacity utilization for total industry in the United States is 2.0 percentage points lower than the long-run average from 1972 to 2011. Manufacturing increased 0.1 percent the six months ending in Sep or at the annual equivalent rate of 0.2 percent The index of general business conditions of the Federal Reserve Bank of New York Empire State Manufacturing Survey has fluctuated with further decline to contraction territory at minus 10.41 in Sep 2012 but improvement to minus 6.16 in Oct 2012, which is in contraction territory, as shown in Table VA-5. The index had been registering negative changes in the five months from Jun to Oct 2011. The new orders segment fell to minus 5.50 in Aug 2012, indicating mild contraction, and to minus 14.03 in Sep 2012, indicating faster contraction, improving to minus 8.97 in Oct 2012, which is still in contraction territory. There is declining reading in shipments decreasing to 4.09 in Aug 2012 with decline at minus 6.4 in Oct 2012. The segment of number of employees eased to 16.47 in Aug 2012 and dropped to 4.26 in Sep 2012, falling in contraction territory at minus 1.08 in Oct 2012. Number of weekly hours worked fell to neutral at zero in Jul 2012 and increased marginally to 3.53 in Aug but fell to minus 1.06 in Sep and minus 4.30 in Oct 2012, indicating contraction. Expectations for the next six months of the general business conditions index peaked at 54.87 in Jan 2012, declining to 19.42 in Oct 2012. Expectations of new orders also peaked at 53.85 in Jan 2012, declining to 2.35 in Aug 2012 but rebounding to 11.83 in Oct 2012. There is a similar pattern of strong recovery in shipments with decline to 8.24 in Aug 2012 and rebound to 12.77 in Sep 2012 and 11.83 in Oct 2012. Number of employees fell sharply to 3.53 in Aug 2012 and rebounded to 8.51 in Sep 2012 but was neutral at 0.00 in Oct 2012. Hours worked collapsed to minus 8.24 in Aug, indicating expected contraction, rebounded to 2.13 in Sep 2012, indicating moderate expansion, and fell to minus 11.83 in Oct 2012, indicating sharper contraction.
Table VA-5, US, New York Federal Reserve Bank Empire State Manufacturing Survey Index SA
| General | New Orders | Shipments | # Workers | Average Work-week | |
| Current | |||||
| Oct 2012 | -6.16 | -8.97 | -6.4 | -1.08 | -4.30 |
| Sep | -10.41 | -14.03 | 2.75 | 4.26 | -1.06 |
| Aug | -5.85 | -5.50 | 4.09 | 16.47 | 3.53 |
| Jul | 7.39 | -2.69 | 10.28 | 18.52 | 0.00 |
| Jun | 2.29 | 2.18 | 4.81 | 12.37 | 3.09 |
| May | 17.09 | 8.32 | 24.14 | 20.48 | 12.05 |
| Apr | 6.56 | 6.48 | 6.41 | 19.28 | 6.02 |
| Mar | 20.21 | 6.84 | 18.21 | 13.58 | 18.52 |
| Feb | 19.53 | 9.73 | 22.79 | 11.76 | 7.06 |
| Jan | 13.48 | 13.70 | 21.69 | 12.09 | 6.59 |
| Dec 2011 | 8.19 | 5.99 | 20.06 | 2.33 | -2.33 |
| Nov | 0.80 | -0.82 | 11.70 | -3.66 | 2.44 |
| Oct | -7.22 | -0.26 | 2.89 | 3.37 | -4.49 |
| Sep | -7.43 | -7.52 | -8.28 | -5.43 | -2.17 |
| Six Months | |||||
| Oct 2012 | 19.42 | 15.05 | 11.83 | 0.00 | -11.83 |
| Sep | 27.22 | 17.02 | 12.77 | 8.51 | 2.13 |
| Aug | 15.20 | 2.35 | 8.24 | 3.53 | -8.24 |
| Jul | 20.20 | 13.58 | 14.81 | 6.17 | -4.94 |
| Jun | 23.13 | 15.46 | 12.37 | 16.49 | 2.06 |
| May | 29.26 | 30.12 | 25.30 | 12.05 | 8.43 |
| Apr | 43.12 | 45.78 | 44.58 | 27.71 | 10.84 |
| Mar | 47.50 | 41.98 | 43.21 | 32.10 | 20.99 |
| Feb | 50.38 | 44.71 | 49.41 | 29.41 | 18.82 |
| Jan | 54.87 | 53.85 | 52.75 | 28.57 | 17.58 |
| Dec 2011 | 45.61 | 54.65 | 51.16 | 24.42 | 22.09 |
| Nov | 32.06 | 35.37 | 36.59 | 14.63 | 8.54 |
| Oct | 13.99 | 12.36 | 17.98 | 6.74 | -2.25 |
| Sep | 22.93 | 13.04 | 13.04 | 0.00 | -6.52 |
Source: http://www.newyorkfed.org/survey/empire/empiresurvey_overview.html
The Philadelphia Business Outlook Survey in Table VA-6 provides an optimistic reading in Oct 2011 with the movement to 10.8 away from the contraction zone of minus 12.7 in Sep and recovered to 12.5 in Mar 2012 from the decline to 3.1 in Nov but then fell to 8.5 in Apr and back to contraction territory at minus 5.8 in May and even sharper contraction at minus 16.6 in Jun, easing to minus 12.9 in Jul 2012 with contraction at minus 7.1 in Aug and milder contraction of 1.9 in Sep 2012. The index returned to growth territory at 5.7 in Oct 2012. New orders were signaling increasing future activity, rising from contraction at minus 5.5 in Sep 2011 to positive reading but registered only 3.3 in Mar 2012 and fell further to 2.7 in Apr and into contraction reading at minus 1.2 in May and sharp contraction at 18.8 in Jun, with milder contraction at minus 5.5 in Aug 2012 and moderate expansion at 1.0 in Sep 2012 but then fell to minus 0.6 in Oct. There is similar behavior in shipments as in new orders but with sharp contraction in Sep 2012 and mild contraction of minus 0.2 in Oct 2012. Employment or number of employees fell to contraction at minus 8.6 in Aug 2012, minus 7.3 in Sep 2012 and minus 10.7 in Oct 2012. The average work week also fell to sharp contraction at minus 19.1 in Jun 2012 and minus 14.6 in Aug 2012, remaining in contraction territory at minus 7.3 in Sep 2012 and minus 7.6 in Oct 2012. Most indexes of expectations for the next six months are showing sharp increases but interruptions from May to Aug 2012 for the general index that rebounded to 41.2 in Sep 2012 but fell to 21.6 in Oct 2012. Employment increased from Jan to Apr 2012, deteriorating in May and further deterioration in Aug but improvement in Sep with decline in Oct while the average work week weakened in Apr and contracted at minus 1.1 in May and minus 0.8 in Jun but recovery at 14.5 in Jul, declining to 4.8 in Aug and improving to 14.6 in Sep and 11.1 in Oct. With most US workers on hourly remuneration, contraction of the workweek means reduction of labor income, which can affect consumption. Personal consumption expenditures have share of 71.0 percent of GDP in IIQ2012 (see Table I-10 at http://cmpassocregulationblog.blogspot.com/2012/09/historically-sharper-recoveries-from.html).
Table VA-6, FRB of Philadelphia Business Outlook Survey Diffusion Index SA
| General | New Orders | Ship-ments | # Workers | Average Work-week | |
| Current | |||||
| Oct 12 | 5.7 | -0.6 | -0.2 | -10.7 | -7.6 |
| Sep 12 | -1.9 | 1.0 | -21.2 | -7.3 | -7.3 |
| Aug | -7.1 | -5.5 | -11.3 | -8.6 | -14.6 |
| Jul | -12.9 | -6.9 | -8.6 | -8.4 | -17.3 |
| Jun | -16.6 | -18.8 | -16.6 | 1.8 | -19.1 |
| May | -5.8 | -1.2 | 3.5 | -1.3 | -5.4 |
| Apr | 8.5 | 2.7 | 2.8 | 17.9 | -2.3 |
| Mar | 12.5 | 3.3 | 3.5 | 6.8 | 2.7 |
| Feb | 10.2 | 11.7 | 15.0 | 1.1 | 10.1 |
| Jan | 7.3 | 6.9 | 5.7 | 11.6 | 5.0 |
| Dec 11 | 6.8 | 10.7 | 9.1 | 11.5 | 2.8 |
| Nov | 3.1 | 3.5 | 6.0 | 10.6 | 7.1 |
| Oct | 10.8 | 8.5 | 13.6 | 5.0 | 4.2 |
| Sep | -12.7 | -5.5 | -16.6 | 7.3 | -6.2 |
| Aug | -22.7 | -22.2 | -8.9 | -0.9 | -11.2 |
| Jul | 6.2 | 0.5 | 8.2 | 9.5 | -3.9 |
| Future | |||||
| Oct 12 | 21.6 | 21.2 | 20.6 | 8.0 | 11.1 |
| Sep | 41.2 | 49.4 | 42.9 | 21.4 | 14.6 |
| Aug | 12.5 | 18.5 | 11.7 | 10.8 | 4.8 |
| Jul | 19.3 | 26.1 | 19.0 | 11.3 | 14.5 |
| Jun | 19.5 | 38.2 | 38.0 | 18.7 | -0.8 |
| May | 15.0 | 26.3 | 20.8 | 10.6 | -1.1 |
| Apr | 33.8 | 35.4 | 31.0 | 27.8 | 7.5 |
| Mar | 32.9 | 36.4 | 31.3 | 21.8 | 11.2 |
| Feb | 33.3 | 32.5 | 29.0 | 22.5 | 10.8 |
| Jan | 49.0 | 49.7 | 48.2 | 19.1 | 9.2 |
| Dec 11 | 40.0 | 44.1 | 36.4 | 10.8 | 4.5 |
| Nov | 37.7 | 36.9 | 35.5 | 25.2 | 4.0 |
| Oct | 28.8 | 28.1 | 29.0 | 15.5 | 8.4 |
| Sep | 25.2 | 24.6 | 27.1 | 14.0 | 6.8 |
| Aug | 6.3 | 20.6 | 18.4 | 11.2 | -0.7 |
| Jul | 25.8 | 31.2 | 26.1 | 12.9 | 6.6 |
Source: Federal Reserve Bank of Philadelphia
http://www.philadelphiafed.org/index.cfm
Chart VA-1 of the Federal Reserve Bank of Philadelphia is very useful, providing current and future general activity indexes from Jan 1995 to Jun 2012. The shaded areas are the recession cycle dates of the National Bureau of Economic Research (NBER) (http://www.nber.org/cycles.html). The Philadelphia Fed index dropped during the initial period of recession and then led the recovery, as industry overall. There was a second decline of the index into 2011 followed now by what hopefully appeared as renewed strength from late 2011 into Jan 2012 but marginal weakness in Feb 2012 with stability in Mar and Apr followed by sharp decline in May and Jun with marginal recovery in Jul and further drop in Aug with recovery in Sep and Aug into positive territory.
Chart VA-9, Federal Reserve Bank of Philadelphia Business Outlook Survey, Current and Future Activity Indexes
Source: Federal Reserve Bank of Philadelphia
http://www.philadelphiafed.org/index.cfm
Chart VA-2 of the Federal Reserve Bank of Philadelphia provides the index of new orders of the Business Outlook Survey. Strong growth in the beginning of 2011 was followed by a bump after Mar that lasted until Oct 2011. The strength of the first quarter of 2011 has not been recovered with weakness in Apr-Aug 2012 moving into contraction territory with marginal improvement.
Chart VA-10, Federal Reserve Bank of Philadelphia Current New Orders Diffusion Index
Source: Federal Reserve Bank of Philadelphia
http://www.philadelphiafed.org/index.cfm
Growth rates and levels of sales in millions of dollars of manufacturers, retailers and merchant wholesalers are provided in Table VA-7. Total business sales increased 0.5 percent in Aug after increasing 0.9 percent in Jul and increased 3.2 percent in the 12 months ending in Aug. Sales of manufacturers decreased 0.3 percent in Aug after increasing 1.9 percent in Jul and increased 2.5 percent in the 12 months ending in Aug. Retailers’ sales increased 1.3 percent in Aug and 0.8 percent in Jul and increased 5.7 percent in 12 months ending in Aug. Sales of merchant wholesalers increased 0.9 percent in Aug, falling 0.2 percent in Jul and increased 1.8 percent in 12 months ending in Aug. These data are not adjusted for price changes such that they reflect increases in both quantities and prices.
Table VA-7, US, Percentage Changes for Sales of Manufacturers, Retailers and Merchant Wholesalers
| Aug 12/ Jul 12 | Aug 2012 | Jul 12/ Jun 12 ∆% SA | Aug 12/ Aug 11 | |
| Total Business | 0.5 | 1,298,685 | 0.9 | 3.2 |
| Manufacturers | -0.3 | 497,047 | 1.9 | 2.5 |
| Retailers | 1.3 | 377,092 | 0.8 | 5.7 |
| Merchant Wholesalers | 0.9 | 424,546 | -0.2 | 1.8 |
Source: US Census Bureau http://www.census.gov/mtis/
Chart VA-11 of the US Census Bureau provides total US sales of manufacturing, retailers and wholesalers seasonally adjusted (SA) in millions of dollars. Seasonal adjustment softens adjacent changes for purposes of comparing short-term variations free of seasonal factors. There was sharp drop in the global recession followed by sharp recovery with decline and partial recovery in the final segment. Data are not adjusted for price changes.
Chart VA-11, US, Total Business Sales of Manufacturers, Retailers and Merchant Wholesalers, SA, Millions of Dollars, Jan 1992-Aug 2012
US Census Bureau http://www.census.gov/mtis/
Chart VA-12 of the US Census Bureau provides total US sales of manufacturing, retailers and wholesalers not seasonally adjusted (NSA) in millions of dollars. The series without adjustment shows sharp jagged behavior because of monthly fluctuations following seasonal patterns. There is sharp recovery from the global recession in a robust trend, which is mixture of price and quantity effects because data are not adjusted for price changes. There is decline in the final segment.
Chart VA-12, US, Total Business Sales of Manufacturers, Retailers and Merchant Wholesalers, NSA, Millions of Dollars, Jan 1992-Aug 2012
US Census Bureau http://www.census.gov/mtis/
Businesses added cautiously to inventories to replenish stocks. Retailers added 0.6 percent to inventories in Aug 2012 and 1.1 percent in Jul with growth of 7.8 percent in 12 months, as shown in Table VA-8. Total business increased inventories by 0.6 percent in Aug, 0.6 percent in Jul and 5.2 percent in 12 months. Inventories sales/ratios of total business continued at a level close to 1.28 under judicious management to avoid costs and risks. Inventory/sales ratios of manufacturers and retailers are higher than for merchant wholesalers. There is stability in inventory/sales ratios in individual months and relative to a year earlier.
Table VA-8, US, Percentage Changes for Inventories of Manufacturers, Retailers and Merchant Wholesalers and Inventory/Sales Ratios
| Inventory Change | Aug 12 | Aug12/ Jul 12 ∆% SA | Jul 12/ Jun 12 ∆% SA | Aug 12/ Aug 11 ∆% NSA |
| Total Business | 1,298,685 | 0.6 | 0.8 | 5.2 |
| Manufacturers | 497,047 | 0.6 | 0.6 | 3.2 |
| Retailers | 377,092 | 0.6 | 1.1 | 7.8 |
| Merchant | 424,546 | 0.5 | 0.6 | 5.3 |
| Inventory/ | Aug 12 | Aug 2012 SA | Jul 2012 SA | Jun 2011 SA |
| Total Business | 1,298,685 | 1.28 | 1.28 | 1.26 |
| Manufacturers | 497,047 | 1.28 | 1.27 | 1.27 |
| Retailers | 377,092 | 1.38 | 1.39 | 1.34 |
| Merchant Wholesalers | 424,546 | 1.20 | 1.21 | 1.17 |
Source: US Census Bureau http://www.census.gov/mtis/
Chart VA-13 of the US Census Bureau provides total business inventories of manufacturers, retailers and merchant wholesalers seasonally adjusted (SA) in millions of dollars from Jan 1992 to Aug 2012. The impact of the two recessions of 2001 and IVQ2007 to IIQ2009 is evident in the form of sharp reductions in inventories. Data are not adjusted for price changes.
Chart VA-13, US, Total Business Inventories of Manufacturers, Retailers and Merchant Wholesalers, SA, Millions of Dollars, Jan 1992-Aug 2012
US Census Bureau http://www.census.gov/mtis/
Chart VA-14 provides total business inventories of manufacturers, retailers and merchant wholesalers not seasonally adjusted (NSA) from Jan 1992 to Aug 2012 in millions of dollars. The recessions of 2001 and IVQ2007 to IIQ2009 are evident in the form of sharp reductions of inventories. There is sharp upward trend of inventory accumulation after both recessions.
Chart VA-14, US, Total Business Inventories of Manufacturers, Retailers and Merchant Wholesalers, NSA, Millions of Dollars, Jan 1992-Aug 2012
US Census Bureau http://www.census.gov/mtis/
Inventories follow business cycles. When recession hits sales inventories pile up, declining with expansion of the economy. In a fascinating classic opus, Lloyd Meltzer (1941, 129) concludes:
“The dynamic sequences (I) through (6) were intended to show what types of behavior are possible for a system containing a sales output lag. The following conclusions seem to be the most important:
(i) An economy in which business men attempt to recoup inventory losses will always undergo cyclical fluctuations when equilibrium is disturbed, provided the economy is stable.
This is the pure inventory cycle.
(2) The assumption of stability imposes severe limitations upon the possible size of the marginal propensity to consume, particularly if the coefficient of expectation is positive.
(3) The inventory accelerator is a more powerful de-stabilizer than the ordinary acceleration principle. The difference in stability conditions is due to the fact that the former allows for replacement demand whereas the usual analytical formulation of the latter does not. Thus, for inventories, replacement demand acts as a de-stabilizer. Whether it does so for all types of capital goods is a moot question, but I believe cases may occur in which it does not.
(4) Investment for inventory purposes cannot alter the equilibrium of income, which depends only upon the propensity to consume and the amount of non-induced investment.
(5) The apparent instability of a system containing both an accelerator and a coefficient of expectation makes further investigation of possible stabilizers highly desirable.”
Chart VA-15 shows the increase in the inventory/sales ratios during the recessions of 2001 and 2007-2009. The inventory/sales ratio fell during the expansions. The inventory/sales ratio declined to a trough in 2011, climbed and then stabilized at current levels in 2012.
Chart VA-15, Total Business Inventories/Sales Ratios 2002 to 2011
Source: US Census Bureau
http://www2.census.gov/retail/releases/historical/mtis/img/mtisbrf.gif
Sales of retail and food services increased 1.1 percent in Sep after increasing 1.2 percent in Aug seasonally adjusted (SA), growing 5.6 percent in Jan-Sep 2012 relative to Jan-Sep 2011 not seasonally adjusted (NSA), as shown in Table VA-9. Excluding motor vehicles and parts, retail sales increased 1.1 percent in Sep 2012, increasing 1.1 percent in Aug 2012 SA and increasing 5.0 percent NSA in Jan-Sep 2012 relative to a year earlier. Sales of motor vehicles and parts increased 1.3 percent in Sep 2012 after increasing 1.8 percent in Aug SA and increasing 8.1 percent NSA in Jan-Sep 2012 relative to a year earlier. Gasoline station sales increased 2.5 percent SA in Sep 2012 after increasing 6.1 percent in Aug 2012 in increasing prices of gasoline, increasing 3.9 percent in Jan-Sep 2012 relative to a year earlier.
Table VA-9, US, Percentage Change in Monthly Sales for Retail and Food Services, ∆%
| Sep/ Aug ∆% SA | Aug/Jul ∆% SA | Jan-Sep 2012 Million Dollars NSA | Jan-Sep 2012 from Jan-Sep 2011 ∆% NSA | |
| Retail and Food Services | 1.1 | 1.2 | 3,599,536 | 5.6 |
| Excluding Motor Vehicles and Parts | 1.1 | 1.0 | 2,926,180 | 5.0 |
| Motor Vehicles & Parts | 1.3 | 1.8 | 673,356 | 8.1 |
| Retail | 1.2 | 1.3 | 3,202,841 | 5.3 |
| Building Materials | 1.1 | 1.9 | 221,733 | 5.8 |
| Food and Beverage | 1.2 | -0.2 | 470,601 | 3.6 |
| Grocery | 1.0 | -0.2 | 423,313 | 3.3 |
| Health & Personal Care Stores | 0.4 | -0.1 | 204,750 | 1.5 |
| Clothing & Clothing Accessories Stores | 0.6 | 0.3 | 166,619 | 6.1 |
| Gasoline Stations | 2.5 | 6.1 | 412,852 | 3.9 |
| General Merchandise Stores | 0.3 | -0.3 | 452,301 | 1.5 |
| Food Services & Drinking Places | 0.4 | 0.2 | 396,695 | 7.7 |
Source: US Census Bureau
Chart VA-37 of the US Bureau of the Census shows percentage change of retail and food services sales. Auto sales have been increasing strongly monthly, and particularly relative to a year earlier, but with weakness in the total excluding auto sales and declines or mild growth in general merchandise.
Chart VA-16, US, Percentage Change of Retail and Food Services Sales
Source: US Census Bureau
Chart VA-17 of the US Census Bureau provides total sales of retail trade and food services seasonally adjusted (SA) from Jan 1992 to Sep 2012 in millions of dollars. The impact on sales of the shallow recession of 2001 was much milder than the sharp contraction in the global recession from IVQ2007 to IIQ2009. There is flattening in the final segment of the series. Data are not adjusted for price changes.
http://www2.census.gov/retail/releases/historical/marts/img/martsbrf.gif
Chart VA-17, US, Total Sales of Retail Trade and Food Services, SA, Jan 1992-Sep 2012, Millions of Dollars
Source: US Census Bureau
Chart VA-18 of the US Census Bureau provides total sales of retail trade and food services not seasonally adjusted (NSA) in millions of dollars from Jan 1992 to Sep 2012. Data are not adjusted for seasonality, which explains sharp jagged behavior, or price changes. There was contraction during the global recession from IVQ2007 to IIQ2009 with strong rebound to a higher level.
Chart VA-18, US, Total Sales of Retail Trade and Food Services, NSA, Jan 1992-Sep 2012, Millions of Dollars
Source: US Census Bureau
Twelve-month rates of growth of US sales of retail and food services in Sep from 2000 to 2012 are shown in Table VA-10. Nominal sales have been dynamic in 2012, 2011 and 2010 after decline of 0.8 percent in 2008 and increase of 0.3 percent in 2009 with decline of 1.4 percent in 2010. It is difficult to separate price and quantity effects in these nominal data.
Table VA-10, US, Percentage Change in 12-Month Sales for Retail and Food Services, ∆% NSA
| Aug | 12 Months ∆% |
| 2012 | 3.0 |
| 2011 | 9.0 |
| 2010 | -1.4 |
| 2009 | 0.3 |
| 2008 | -0.8 |
| 2007 | 2.3 |
| 2006 | 3.9 |
| 2005 | 6.3 |
| 2004 | 6.7 |
| 2003 | 7.6 |
| 2002 | 4.3 |
| 2001 | -2.7 |
| 2000 | 6.0 |
Source: US Census Bureau http://www.census.gov/retail/
Seasonally-adjusted annual rates (SAAR) of housing starts and permits are shown in Table VA-11. Housing starts increased 15.0 percent in Sep 2012 after increasing 4.1 percent in Aug 2012. Housing permits, indicating future activity, increased 11.6 percent in Sep 2012 but decreased 1.2 percent in Aug 2012 after increasing 6.7 percent in Jul. Monthly rates in starts and permits fluctuate significantly as shown in Table VA-11.
Table VA-11, US, Housing Starts and Permits SSAR Month ∆%
| Housing | Month ∆% | Housing | Month ∆% | |
| Sep 2012 | 872 | 15.0 | 894 | 11.6 |
| Aug | 758 | 4.1 | 801 | -1.2 |
| Jul | 728 | -3.4 | 811 | 6.7 |
| Jun | 754 | 6.8 | 760 | -3.1 |
| May | 706 | -5.5 | 784 | 8.4 |
| Apr | 747 | 5.8 | 723 | -6.0 |
| Mar | 706 | -1.7 | 769 | 8.8 |
| Feb | 718 | -0.3 | 707 | 3.4 |
| Jan | 720 | 3.3 | 684 | -2.4 |
| Dec 2011 | 697 | -1.6 | 701 | -1.1 |
| Nov | 708 | 12.4 | 709 | 6.3 |
| Oct | 630 | -2.6 | 667 | 8.3 |
| Sep | 647 | 11.4 | 616 | -4.5 |
| Aug | 581 | -5.4 | 645 | 2.9 |
| Jul | 614 | -0.2 | 627 | -0.9 |
| Jun | 615 | 11.6 | 633 | 1.4 |
| May | 551 | -0.2 | 624 | 7.9 |
| Apr | 552 | -8.0 | 578 | -2.0 |
| Mar | 600 | 15.8 | 590 | 10.1 |
| Feb | 518 | -18.0 | 536 | -5.3 |
| Jan | 632 | 17.3 | 566 | -10.4 |
| Dec 2010 | 539 | -1.1 | 632 | 12.9 |
| Nov | 545 | 0.4 | 560 | 0.4 |
| Oct | 543 | -8.6 | 558 | -0.9 |
| Sep | 594 | -0.8 | 563 | -3.0 |
SAAR: Seasonally Adjusted Annual Rate
Source: US Census Bureau http://www.census.gov/construction/nrc/
Housing starts and permits in Jan-Sep not-seasonally adjusted are provided in Table VA-12. Housing starts increased 26.7 percent in Jan-Sep 2012 relative to Jan-Sep 2011 and in the same period new permits increased 31.5 percent. Construction of new houses in the US remains at very depressed levels. Housing starts fell 59.6 percent in Jan-Sep 2012 relative to Jan-Sep 2006 and fell 63.4 percent relative to Jan-Sep 2005. Housing permits fell 59.2 percent in Jan-Sep 2012 relative to Jan-Sep 2006 and fell 63.7 percent in Jan-Sep 2012 from Jan-Sep 2005.
Table VA-12, US, Housing Starts and New Permits, Thousands of Units, NSA, and %
| Housing Starts | New Permits | |
| Jan-Sep 2012 | 582.5 | 605.2 |
| Jan-Sep 2011 | 459.9 | 460.3 |
| ∆% Jan-Sep 2012/Jan-Sep 2011 | 26.7 | 31.5 |
| Jan-Sep 2006 | 1442.6 | 1482.9 |
| ∆% Jan-Sep 2012/ | -59.6 | -59.2 |
| Jan-Sep 2005 | 1591.1 | 1665.8 |
| ∆%/ Jan-Sep 2012 | -63.4 | -63.7 |
Source: US Census Bureau http://www.census.gov/construction/nrc/
Chart VA-19 of the US Census Bureau shows the sharp increase in construction of new houses from 2000 to 2006. Housing construction fell sharply through the recession, recovering from the trough around IIQ2009. The right-hand side of Chart VA-3 shows a mild downward trend or stagnation from mid 2010 to the present in single-family houses with a recent mild upward trend in recent months in the category of two or more units but marginal decline in Mar-Jul 2012.
Chart VA-19, US, New Housing Units Started in the US, SAAR (Seasonally Adjusted Annual Rate)
Source: US Census Bureau
http://www.census.gov/briefrm/esbr/www/esbr020.html
Table VA-13 provides new housing units started in the US at seasonally adjusted annual rates (SAAR) in the first eight months of the year from 2000 to 2012. SAARs have dropped from high levels around 2 million in 2005-2006 to the range of 706,000 to 872,000 in Mar-Sep 2012, which is an improvement over the range of 551,000 to 647,000 in Mar-Sep 2011.
Table VA-13, New Housing Units Started in the US, Seasonally Adjusted Annual Rates, Thousands of Units
| Mar | Apr | May | Jun | Jul | Aug | Sep | |
| 2000 | 1,604 | 1,626 | 1,575 | 1,559 | 1,463 | 1,541 | 1,507 |
| 2001 | 1,590 | 1,649 | 1,605 | 1,636 | 1,670 | 1,567 | 1,562 |
| 2002 | 1,642 | 1,592 | 1,764 | 1,717 | 1,655 | 1,633 | 1,804 |
| 2003 | 1,726 | 1,643 | 1,751 | 1,867 | 1,897 | 1,833 | 1,939 |
| 2004 | 1,998 | 2,003 | 1,981 | 1,828 | 2,002 | 2,024 | 1,905 |
| 2005 | 1,864 | 2,061 | 2,025 | 2,068 | 2,054 | 2,095 | 2,151 |
| 2006 | 1,969 | 1,821 | 1,942 | 1,802 | 1,737 | 1,650 | 1,720 |
| 2007 | 1,495 | 1,490 | 1,415 | 1,448 | 1,354 | 1,330 | 1,183 |
| 2008 | 1,005 | 1,013 | 973 | 1,046 | 923 | 844 | 820 |
| 2009 | 505 | 478 | 540 | 585 | 594 | 586 | 585 |
| 2010 | 636 | 687 | 583 | 536 | 546 | 599 | 594 |
| 2011 | 600 | 552 | 551 | 615 | 614 | 581 | 647 |
| 2012 | 706 | 747 | 706 | 754 | 728 | 758 | 872 |
Source: US Census Bureau
http://www.census.gov/construction/nrc/
Chart VA-20 of the US Census Bureau provides construction of new housing units started in the US at seasonally adjusted annual rate (SAAR) from Jan 1959 to Sep 2012 that help to analyze in historical perspective the debacle of US new house construction. There are three periods in the series. (1) There is stationary behavior with wide fluctuations from 1959 to the beginning of the decade of the 1970s. (2) There is sharp upward trend from the 1990s to 2006 propelled by the US housing subsidy, politics of Fannie Mae and Freddie Mac and unconventional monetary policy of near zero interest rates and suspension of the auction of 30-year Treasury bonds from Jun 2003 to Jun 2004. The financial crisis and global recession were caused by interest rate and housing subsidies and affordability policies that encouraged high leverage and risks, low liquidity and unsound credit (Pelaez and Pelaez, Financial Regulation after the Global Recession (2009a), 157-66, Regulation of Banks and Finance (2009b), 217-27, International Financial Architecture (2005), 15-18, The Global Recession Risk (2007), 221-5, Globalization and the State Vol. II (2008b), 197-213, Government Intervention in Globalization (2008c), 182-4). Several past comments of this blog elaborate on these arguments, among which: http://cmpassocregulationblog.blogspot.com/2011/07/causes-of-2007-creditdollar-crisis.html http://cmpassocregulationblog.blogspot.com/2011/01/professor-mckinnons-bubble-economy.html http://cmpassocregulationblog.blogspot.com/2011/01/world-inflation-quantitative-easing.html http://cmpassocregulationblog.blogspot.com/2011/01/treasury-yields-valuation-of-risk.html http://cmpassocregulationblog.blogspot.com/2010/11/quantitative-easing-theory-evidence-and.html http://cmpassocregulationblog.blogspot.com/2010/12/is-fed-printing-money-what-are.html . (3) Housing construction dropped vertically during the global recession. There was initial stability followed by some recovery in recent months.
Chart VA-20, US, New Housing Units Started in the US, SAAR (Seasonally Adjusted Annual Rate), Thousands of Units, Jan 1959-Sep 2012
Source: US Census Bureau
http://www.census.gov/construction/nrc/
Table VA-14 provides actual new housing units started in the US, or not seasonally adjusted, in Jan-Sep from 2000 to 2012. The number of housing units started fell from the peak of 197.9 thousand in May 2005 to 67.8 thousand in May 2012 or 65.7 percent. The number of housing units started fell from 187.9 thousand in Sep 2005 to 79.0 thousand in Sep 2012 or by 57.9 percent. The number of housing units started jumped from 58.8 thousand in Sep 2011 to 79.0 thousand in Sep 2012 or by 34.4 percent.
Table VA-14, New Housing Units Started in the US, Not Seasonally Adjusted, Thousands of Units
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | |
| 2000 | 104.0 | 119.7 | 133.4 | 149.5 | 152.9 | 146.3 | 135.0 | 141.4 | 128.9 |
| 2001 | 106.4 | 108.2 | 133.2 | 151.3 | 154.0 | 155.2 | 154.6 | 141.5 | 133.1 |
| 2002 | 110.4 | 120.4 | 138.2 | 148.8 | 165.5 | 160.3 | 155.9 | 147.0 | 155.6 |
| 2003 | 117.8 | 109.7 | 147.2 | 151.2 | 165.0 | 174.5 | 175.8 | 163.8 | 171.3 |
| 2004 | 124.5 | 126.4 | 173.8 | 179.5 | 187.6 | 172.3 | 182.0 | 185.9 | 164.0 |
| 2005 | 142.9 | 149.1 | 156.2 | 184.6 | 197.9 | 192.8 | 187.6 | 192.0 | 187.9 |
| 2006 | 153.0 | 145.1 | 165.9 | 160.5 | 190.2 | 170.2 | 160.9 | 146.8 | 150.1 |
| 2007 | 95.0 | 103.1 | 123.8 | 135.6 | 136.5 | 137.8 | 127.9 | 121.2 | 101.5 |
| 2008 | 70.8 | 78.4 | 82.2 | 89.5 | 91.7 | 102.5 | 86.7 | 76.4 | 73.9 |
| 2009 | 31.9 | 39.8 | 42.7 | 42.5 | 52.2 | 59.1 | 56.8 | 52.9 | 52.6 |
| 2010 | 38.9 | 40.7 | 54.7 | 62.0 | 56.2 | 53.8 | 51.5 | 56.3 | 53.0 |
| 2011 | 40.2 | 35.4 | 49.9 | 49.0 | 54.0 | 60.5 | 57.6 | 54.5 | 58.8 |
| 2012 | 47.2 | 49.7 | 58.0 | 66.8 | 67.8 | 74.7 | 69.2 | 70.1 | 79.0 |
Source: US Census Bureau
http://www.census.gov/construction/nrc/
Chart VA-21 of the US Census Bureau provides new housing units started in the US not seasonally adjusted (NSA) from Jan 1959 to Sep 2012. There is the same behavior as in Chart VA-20 SA but with sharper fluctuations in the original series without seasonal adjustment. There are the same three periods. (1) The series is virtually stationary with wide fluctuations from 1959 to the late 1980s. (2) There is downward trend during the savings and loans crisis of the 1980s. Benston and Kaufman (1997, 139) find that there was failure of 1150 US commercial and savings banks between 1983 and 1990, or about 8 percent of the industry in 1980, which is nearly twice more than between the establishment of the Federal Deposit Insurance Corporation in 1934 through 1983. More than 900 savings and loans associations, representing 25 percent of the industry, were closed, merged or placed in conservatorships (see Pelaez and Pelaez, Regulation of Banks and Finance (2008b), 74-7). The Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) created the Resolution Trust Corporation (RTC) and the Savings Association Insurance Fund (SAIF) that received $150 billion of taxpayer funds to resolve insolvent savings and loans. The GDP of the US in 1989 was $5482.1 billion (http://www.bea.gov/iTable/index_nipa.cfm), such that the partial cost to taxpayers of that bailout was around 2.74 percent of GDP in a year. US GDP in 2011 is estimated at $15,075.7 billion, such that the bailout would be equivalent to cost to taxpayers of about $412.5 billion in current GDP terms. A major difference with the Troubled Asset Relief Program (TARP) for private-sector banks is that most of the costs were recovered with interest gains whereas in the case of savings and loans there was no recovery. (3) There is vertical drop of new housing construction in the US during the global recession from (Dec) IVQ2007 to (Jun) IIQ2009 (http://www.nber.org/cycles/cyclesmain.html). The final segment shows upward trend but it could be simply part of yet another fluctuation. Marginal improvement in housing in the US should not obscure the current depressed levels relative to earlier periods.
Chart VA-21, US, New Housing Units Started in the US, Not Seasonally Adjusted, Thousands of Units, Jan 1959-Sep 2012
Source: US Census Bureau
http://www.census.gov/briefrm/esbr/www/esbr020.html
A longer perspective on residential construction in the US is provided by Table VA-15 with annual data from 1960 to 2011. Housing starts fell 70.6 percent from 2005 to 2011, 61.2 percent from 2000 to 2011 and 51.4 percent relative to 1960. Housing permits fell 71.7 percent from 2005 to 2011, 60.8 percent from 2000 to 2011 and 37.4 percent from 1960 to 2011. Housing starts rose 31.8 from 2000 to 2005 while housing permits grew 35.4 percent. From 1990 to 2000 housing starts increased 31.5 percent while permits increased 43.3 percent.
Table VA-15, US, Annual New Privately Owned Housing Units Authorized by Building Permits in Permit-Issuing Places and New Privately Owned Housing Units Started, Thousands
| Starts | Permits | |
| 2011 | 608.8 | 624.1 |
| ∆% 2011/2010 | 3.7 | 3.2 |
| ∆% 2011/2005 | -70.6 | -71.0 |
| ∆% 2011/2000 | -61.2 | -60.8 |
| ∆% 2011/1960 | -51.4 | -37.4 |
| 2010 | 586.9 | 604.6 |
| ∆% 2010/2005 | -71.6 | -71.9 |
| ∆% 2010/2000 | -62.6 | -62.0 |
| ∆% 2010/1960 | -53.1 | -39.4 |
| 2009 | 554,0 | 583.0 |
| 2008 | 905.5 | 905.4 |
| 2007 | 1,355,0 | 1,398.4 |
| 2006 | 1,800.9 | 1,838.9 |
| 2005 | 2,068.3 | 2,155.3 |
| ∆% 2005/2000 | 31.8 | 35.4 |
| 2004 | 1,955.8 | 2,070.1 |
| 2003 | 1,847.7 | 1,889,2 |
| 2002 | 1,704.9 | 1,747.2 |
| 2001 | 1,602.7 | 1,636.7 |
| 2000 | 1,568.7 | 1,592.3 |
| ∆% 2000/1990 | 31.5 | 43.3 |
| 1990 | 1,192,7 | 1,110.8 |
| 1980 | 1,292.2 | 1,190.6 |
| 1970 | 1,433.6 | 1,351.5 |
| 1960 | 1,252.2 | 997.6 |
Source: US Census Bureau http://www.census.gov/construction/nrc/
Risk aversion channels funds toward US long-term and short-term securities that finance the US balance of payments and fiscal deficits benefitting at the moment from risk flight to US dollar denominated assets. Net foreign purchases of US long-term securities (row C in Table VA-16) increased from $67.2 billion in Jul 2012 to $90.0 billion in Aug 2012. Foreign (residents) purchases minus sales of US long-term securities (row A in Table VA-16) in Jul of $60.6 billion increased to $78.5 billion in Aug 2012. Net US (residents) purchases of long-term foreign securities (row B in Table VA-8) increased from $6.6 billion in Jul to $11.5 billion in Aug. In Aug,
C = A + B = $78.5 billion + $11.5 billion = $90.0 billion
There is increasing demand in Table VA-16 in Aug in A1 private purchases by residents overseas of US long-term securities of $48.6 billion of which increases in A11 Treasury securities of $23.8 billion, increase in A12 of $9.6 billion in agency securities, increase by $9.2 billion of corporate bonds and increase of $6.1 billion in equities. Worldwide risk aversion causes flight into US Treasury obligations with significant oscillations. Official purchases of securities in row A2 increased $29.9 billion with increase of Treasury securities of $19.2 billion in Aug, which is lower than $19.2 billion in Jul. Official purchases of agency securities fell $8.3 billion in Jul and increased $9.0 billion in Aug. Row D shows decrease in Aug in purchases of short-term dollar denominated obligations. Foreign private holdings of US Treasury bills increased $21.1 billion (row D11) with foreign official holdings increasing $18.0 billion while the category other increased $9.3 billion. Risk aversion of default losses in foreign securities dominates decisions to accept zero interest rates in Treasury securities with no perception of principal losses. In the case of long-term securities, investors prefer to sacrifice inflation and possible duration risk to avoid principal losses.
Table VA-16, Net Cross-Borders Flows of US Long-Term Securities, Billion Dollars, NSA
| Aug 2011 12 Months | Aug 2012 12 Months | Jul 2012 | Aug 2012 | |
| A Foreign Purchases less Sales of | 643.9 | 513.4 | 60.6 | 78.5 |
| A1 Private | 478.7 | 291.2 | 39.3 | 48.6 |
| A11 Treasury | 303.8 | 283.0 | 20.8 | 23.8 |
| A12 Agency | 52.7 | 88.5 | 12.8 | 9.6 |
| A13 Corporate Bonds | 6.8 | -68.4 | -0.5 | 9.2 |
| A14 Equities | 115.4 | -11.9 | 6.2 | 6.1 |
| A2 Official | 165.2 | 222.2 | 21.3 | 29.9 |
| A21 Treasury | 179.4 | 219.7 | 28.7 | 19.2 |
| A22 Agency | -14.2 | -4.6 | -8.3 | 9.0 |
| A23 Corporate Bonds | -1.4 | 0.6 | 0.6 | 1.6 |
| A24 Equities | 1.3 | 6.4 | 0.3 | 0.1 |
| B Net US Purchases of LT Foreign Securities | -204.0 | 70.8 | 6.6 | 11.5 |
| B1 Foreign Bonds | -88.2 | 95.4 | 7.5 | 14.2 |
| B2 Foreign Equities | -115.7 | -24.6 | -0.9 | -2.7 |
| C Net Foreign Purchases of US LT Securities | 439.9 | 584.3 | 67.2 | 90.0 |
| D Increase in Foreign Holdings of Dollar Denominated Short-term | -159.3 | 25.5 | -7.9 | 48.4 |
| D1 US Treasury Bills | -138.8 | 23.3 | -12.5 | 39.1 |
| D11 Private | -52.4 | 59.6 | -5.3 | 21.1 |
| D12 Official | -86.4 | -36.3 | -7.2 | 18.0 |
| D2 Other | -20.5 | 2.2 | 4.6 | 9.3 |
C = A + B;
A = A1 + A2
A1 = A11 + A12 + A13 + A14
A2 = A21 + A22 + A23 + A24
B = B1 + B2
D = D1 + D2
D1 = D11 + D12
Sources: http://www.treasury.gov/resource-center/data-chart-center/tic/Pages/ticpress.aspx
Table VA-17 provides major foreign holders of US Treasury securities. China is the largest holder with $1153.6 billion in Aug 2012, decreasing 9.8 percent from $1278.5 billion in Aug 2011. Japan increased its holdings from $907.0 billion in Aug 2011 to $1121.5 billion in Aug 2012 or by 23.6 percent likely in part by intervention to buy dollars against the yen to depreciate the overvalued yen/dollar rate that diminishes the competitiveness of Japan. Total foreign holdings of Treasury securities rose from $4763.5 billion in Aug 2011 to $5430.0 billion in Aug 2012, or 14.0 percent. The US continues to finance its fiscal and balance of payments deficits with foreign savings (see Pelaez and Pelaez, The Global Recession Risk (2007)). In their classic work on “unpleasant monetarist arithmetic,” Sargent and Wallace (1981, 2) consider a regime of domination of monetary policy by fiscal policy (emphasis added):
“Imagine that fiscal policy dominates monetary policy. The fiscal authority independently sets its budgets, announcing all current and future deficits and surpluses and thus determining the amount of revenue that must be raised through bond sales and seignorage. Under this second coordination scheme, the monetary authority faces the constraints imposed by the demand for government bonds, for it must try to finance with seignorage any discrepancy between the revenue demanded by the fiscal authority and the amount of bonds that can be sold to the public. Suppose that the demand for government bonds implies an interest rate on bonds greater than the economy’s rate of growth. Then if the fiscal authority runs deficits, the monetary authority is unable to control either the growth rate of the monetary base or inflation forever. If the principal and interest due on these additional bonds are raised by selling still more bonds, so as to continue to hold down the growth of base money, then, because the interest rate on bonds is greater than the economy’s growth rate, the real stock of bonds will growth faster than the size of the economy. This cannot go on forever, since the demand for bonds places an upper limit on the stock of bonds relative to the size of the economy. Once that limit is reached, the principal and interest due on the bonds already sold to fight inflation must be financed, at least in part, by seignorage, requiring the creation of additional base money.”
Table VA-17, US, Major Foreign Holders of Treasury Securities $ Billions at End of Period
| Aug 2012 | Jul 2012 | Aug 2011 | |
| Total | 5430.0 | 5348.0 | 4763.5 |
| China | 1153.6 | 1149.0 | 1278.5 |
| Japan | 1121.5 | 1116.2 | 907.0 |
| Oil Exporters | 263.0 | 262.5 | 245.8 |
| Caribbean Banking Centers | 256.9 | 245.7 | 210.4 |
| Brazil | 253.9 | 253.0 | 219.2 |
| Switzerland | 202.2 | 190.1 | 157.6 |
| Taiwan | 198.0 | 196.1 | 143.5 |
| United Kingdom | 153.6 | 140.4 | 181.2 |
| Russia | 153.3 | 154.3 | 138.1 |
| Belgium | 142.6 | 144.2 | 87.1 |
| Hong Kong | 139.6 | 136.7 | 102.0 |
| Luxembourg | 131.4 | 128.3 | 114.7 |
| Foreign Official Holdings | 3911.5 | 3874.4 | 3517.2 |
| A. Treasury Bills | 373.0 | 355.0 | 409.2 |
| B. Treasury Bonds and Notes | 3538.5 | 3519.4 | 3109.0 |
Source: http://www.treasury.gov/resource-center/data-chart-center/tic/Pages/ticsec2.aspx#ussecs
http://www.meti.go.jp/english/statistics/index.html
VB Japan. Table VB-BOJF provides the forecasts of economic activity and inflation in Japan by the majority of members of the Policy Board of the Bank of Japan, which is part of their Outlook for Economic Activity and Prices (http://www.boj.or.jp/en/mopo/outlook/gor1204a.pdf
http://www.boj.or.jp/en/mopo/outlook/gor1204b.pdf). For fiscal 2012, the forecast is of growth of GDP between 2.1 and 2.4 percent, with domestic producer price inflation (Corporate Goods Price Index, CGPI) in the range of 0.4 to 0.7 percent and the all items CPI less fresh food of 0.1 to 0.4 percent. These forecasts are biannual in Apr and Oct.
Table VB-BOJF, Bank of Japan, Forecasts of the Majority of Members of the Policy Board, % Year on Year
| Fiscal Year | Real GDP | Domestic CGPI | CPI All Items Less Fresh Food |
| 2011 | |||
| Apr 2012 | -0.2 to –0.2 | +1.7 | 0.0 |
| Jan 2012 | -0.4 to –0.3 | +1.8 to +1.9 | -0.1 to 0.0 |
| 2012 | |||
| Apr 2012 | +2.1 to +2.4 | +0.4 to +0.7 | +0.1 to +0.4 |
| Jan 2012 | +1.8 to +2.1 | -0.1 to +0.2 | 0.0 to +0.2 |
| 2013 | |||
| Apr 2012 | +1.6 to +1.8 | +0.7 to +0.9 | +0.5 to +0.7 |
| Jan 2012 | +1.4 to +1.7 | +0.6 to 1.0 | +0.4 to +0.5 |
Figures in brackets are the median of forecasts of Policy Board members
Source: Policy Board, Bank of Japan
http://www.boj.or.jp/en/mopo/outlook/gor1204a.pdf
http://www.boj.or.jp/en/mopo/outlook/gor1204b.pdf
http://www.boj.or.jp/en/mopo/outlook/index.htm/
Private-sector activity in Japan contracted at a moderate rate with the Markit Composite Output PMI™ Index decreasing from 48.6 in Aug to 48.4 in Sep, which is still below 50 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10143). Paul Smith, economist at Markit and author of the report, finds that manufacturing and services data suggest stagnation of GDP in Japan in IIIQ2012 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10143). The Markit Business Activity Index of Services decreased from 49.3 in Aug to 48.9 in Sep, also showing contraction at slower pace, also declining in IIIQ2012 to the lowest level in a year (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10143). The Markit/JMMA Purchasing Managers’ Index™ (PMI™), seasonally adjusted, increased from 47.7 in Aug to 48.0 in Aug, for more moderate contraction than in Aug, which registered the weakest private-sector manufacturing activity in 16 months (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10087). Paul Smith, economist at Markit and author of the report, finds the data consistent with quarterly contraction of industrial production with the significant weakness in export demand because of the slowing global economy and strength of the yen (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10087).Table JPY provides the country data table for Japan.
Table JPY, Japan, Economic Indicators
| Historical GDP and CPI | 1981-2010 Real GDP Growth and CPI Inflation 1981-2010 |
| Corporate Goods Prices | Sep ∆% +0.3 |
| Consumer Price Index | Aug NSA ∆% 0.1; Aug 12 months NSA ∆% -0.4 |
| Real GDP Growth | IIQ2012 ∆%: 0.3 on IQ2012; IIQ2012 SAAR 0.7; |
| Employment Report | Aug Unemployed 2.77 million Change in unemployed since last year: minus 180 thousand |
| All Industry Indices | Aug month SA ∆% 0.1 Blog 10/21/12 |
| Industrial Production | Aug SA month ∆%: -1.3 |
| Machine Orders | Total Aug ∆% -12.6 Private ∆%: -13.7 |
| Tertiary Index | Aug month SA ∆% 0.4 |
| Wholesale and Retail Sales | Aug 12 months: |
| Family Income and Expenditure Survey | Aug 12-month ∆% total nominal consumption 1.4, real 1.8 Blog 9/30/12 |
| Trade Balance | Exports Aug 12 months ∆%: -5.8 Imports Aug 12 months ∆% -5.4 Blog 9/23/12 |
Links to blog comments in Table JPY:
10/14/12 http://cmpassocregulationblog.blogspot.com/2012/10/recovery-without-hiring-imf-view-united.html
9/30/12 http://cmpassocregulationblog.blogspot.com/2012/09/historically-sharper-recoveries-from.html
9/23/12 http://cmpassocregulationblog.blogspot.com/2012/09/collapse-of-united-states-creation-of.html
9/16/12 http://cmpassocregulationblog.blogspot.com/2012/09/recovery-without-hiring-world-inflation.html
8/9/11 http://cmpassocregulationblog.blogspot.com/2011/08/turbulence-in-world-financial-markets.html
The indices of all industry activity of Japan, which is an approximation of GDP or economic activity, fell to levels close to the worst point of the recession, showing the brutal impact of the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Table VB-1 with the latest revisions shows the quarterly index which permits comparison with the movement of real GDP. The first row provides weights of the various components of the index: AG (agriculture) 1.4 percent (not shown), CON (construction) 5.7 percent, IND (industrial production) 18.3 percent, TERT (services) 63.2 percent, and GOVT (government) 11.4 percent. GDP increased 0.2 percent in IIQ2012 (Table VB-1 http://cmpassocregulationblog.blogspot.com/2012/09/recovery-without-hiring-world-inflation_16.html), industry decreased 2.0 percent, the tertiary sector was unchanged, government decreased 0.1 percent and construction decreased 1.5 percent. The report shows that the all industry index decreased 0.1 percent in IIQ2012. Industry deducted 0.37 percentage points from growth of the all industry index and the tertiary index contributed 0.00 percentage points. Japan had already experienced a very weak quarter in IVQ2010, with decline of the all industry index of 0.2 percent and unchanged GDP (http://cmpassocregulationblog.blogspot.com/2012/09/recovery-without-hiring-world-inflation_16.html Table VB-1), when it was unexpectedly hit by the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. The worst impact of the natural disaster was on construction with drop of 7.5 percent in IIQ2011 relative to IQ2011 but recovery at 3.3 percent in IIIQ2011. Industrial production fell 4.2 percent from IQ2011 into IIQ2011 but grew 5.4 percent in IIIQ2011. Many accounts had already been closed when the earthquake occurred, but there is visible decline of the index of all industry by 1.3 percent in IQ2011 caused by decline of industrial production by 1.5 percent and services by 1.0 percent with GDP falling revised 2.0 percent (http://cmpassocregulationblog.blogspot.com/2012/09/recovery-without-hiring-world-inflation_16.html Table VB-1).
Table VB-1, Japan, Indices of All Industry Activity Percentage Change from Prior Quarter SA ∆%
| CON | IND | TERT | GOVT | ALL IND | REAL | |
| Weight | 5.7 | 18.3 | 63.2 | 11.4 | 100.0 | |
| 2012 | ||||||
| IIQ | -1.5 | -2.0 | 0.0 | -0.1 | -0.1 | 0.2 |
| Cont to IIQ % Change | -0.07 | -0.37 | 0.00 | -0.01 | ||
| IQ | 5.7 | 1.3 | 0.0 | 0.1 | -0.1 | 1.3 |
| 2011 | ||||||
| IVQ | -1.5 | 0.4 | 0.5 | 0.2 | 0.5 | 0.1 |
| IIIQ | 3.3 | 5.4 | 1.5 | 0.2 | 2.1 | 1.7 |
| IIQ | -7.5 | -4.2 | -0.5 | 0.1 | -0.9 | -0.3 |
AG: indices of agriculture, forestry and fisheries has weight of 1.4% and is not included in official report or in this table; CON: indices of construction industry activity; IND: indices of industrial production; TERT: indices of tertiary industry activity; GOVT: indices of government services, etc.; ALL IND: indices of all industry activity
Source: http://www.meti.go.jp/english/statistics/index.html
There are more details in Table VB-2. The all industry activity index increased 0.1 percent in Aug 2012 relative to Jul 2012 with increase of 0.4 percent of the tertiary or services sector and decrease of industry of 1.6 percent while construction increased 0.1 percent and government increased 0.2 percent. Industry deducted 0.29 percentage points to growth in Aug while the tertiary sector added 0.27 percentage points, construction added 0.01 percentage points and government added 0.02 percentage points. It is possible to explain accurately the overall index by the reported contributions of components. Weakness in Sep and Aug 2011 had interrupted the sharp recovery from Apr to Jul with renewed strength in Oct but weakness again in Nov followed by strong rebound in Dec that was interrupted in Jan-Mar 2012 with modest growth in Apr, new decline in May 2012, moderate increase in Jun 2012 and new decline of 0.6 percent in Jul 2012 but increase of 0.1 percent in Aug 2012. The highest risk to Japan is if weakening world growth would affect Japanese exports.
Table VB-2, Japan, Indices of All Industry Activity Percentage Change from Prior Month SA ∆%
| CON | IND | TERT | GOVT | ALL IND | |
| Aug 2012 | 0.1 | -1.6 | 0.4 | 0.2 | 0.1 |
| Cont to Aug % Change | 0.01 | -0.29 | 0.27 | 0.02 | |
| Jul 2012 | -2.7 | -1.0 | -0.7 | 0.3 | -0.6 |
| Jun 2012 | 1.0 | 0.4 | 0.1 | 0.2 | 0.3 |
| May | 9.5 | -3.4 | 0.9 | -0.1 | -0.2 |
| Apr | -5.5 | -0.2 | -0.2 | 0.1 | 0.1 |
| Mar | -5.4 | 1.3 | -0.6 | -0.1 | -0.3 |
| Feb | 4.2 | -1.6 | 0.0 | -0.4 | -0.1 |
| Jan | 5.6 | 0.9 | -0.6 | 0.5 | -0.7 |
| Dec 2011 | -1.4 | 2.3 | 1.6 | -0.2 | 1.7 |
| Nov | 0.3 | -1.7 | -0.8 | 0.1 | -0.9 |
| Oct | -2.6 | 1.8 | 0.6 | 0.1 | 0.6 |
| Sep | 1.6 | -1.9 | -0.2 | 0.2 | -0.1 |
| Aug | 1.1 | 0.9 | 0.1 | -0.1 | 0.2 |
| Jul | 0.1 | 1.1 | 0.4 | -0.2 | 0.5 |
| Jun | -0.1 | 3.8 | 1.2 | 0.2 | 1.5 |
| May | 6.5 | 5.8 | 0.9 | 0.7 | 1.6 |
| Apr | -5.1 | 2.4 | 2.1 | -0.9 | 2.0 |
| Mar | -10.6 | -16.2 | -5.4 | 0.7 | -6.6 |
| Feb | 2.3 | 1.1 | 0.3 | 0.0 | 0.1 |
| Jan | 6.3 | 1.2 | 0.5 | -0.5 | 0.6 |
| Dec 2010 | -0.5 | 2.4 | -0.2 | 0.3 | 0.1 |
| Nov | -1.4 | 1.6 | 0.6 | -0.4 | 0.3 |
| Oct | 0.1 | -1.4 | 0.2 | -0.1 | 0.0 |
| Sep | -1.9 | -0.8 | -0.4 | -0.1 | -0.4 |
| Aug | 1.6 | -0.1 | 0.1 | 0.1 | -0.5 |
| Jul | 0.8 | 0.3 | 0.7 | 0.1 | 1.1 |
| Jun | -2.1 | -1.5 | 0.1 | -0.1 | 0.2 |
| May | 6.3 | -0.1 | -0.3 | 0.0 | 0.0 |
| Apr | -3.1 | 0.6 | 1.6 | -0.2 | 0.9 |
AG: indices of agriculture, forestry and fisheries has weight of 1.4% and is not included in official report or in this table; CON: indices of construction industry activity; IND: indices of industrial production; TERT: indices of tertiary industry activity; GOVT: indices of government services, etc.; ALL IND: indices of all industry activity
Sources: http://www.meti.go.jp/english/statistics/index.html
Percentage changes from a year earlier in calendar years and relative to the same quarter a year earlier of the all industry activity indices are provided in Table VB-3. The first row shows that services contribute 63.2 percent of the total index and industry contributes 18.3 percent for joint contribution of 81.5 percent. The all industry activity index increased 2.6 percent in IIQ2012 and GDP increased 3.2 percent relative to a year earlier. Industry increased 5.3 percent relative to a year earlier while the tertiary sector increased 2.2 percent, contributing combined 2.38 percentage points to growth of the all industry activity index of 2.6 percent. The fall of industrial production in 2009 was by a catastrophic 21.9 percent. Japan emerged from the crisis with industrial growth of 16.4 percent in 2010. Quarterly data show that industry is the most dynamic sector of the Japanese economy. The all-industry index fell 0.5 percent in 2011, almost equal to the revised decline of 0.8 percent in GDP. Industry fell 2.3 percent, deducting 0.42 percentage points, while the tertiary sector increased 0.1 percent, adding 0.07 percentage points. The Tōhoku or Great East Earthquake and Tsunami of Mar 11, 201, declining world trade and revaluation of the yen in fear of world financial risks interrupted the recovery of the Japanese economy from the global recession.
Table VB-3, Japan, Indices of All Industry Activity Percentage Change from Earlier Calendar Year and Same Quarter Year Earlier NSA ∆%
| CON | IND | TERT | GOVT | ALL IND | REAL | |
| Weight | 5.7 | 18.3 | 63.2 | 11.4 | 100.0 | |
| Calendar Year | ||||||
| 2011 | -2.0 | -2.3 | 0.1 | -0.2 | -0.5 | -0.8 |
| Cont to 2011 % Change | -0.09 | -0.42 | 0.07 | -0.02 | ||
| 2010 | -7.0 | 16.4 | 1.3 | -0.7 | 3.1 | 4.5 |
| 2009 | -5.6 | -21.9 | -5.2 | 0.1 | -7.7 | -5.5 |
| 2008 | -7.6 | -3.4 | -1.0 | -1.4 | -1.9 | -1.0 |
| 2012 | ||||||
| II Q | 5.8 | 5.3 | 2.2 | 0.4 | 2.6 | 3.2 |
| Cont to IIQ % Change | 0.23 | 0.92 | 1.46 | 0.05 | ||
| IQ | -0.3 | 4.8 | 2.4 | 0.1 | 2.4 | 2.9 |
| 2011 | ||||||
| IVQ | -2.8 | -1.6 | 0.6 | 0.6 | 0.0 | -0.7 |
| IIIQ | -3.2 | -0.9 | 0.3 | -0.1 | -0.1 | -0.6 |
| IIQ | -5.1 | -5.8 | -0.5 | -0.4 | -1.6 | -1.8 |
| IQ | 2.3 | -1.3 | -0.3 | -1.0 | -0.5 | 0.0 |
| 2010 | ||||||
| IV Q | -0.6 | 5.9 | 1.6 | -0.8 | 2.1 | 3.2 |
| III Q | -3.2 | 14.0 | 1.8 | -0.6 | 3.2 | 5.6 |
| IIQ | -11.3 | 21.3 | 1.4 | -0.7 | 3.5 | 4.5 |
| IQ | -12.4 | 28.0 | 0.8 | -0.5 | 3.9 | 4.8 |
AG: indices of agriculture, forestry and fisheries has weight of 1.4% and is not included in official report or in this table; CON: indices of construction industry activity; IND: indices of industrial production; TERT: indices of tertiary industry activity; GOVT: indices of government services, etc.; ALL IND: indices of all industry activity
Source: http://www.meti.go.jp/english/statistics/index.html
Percentage changes of a month relative to the same month a year earlier for the indices of all industry activity of Japan are shown in Table VB-4. The all industry activity index decreased 0.1 percent in Aug 2012 relative to Aug 2011. Industry fell 4.6 percent in Aug 2012 relative to a year earlier, subtracting 0.82 percentage points to growth of the all industry activity index. The tertiary sector increased 0.6 percent, adding 0.40 percentage points. Construction added 0.18 percentage points to the index and government added 0.11 percentage points.
Table VB-4, Japan, Indices of All Industry Activity Percentage Change from Same Month Year Earlier NSA ∆%
| CON | IND | TERT | GOVT | ALL IND | |
| Aug 2012 | 4.0 | -4.6 | 0.6 | 0.9 | -0.1 |
| Cont to Aug % Change | 0.18 | -0.82 | 0.40 | 0.11 | |
| Jul 2012 | 4.9 | -0.8 | 0.8 | 0.0 | 0.5 |
| Jun | 7.6 | -1.5 | 0.8 | 0.8 | 0.6 |
| May | 6.4 | 6.0 | 3.2 | -0.6 | 3.3 |
| Apr | 3.7 | 12.9 | 2.6 | 0.8 | 4.1 |
| Mar | 4.1 | 14.2 | 4.2 | 0.6 | 5.5 |
| Feb | -1.6 | 1.5 | 2.4 | -0.7 | 1.6 |
| Jan | -3.4 | -1.6 | 0.4 | 0.4 | -0.1 |
| Dec 2011 | -3.0 | -3.0 | 1.2 | 0.8 | 0.2 |
| Nov | -1.2 | -2.9 | -0.3 | 0.8 | -0.7 |
| Oct | -4.0 | 0.9 | 0.9 | 0.2 | 0.5 |
| Sep | -0.4 | -2.4 | 0.1 | 0.1 | -0.3 |
| Aug | -4.3 | 1.6 | 0.8 | -1.1 | 0.4 |
| Jul | -4.8 | -1.7 | 0.1 | 0.5 | -0.4 |
| Jun | -4.6 | -0.6 | 1.0 | 0.3 | 0.4 |
| May | -6.5 | -4.6 | -0.2 | -0.8 | -1.3 |
| Apr | -4.1 | -12.7 | -2.3 | -0.6 | -4.0 |
| Mar | -2.8 | -12.4 | -3.4 | 0.0 | -4.6 |
| Feb | 4.4 | 4.5 | 2.0 | -1.4 | 2.1 |
| Jan | 5.9 | 6.1 | 1.0 | -1.4 | 1.8 |
| Dec 2010 | -0.5 | 5.9 | 1.8 | -0.7 | 2.1 |
| Nov | -0.5 | 7.0 | 2.5 | -1.9 | 2.7 |
| Oct | -1.1 | 5.0 | 0.5 | 0.3 | 1.3 |
| Sep | -2.8 | 12.1 | 1.3 | -0.6 | 2.7 |
| Aug | -1.7 | 15.5 | 2.3 | -1.1 | 3.8 |
| Jul | -5.3 | 14.6 | 1.6 | -0.1 | 3.3 |
| Jun | -8.3 | 16.6 | 1.0 | -0.7 | 3.0 |
| May | -8.1 | 20.7 | 1.2 | -0.9 | 3.4 |
| Apr | -17.0 | 27.0 | 1.9 | -0.4 | - |
AG: indices of agriculture, forestry and fisheries has weight of 1.4% and is not included in official report or in this table; CON: indices of construction industry activity; IND: indices of industrial production; TERT: indices of tertiary industry activity; GOVT: indices of government services, etc.; ALL IND: indices of all industry activity
Source: http://www.meti.go.jp/english/statistics/index.html
VC China. China estimates an index of nonmanufacturing purchasing managers on the basis of a sample of 1200 nonmanufacturing enterprises across the country (http://www.stats.gov.cn/english/pressrelease/t20121009_402841094.htm). Table CIPMNM provides this index and components from Jan to Sep 2012. The index fell from 58.0 in Mar to 55.2 in May but climbed to 56.7 in Jun, which is lower than 58.0 in Mar and 57.3 in Feb but higher than in any other of the months in 2012. In Jul 2012 the index fell marginally to 55.6 and then to 56.3 in Aug and 53.7 in Sep.
Table CIPMNM, China, Nonmanufacturing Index of Purchasing Managers, %, Seasonally Adjusted
| 2012 | Total Index | New Orders | Interm. | Subs Prices | Exp |
| Sep | 53.7 | 51.8 | 57.5 | 51.3 | 60.9 |
| Aug | 56.3 | 52.7 | 57.6 | 51.2 | 63.2 |
| Jul | 55.6 | 53.2 | 49.7 | 48.7 | 63.9 |
| Jun | 56.7 | 53.7 | 52.1 | 48.6 | 65.5 |
| May | 55.2 | 52.5 | 53.6 | 48.5 | 65.4 |
| Apr | 56.1 | 52.7 | 57.9 | 50.3 | 66.1 |
| Mar | 58.0 | 53.5 | 60.2 | 52.0 | 66.6 |
| Feb | 57.3 | 52.7 | 59.0 | 51.2 | 63.8 |
| Jan | 55.7 | 52.2 | 58.2 | 51.1 | 65.3 |
Notes: Interm.: Intermediate; Subs: Subscription; Exp: Business Expectations
Source: National Bureau of Statistics of China
http://www.stats.gov.cn/english/pressrelease/t20121009_402841094.htm
Chart CIPMNM provides China’s nonmanufacturing purchasing managers’ index from Sep 2011 to Sep 2012. There was slowing of the general index in Apr 2012 after the increase in Jan-Mar 2012 and further decline to 55.2 in May 2012 but increase to 56.7 in Jun 2012 with marginal decline to 55.6 in Jul 2012 and 56.3 in Aug 2012 and sharper drop to 53.7 in Sep 2012.
Chart CIPMNM, China, Nonmanufacturing Index of Purchasing Managers, Seasonally Adjusted
Source: National Bureau of Statistics of China
http://www.stats.gov.cn/english/pressrelease/t20121009_402841100.htm
Table CIPMMFG provides the index of purchasing managers of manufacturing seasonally adjusted of the National Bureau of Statistics of China. The general index (IPM) rose from 50.5 in Jan 2012 to 53.3 in Apr and declined to 50.1 in Jul and to the contraction zone at 49.2 in Aug. The index of new orders (NOI) fell from 54.5 in Apr 2012 to 49.0 in Jul and 48.7 in Aug. The index of employment also fell from 51.0 in Apr to 49.1 in Aug. There is mild rebounding to 49.8 in Sep 2012.
Table CIPMMFG, China, Manufacturing Index of Purchasing Managers, %, Seasonally Adjusted
| 2012 | IPM | PI | NOI | INV | EMP | SDEL |
| Sep | 49.8 | 51.3 | 49.8 | 47.0 | 48.9 | 49.5 |
| Aug | 49.2 | 50.9 | 48.7 | 45.1 | 49.1 | 50.0 |
| Jul | 50.1 | 51.8 | 49.0 | 48.5 | 49.5 | 49.0 |
| Jun | 50.2 | 52.0 | 49.2 | 48.2 | 49.7 | 49.1 |
| May | 50.4 | 52.9 | 49.8 | 45.1 | 50.5 | 49.0 |
| Apr | 53.3 | 57.2 | 54.5 | 48.5 | 51.0 | 49.6 |
| Mar | 53.1 | 55.2 | 55.1 | 49.5 | 51.0 | 48.9 |
| Feb | 51.0 | 53.8 | 51.0 | 48.8 | 49.5 | 50.3 |
| Jan | 50.5 | 53.6 | 50.4 | 49.7 | 47.1 | 49.7 |
IPM: Index of Purchasing Managers; PI: Production Index; NOI: New Orders Index; EMP: Employed Person Index; SDEL: Supplier Delivery Time Index
Source: National Bureau of Statistics of China
http://www.stats.gov.cn/english/pressrelease/t20121009_402841094.htm
China estimates the manufacturing index of purchasing managers on the basis of a sample of 820 enterprises (http://www.stats.gov.cn/english/pressrelease/t20121009_402841094.htm). Chart CIPMMFG provides the index from Sep 2011 to Sep 2012. There is deceleration from 51.2 in Sep 2011 to marginal contraction at 49.0 in Nov 2011. Manufacturing activity recovered to 53.3 in Apr 2012 but then declined to 50.4 in May 2012 and 50.1 in Jun 2012, which is the lowest in a year with exception of contraction at 49.0 in Nov 2011. The index then fell to contraction at 49.2 in Aug 2012 and improved to 49.8 in Sep, closer to the neutral zone of 50.0.
Chart CIPMMFG, China, Manufacturing Index of Purchasing Managers, Seasonally Adjusted
Source: National Bureau of Statistics of China
http://www.stats.gov.cn/english/pressrelease/t20121009_402841094.htm
The HSBC China Services PMI™, compiled by Markit, shows improving business activity in China with the HSBC Composite Output, combining manufacturing and services, increasing from 49.9 in Aug to 50.3 in Sep growth in services compensating decline in manufacturing (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10187). Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds marginal improvement in business conditions in China but that increasing demand requires further easing measures (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10187). The HSBC Business Activity index increased from 52.0 in Aug to 54.3 in Sep with improving activity in services (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10187). The HSBC Purchasing Managers’ Index™ (PMI™), compiled by Markit, increased to 47.9 in Sep from 47.6 in Aug, indicating moderate reduction of activity and the eleventh monthly deterioration of the index (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10116). Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds that accelerating contraction of export orders with pressure on employment suggest that China still requires further easing of policy (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10116).
Wang Xiaotian, writing on China Daily, on “China cuts its reserve ratio again,” published by Xinhuanet on May 13, 2012 (http://news.xinhuanet.com/english/china/2012-05/13/c_131584252.htm), informs that the People’s Bank of China (PBC) (http://www.pbc.gov.cn/publish/english/963/index.html) reduced the reserve requirement imposed on Chinese lenders by 50 basis points with the objective of injecting liquidity to strengthen the economy. This is the second such reduction of reserve requirements in 2012. The reduction is estimated to release CNY 400 in China’s money market. The reserve requirement will be 20 percent for larger banks and 16.5 percent for smaller banks. The measures are intended to strengthen the economy. Xinhuanet, writing on “China announces surprise rate cuts amid economic downshift,” on Jun 5, 2012 (http://news.xinhuanet.com/english/china/2012-07/05/c_131697843.htm), informs that the central bank of China People’s Bank of China reduced the one year deposit rate by 25 basis points and the one year lending rate by 31 basis points effective Jun 6, 2012. The People’s Bank of China posts the new rates (http://www.pbc.gov.cn/publish/english/955/2012/20120608171005950734495/20120608171005950734495_.html). Table CNY provides the country data table for China.
Table CNY, China, Economic Indicators
| Price Indexes for Industry | Sep 12-month ∆%: minus 3.6 Sep month ∆%: minus 0.1 |
| Consumer Price Index | Sep month ∆%: 0.3 Sep 12 months ∆%: 1.9 |
| Value Added of Industry | Sep month ∆%: 0.79 Jan-Sep 2012/Jan-Sep 2011 ∆%: 10.0 |
| GDP Growth Rate | Year IIIQ2012 ∆%: 7.4 |
| Investment in Fixed Assets | Sep month ∆%: 1.63 Total Jan-Sep 2012 ∆%: 20.5 Real estate development: 15.4 |
| Retail Sales | Sep month ∆%: 1.46 Jan-Sep ∆%: 14.1 |
| Trade Balance | Sep balance $27.67 billion Cumulative Sep: $148.43 billion |
Links to blog comments in Table CNY:
10/14/12 http://cmpassocregulationblog.blogspot.com/2012/10/recovery-without-hiring-imf-view-united.html
Growth of GDP of China from a quarter relative to the same quarter a year earlier decelerated from 12.1 percent in IQ2010 to 7.6 percent in IIQ2012 and 7.4 percent in IIIQ2012, as shown in Table VC-1. Growth of GDP in a quarter relative to the prior quarter decelerated from 2.2 percent in IQ2011 or annual equivalent 9.1 percent to 1.8 percent in both IQ2012 and IIQ 2012 or annual equivalent 7.4 percent and increased to 2.2 percent in IIIQ2012 or annual equivalent of 9.1 percent. Secondary industry activity growth in a quarter relative to the same quarter a year earlier decelerated from growth of 14.5 percent in IQ2010 to 8.1 percent in IIIQ2012.
Table VC-1, China, Growth Rate of GDP, ∆% Relative to a Year Earlier and ∆% Relative to Prior Quarter
| IQ 2011 | IIQ 2011 | IIIQ 2011 | IVQ 2011 | IQ 2012 | IIQ 2012 | IIIQ 2012 | |
| GDP | 9.7 | 9.5 | 9.1 | 8.9 | 8.1 | 7.6 | 7.4 |
| Primary Industry | 3.5 | 3.2 | 3.8 | 4.5 | 3.8 | 4.3 | 4.2 |
| Secondary Industry | 11.1 | 11.0 | 10.8 | 10.6 | 9.1 | 8.3 | 8.1 |
| Tertiary Industry | 9.1 | 9.2 | 9.0 | 8.9 | 7.5 | 7.7 | 7.9 |
| GDP ∆% Relative to a Prior Quarter | 2.2 | 2.3 | 2.4 | 1.9 | 1.8 | 1.8 | 2.2 |
| IQ 2010 | IIQ 2010 | IIIQ 2010 | IVQ 2010 | ||||
| GDP | 12.1 | 11.2 | 10.7 | 12.1 | |||
| Primary Industry | 3.8 | 3.6 | 4.0 | 3.8 | |||
| Secondary Industry | 14.5 | 13.3 | 12.6 | 14.5 | |||
| Tertiary Industry | 10.5 | 9.9 | 9.7 | 10.5 |
Source: National Bureau of Statistics of China
http://www.stats.gov.cn/enGliSH/
Cumulative and 12-months rates of value added of industry in China are provided in Table VC-2. Value added in total industry in Jan-Sep 2012 increased 10.0 percent relative to a year earlier and 9.2 percent in the 12 months ending in Sep 2012. Heavy industry had been the driver of growth with a cumulative rate of 11.0 percent relative to a year earlier in Jan-Mar 2012 that declined to 10.5 percent in Jan-Apr 2012 relative to the same period a year earlier and further down to 10.1 percent in Jan-Jun 2012, 9.9 percent in Jan-Jul 2012, 9.8 percent in Jan-Aug 2012 and 9.7 percent in Jan-Sep 2012. Light industry grew 10.4 percent in Jan-Sep 2012 relative to a year earlier and 9.0 percent in 12 months ending in Sep 2012. Growth of total industry decelerated from cumulative 14.4 percent in Jan-Mar 2011 to 10.0 percent in Jan-Sep 2012.
Table VC-2, China, Growth Rate of Value Added of Industry ∆%
| Industry | Light Industry | Heavy | State | Private | |
| 2012 | |||||
| Jan-Sep | 10.0 | 10.4 | 9.7 | 6.3 | 11.8 |
| 12 M | 9.2 | 9.0 | 9.3 | 6.3 | 11.0 |
| Jan-Aug | 10.1 | 10.5 | 9.8 | 6.3 | 15.4 |
| 12 M Aug | 8.9 | 8.6 | 9.0 | 5.3 | 14.3 |
| Jan-Jul | 10.3 | 10.8 | 9.9 | 6.6 | 12.1 |
| 12 M Jul | 9.2 | 10.1 | 8.8 | 4.8 | 10.9 |
| Jan-Jun | 10.5 | 11.1 | 10.1 | 7.0 | 12.4 |
| 12 M Jun | 9.5 | 9.0 | 9.6 | 6.5 | 11.5 |
| Jan-May | 10.7 | 11.5 | 10.3 | 6.7 | 12.4 |
| 12 M May | 9.6 | 9.1 | 9.8 | 6.6 | 11.0 |
| Jan-Apr | 11.0 | 12.3 | 10.5 | 6.6 | 12.9 |
| 12 M Apr | 9.3 | 10.3 | 8.9 | 4.3 | 10.7 |
| Jan-Mar | 11.6 | 13.2 | 11.0 | 7.2 | 13.8 |
| 12 M Mar | 11.9 | 13.9 | 11.2 | 8.0 | 13.7 |
| Jan-Feb | 11.4 | 12.7 | 10.9 | 7.3 | 13.9 |
| 2011 | |||||
| Jan-Dec | 13.9 | 13.0 | 14.3 | 9.9 | 15.8 |
| 12 M Dec | 12.8 | 12.6 | 13.0 | 9.2 | 14.7 |
| Jan-Nov | 14.0 | 13.0 | 14.4 | 9.9 | 16.0 |
| 12 M Nov | 12.4 | 12.4 | 12.4 | 7.8 | 14.4 |
| Jan-Oct | 14.1 | 13.0 | 14.5 | 10.1 | 9.1 |
| 12 M Oct | 13.2 | 12.1 | 13.7 | 8.9 | 15.1 |
| Jan-Sep | 14.2 | 13.1 | 14.6 | 10.4 | 16.1 |
| 12 M Sep | 13.8 | 12.8 | 14.3 | 9.9 | 16.0 |
| Jan-Aug | 14.2 | 13.1 | 14.6 | 10.4 | 16.1 |
| 12 M Aug | 13.5 | 13.4 | 13.5 | 9.4 | 15.5 |
| Jan-Jul | 14.3 | ||||
| 12 M | 14.0 | 12.8 | 14.5 | 9.5 | |
| Jan-Jun | 14.3 | 13.1 | 14.7 | 10.7 | 19.7 |
| 12 M | 15.1 | 13.9 | 15.6 | 10.7 | 20.8 |
| Jan-May | 14.0 | 12.9 | 14.4 | 10.7 | 19.3 |
| 12 M May | 13.3 | 12.9 | 13.5 | 8.9 | 18.7 |
| Jan-Apr | 14.2 | 12.9 | 14.7 | 11.2 | 19.5 |
| 12 M Apr | 13.4 | 11.9 | 14.0 | 10.4 | 18.0 |
| Jan-Mar | 14.4 | 13.1 | 14.9 | 11.4 | 19.8 |
| 12 M Mar | 14.8 | 12.8 | 15.6 | 12.9 | 19.2 |
| 12 M Feb | 14.9 | 13.1 | 15.6 | 10.5 | 21.7 |
| Jan-Feb | 14.1 | 13.3 | 14.4 | 10.6 | 20.3 |
Source: National Bureau of Statistics of China
http://www.stats.gov.cn/english/
Chart VC-1 provides 12-month percentage changes of value added of industry in 2011 and from Jan to Sep 2012. Growth rates of value added of industry in the first five months of 2010 were higher than in 2011 as would be expected in an earlier phase of recovery from the global recession. Growth rates have converged in the second half of 2011 to lower percentages with further decline into 2012 to single digit percentage changes.
Chart VC-1, China, Growth Rate of Total Value Added of Industry, 12-Month ∆%
Source: National Bureau of Statistics of China
http://www.stats.gov.cn/english/
Yearly rates of growth for the past 12 months and cumulative relative to the earlier year of various segments of industrial production in China are provided in Table VC-3. Rates from Jan to Dec 2011 relative to the same period a year earlier fluctuated but remained mostly above 10 percent with the exception of motor vehicles and crude oil. There is deceleration in Jan-Sep 2012 of percentage change with no segment showing growth exceeding 10 percent with exception of 12-month growth of 12.0 percent for cement. Electricity fell from growth of 16.2 percent in the 12 months ending in Jun 2011 to 0.0 percent in the 12 months ending in Jun 2012, rebounding to 4.8 percent in Aug 2012 but declining to 1.5 percent in Sep 2012.
Table VC-3, China, Industrial Production Operation ∆%
| Elec- | Pig Iron | Cement | Crude | Non- | Motor Vehicles | |
| 2012 | ||||||
| Jan-Sep | 3.6 | 5.7 | 6.7 | 2.2 | 7.1 | 7.3 |
| 12 M Sep | 1.5 | 4.9 | 12.0 | 7.0 | 7.1 | 6.3 |
| Jan-Aug | 3.8 | -0.5 | 8.7 | 2.5 | 13.8 | 10.4 |
| 12 M Aug | 4.8 | 2.6 | 5.9 | -0.4 | 13.8 | 9.7 |
| Jan-Jul | 3.8 | 6.1 | 5.3 | 1.6 | 6.7 | 7.4 |
| 12M Jul | 2.1 | 6.5 | 6.1 | 1.1 | 4.1 | 12.3 |
| Jan-Jun | 3.7 | 6.1 | 5.5 | 1.7 | 6.7 | 6.7 |
| 12 M Jun | 0.0 | 6.7 | 6.5 | -0.6 | 5.8 | 13.8 |
| Jan-May | 4.7 | 6.3 | 5.0 | 2.2 | 5.1 | 6.2 |
| 12 M May | 2.7 | 6.3 | 4.3 | 0.7 | 6.6 | 18.5 |
| Jan-Apr | 5.0 | 6.2 | 5.5 | 2.9 | 4.6 | 3.1 |
| 12 M Apr | 0.7 | 7.9 | 4.9 | -0.3 | 2.3 | 10.7 |
| Jan-Mar | 7.1 | 6.5 | 7.3 | 3.1 | 5.8 | 0.0 |
| 12 M Mar | 7.2 | 10.2 | 7.9 | 2.0 | 3.3 | 5.1 |
| Jan-Feb | 7.1 | 4.6 | 4.8 | 4.0 | 8.4 | -1.8 |
| 2011 | ||||||
| Jan-Dec | 12.0 | 8.4 | 16.1 | 4.9 | 10.6 | 3.0 |
| 12 M Dec | 9.7 | 3.7 | 7.0 | 4.0 | 13.2 | -6.5 |
| Jan-Nov | 12.0 | 13.1 | 17.2 | 5.3 | 10.2 | 3.9 |
| 12 M Nov | 8.5 | 7.8 | 11.2 | 3.2 | 8.2 | -1.3 |
| Jan-Oct | 12.3 | 13.7 | 18.0 | 5.4 | 10.4 | 5.2 |
| 12 M | 9.3 | 13.4 | 16.5 | -0.9 | 3.7 | 1.3 |
| Jan-Sep | 12.7 | 13.9 | 18.1 | 6.0 | 11.2 | 5.5 |
| 12 M Sep | 11.5 | 18.8 | 15.7 | 1.5 | 13.9 | 2.5 |
| Jan-Aug | 13.0 | 13.1 | 18.4 | 6.6 | 4.7 | |
| 12 M Aug | 10.0 | 12.9 | 12.8 | 4.5 | 15.6 | 9.5 |
| Jan-Jul | 13.3 | 13.0 | 19.2 | 6.9 | 9.9 | 4.0 |
| 12 M | 13.2 | 14.9 | 16.8 | 5.9 | 9.8 | -1.3 |
| 12 M | 16.2 | 14.8 | 19.9 | -0.7 | 9.8 | 3.6 |
| 12 M | 12.1 | 10.6 | 19.2 | 6.0 | 14.2 | -1.9 |
| 12 M Apr | 11.7 | 8.3 | 22.4 | 6.8 | 6.1 | -1.6 |
| 12 M Mar | 14.8 | 13.7 | 29.8 | 8.0 | 11.6 | 9.9 |
| 12 M Feb | 11.7 | 14.5 | 9.1 | 10.9 | 14.4 | 10.3 |
| 12 M Jan | 5.1 | 3.5 | 16.4 | 12.2 | 1.4 | 23.9 |
| 12 M Dec 2010 | 5.6 | 4.6 | 17.3 | 10.3 | -1.9 | 27.6 |
M: month
Source: National Bureau of Statistics of China
http://www.stats.gov.cn/english/
Monthly growth rates of industrial production in China are provided in Table VC-4. Monthly rates have fluctuated around 1 percent. Jan and Feb 2012 are somewhat weaker but there was improvement to 1.17 percent in Mar. The rate of 0.35 percent in Apr is the lowest in the monthly series from Feb 2011 to Sep 2012. Monthly sales growth remained below 1 percent in all the first seven months of 2012 with the exception of Mar 2012.
Table VC-4, China, Industrial Production Operation, Month ∆%
| 2011 | Month ∆% |
| Feb | 0.93 |
| Mar | 0.99 |
| Apr | 1.32 |
| May | 0.79 |
| Jun | 1.30 |
| Jul | 0.82 |
| Aug | 0.85 |
| Sep | 0.95 |
| Oct | 0.76 |
| Nov | 0.74 |
| Dec | 0.96 |
| Jan 2012 | 0.47 |
| Feb | 0.62 |
| Mar | 1.17 |
| Apr | 0.35 |
| May | 0.87 |
| Jun | 0.75 |
| Jul | 0.67 |
| Aug | 0.71 |
| Sep | 0.79 |
Source: National Bureau of Statistics of China
http://www.stats.gov.cn/english/
Table VC-5 provides cumulative growth of investment in fixed assets in China in 2011 relative to 2010 and in Jan-Sep 2012 relative to a year earlier. Total fixed investment has grown at a high rate fluctuating around 25 percent and fixed investment in real estate development has grown at rates in excess of 30 percent. In Jan-Sep 2012 investment in fixed assets in China grew 20.5 percent relative to a year earlier and 15.4 percent in real estate development. There was slight deceleration in the final two months of 2011 that continued into Jan-Sep 2012.
Table VC-5, China, Investment in Fixed Assets ∆% Relative to a Year Earlier
| Total | State | Real Estate Development | |
| Jan-Sep 2012 | 20.5 | 13.6 | 15.4 |
| Jan-Aug | 20.2 | 12.9 | 15.6 |
| Jan-Jul | 20.4 | 12.6 | 15.4 |
| Jan-Jun | 20.4 | 13.8 | 16.6 |
| Jan-May | 20.1 | 10.0 | 18.5 |
| Jan-Apr | 20.2 | 9.5 | 18.7 |
| Jan-Mar | 20.9 | 9.0 | 23.5 |
| Jan-Feb | 21.5 | 8.8 | 27.8 |
| Jan-Dec 2011 | 23.8 | 11.1 | 27.9 |
| Jan-Nov | 24.5 | 11.7 | 29.9 |
| Jan-Oct | 24.9 | 12.4 | 31.1 |
| Jan-Sep | 24.9 | 12.7 | 32.0 |
| Jan-Aug | 25.0 | 12.1 | 33.2 |
| Jan-Jul | 25.4 | 13.6 | 33.6 |
| Jan-Jun | 25.6 | 14.6 | 32.9 |
| Jan-May | 25.8 | 14.9 | 34.6 |
| Jan-Apr | 25.4 | 16.6 | 34.3 |
| Jan-Mar | 25.0 | 17.0 | 34.1 |
| Jan-Feb | 24.9 | 15.6 | 35.2 |
Source: National Bureau of Statistics of China
http://www.stats.gov.cn/english/
Chart VC-2 provides cumulative fixed asset investment in China relative to a year earlier. Growth rose to 25.8 percent in Jan-May 2011 and then fell back to 24.9 percent in Sep and Oct 2011, declining further to 24.5 percent in Nov and 23.8 percent in Dec 2011 with deeper drop in Jan-Feb 2012 to 21.5 percent, 20.9 percent in Jan-Mar, 20.2 percent in Jan-Apr 2012, 20.1 percent in Jan-Apr 2012, 20.4 percent in both Jan-Jun 2012 and Jan-Jul 2012, 20.2 percent in Jan-Aug 2012 and 20.5 percent in Jan-Sep 2012.
Chart VC-2, China, Investment in Fixed Assets, ∆% Cumulative over Year Earlier
Source: National Bureau of Statistics of China
http://www.stats.gov.cn/enGliSH/
Monetary policy has been used in China in the form of increases in interest rates and required reserves of banks to moderate real estate investment. These policies have been reversed because of lower inflation and weakening economic growth. Chart VC-3 shows decline of fluctuating cumulative growth rates of investment in real estate development relative to a year earlier from 35.2 percent in Jan-Feb 2011 to 31.1 percent in Jan-Oct 2011, 29.9 percent in Jan-Nov 2011, 27.9 percent in Jan-Dec 2011, 27.8 percent in Jan-Feb 2012 and sharper decline to 23.5 percent in Jan-Mar 2012, 18.7 percent in Jan-Apr 2012 and 18.5 percent in Jan-May 2012. The trend of decline continued with 16.6 percent in Jan-Jun 2012, 15.4 percent in Jan-Jul 2012, 15.6 percent in Jan-Aug 2012 and 15.4 percent in Jan-Sep 2012.
Chart VC-3, China, Investment in Real Estate Development, ∆% Cumulative over Year Earlier
Source: National Bureau of Statistics of China
http://www.stats.gov.cn/enGliSH/
Table VC-6 provides monthly growth rates of investment in fixed assets in China from Feb 2011 to Sep 2012. Growth rates moderated from Nov 2011 to May 2012. The rate of 0.91 percent in Mar 2012 is the lowest for any month after Mar 2011 but rates rebounded to 1.73 percent in May 2012, 1.68 percent in Jun, 1.42 percent in Jul 2012, 1.33 percent in Aug 2012 and 1.63 percent in Sep 2012.
Table VC-6, China, Investment in Fixed Assets, Month ∆%
| Month ∆% | |
| Feb 2011 | -0.23 |
| Mar | 2.45 |
| Apr | 2.22 |
| May | 1.68 |
| Jun | 1.48 |
| Jul | 1.58 |
| Aug | 1.62 |
| Sep | 1.88 |
| Oct | 1.75 |
| Nov | 1.13 |
| Dec | 1.47 |
| Jan 2012 | 1.17 |
| Feb | 2.03 |
| Mar | 0.91 |
| Apr | 1.16 |
| May | 1.73 |
| Jun | 1.68 |
| Jul | 1.42 |
| Aug | 1.34 |
| Sep | 1.63 |
Source: National Bureau of Statistics of China
http://www.stats.gov.cn/english/
Growth rates of retail sales in China monthly, 12 months and cumulative relative to a year earlier are in Table VC-7. There is decline of growth rates to cumulative 14.7 percent in Feb 2012, 14.8 percent in Mar, 14.7 percent in Apr, 14.5 percent in May, 14.4 percent in Jun, 14.2 percent in Jul and 14.1 percent in both Jul and Aug. Percentage growth rates have declined in Jan-Sep 2012 relative to earlier months.
Table VC-7, China, Total Retail Sales of Consumer Goods ∆%
| Month ∆% | 12-Month ∆% | Cumulative ∆%/ | |
| 2012 | |||
| Sep | 1.46 | 14.2 | 14.1 |
| Aug | 1.36 | 13.2 | 14.1 |
| Jul | 1.33 | 13.1 | 14.2 |
| Jun | 1.36 | 13.7 | 14.4 |
| May | 1.32 | 13.8 | 14.5 |
| Apr | 1.36 | 14.1 | 14.7 |
| Mar | 1.33 | 15.2 | 14.8 |
| Feb | 1.34 | 14.7 | 14.7 |
| Jan | 0.65 | ||
| 2011 | |||
| Dec | 1.52 | 18.1 | 17.1 |
| Nov | 1.40 | 17.3 | 17.0 |
| Oct | 1.47 | 17.2 | 17.0 |
| Sep | 1.33 | 17.7 | 17.0 |
| Aug | 1.50 | 17.0 | 16.9 |
| Jul | 1.57 | 17.2 | 16.8 |
| Jun | 1.49 | 17.7 | 16.8 |
| May | 1.39 | 16.9 | 16.6 |
| Apr | 1.30 | 17.1 | 16.5 |
| Mar | 1.26 | 17.4 | 17.4 |
| Feb | 1.35 | 11.6 | 15.8 |
| Jan | 19.9 | 19.9 |
Note: there are slight revisions of month relative to earlier month data but not of the month on the same month year earlier or cumulative relative to cumulative year earlier in the databank
Source: National Bureau of Statistics of China
http://www.stats.gov.cn/english/
Chart VC-4 of the National Bureau of Statistics of China provides 12-month rates of growth of retail sales in 2011. There is again a drop into 2012 with the lowest percentages in Chart VC-4.
Chart VC-4, China, Total Retail Sales of Consumer Goods 12-Month ∆%
Source: National Bureau of Statistics of China
http://www.stats.gov.cn/enGliSH/
Table VC-8 provides monthly percentage changes of retail sales in China. Although the rate of 0.65 percent in Jan 2012 is the lowest in Table VC-7, the rate of 1.38 percent in May is relatively high and 1.46 percent in Sep 2012 is closer to rates in 2011.
Table VC-8, China, Retail Sales, Month ∆%
| 2011 | Month ∆% |
| Feb | 1.35 |
| Mar | 1.26 |
| Apr | 1.30 |
| May | 1.39 |
| Jun | 1.49 |
| Jul | 1.57 |
| Aug | 1.50 |
| Sep | 1.33 |
| Oct | 1.47 |
| Nov | 1.40 |
| Dec | 1.52 |
| 2012 | |
| Jan | 0.65 |
| Feb | 1.34 |
| Mar | 1.33 |
| Apr | 1.36 |
| May | 1.32 |
| Jun | 1.36 |
| Jul | 1.33 |
| Aug | 1.36 |
| Sep | 1.46 |
Source: National Bureau of Statistics of China
http://www.stats.gov.cn/english/
VD Euro Area. Table VD-EUR provides yearly growth rates of the combined GDP of the members of the European Monetary Union (EMU) or euro area since 1996. Growth was very strong at 3.2 percent in 2006 and 3.0 percent in 2007. The global recession had strong impact with growth of only 0.4 percent in 2008 and decline of 4.4 percent in 2009. Recovery was at lower growth rates of 2.0 percent in 2010 and 1.4 percent in 2011. EUROSTAT forecasts growth of GDP of the euro area of minus 0.3 percent in 2012 but growth of 1.0 percent in 2013.
Table VD-EUR, Euro Area, Yearly Percentage Change of Harmonized Index of Consumer Prices, ∆%
| Year | HICP ∆% | Unemployment | GDP ∆% |
| 1999 | 1.2 | 9.6 | 2.9 |
| 2000 | 2.2 | 8.7 | 3.8 |
| 2001 | 2.4 | 8.1 | 2.0 |
| 2002 | 2.3 | 8.5 | 0.9 |
| 2003 | 2.1 | 9.0 | 0.7 |
| 2004 | 2.2 | 9.3 | 2.2 |
| 2005 | 2.2 | 9.2 | 1.7 |
| 2006 | 2.2 | 8.5 | 3.2 |
| 2007 | 2.1 | 7.6 | 3.0 |
| 2008 | 3.3 | 7.6 | 0.4 |
| 2009 | 0.3 | 9.6 | -4.4 |
| 2010 | 1.6 | 10.1 | 2.0 |
| 2011 | 2.7 | 10.1 | 1.4 |
| 2012* | -0.3 | ||
| 2013* | 1.0 |
*EUROSTAT forecast Source: EUROSTAT http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database
The Markit Eurozone PMI® Composite Output Index, combining services and manufacturing activity with close association with GDP, decreased from 46.3 in Aug to 46.1 in Sep, which is the eighth consecutive contraction; the index average of 46.3 in IIIQ2012 is lower than 46.4 in IIQ2012 and the lowest reading since IIQ2009 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10168). Chris Williamson, Chief Economist at Markit, finds that the data are consistent with likely decline of GDP at a higher rate in IIIQ2012 with the euro area falling again into recession (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10168). The Markit Eurozone Services Business Activity Index declined from 47.2 in Aug to 46.1 in Sep, which is the lowest reading since Jul 2009 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10168). The Markit Eurozone Manufacturing PMI® rose to 46.1 in Sep from 45.1 in Aug (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10110). The average PMI for IIIQ2012 was 45.1, which was the weakest reading since IIQ2009 and below 45.4 in IIQ2012. New export orders declined in Sep for a fifteenth consecutive month, with decline for all countries in the index, with the sharpest contractions in Greece, Austria and Germany. Chris Williamson, Chief Economist at Markit, finds that the index suggests manufacturing in the euro area declined at a quarterly rate of possibly as high as 1 percent, exerting pressure on GDP and employment with the euro area falling into recession in IIIQ2012 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10110). Table EUR provides the regional data table for the euro area.
Table EUR, Euro Area Economic Indicators
| GDP | IIQ2012 ∆% -0.2; IIQ2012/IIQ2011 ∆% -0.4 Blog 10/7/12 |
| Unemployment | Aug 2012: 11.4% unemployment rate Aug 2012: 18.196 million unemployed Blog 10/7/12 |
| HICP | Sep month ∆%: 0.7 12 months Sep ∆%: 2.6 |
| Producer Prices | Euro Zone industrial producer prices Aug ∆%: 0.9 |
| Industrial Production | Aug month ∆%: 0.6; Aug 12 months ∆%: -2.9 |
| Retail Sales | Aug month ∆%: 0.1 |
| Confidence and Economic Sentiment Indicator | Sentiment 85.0 Sep 2012 Confidence minus 25.9 Sep 2012 Blog 9/30/12 |
| Trade | Jan-Aug 2012/Jan-Aug 2011 Exports ∆%: 9.0 Aug 2012 12-month Exports ∆% 10.4 Imports ∆% 1.3 |
Links to blog comments in Table EUR:
10/14/12 http://cmpassocregulationblog.blogspot.com/2012/10/recovery-without-hiring-imf-view-united.html
10/7/12 http://cmpassocregulationblog.blogspot.com/2012/10/twenty-nine-million-unemployed-or.html
9/30/12 http://cmpassocregulationblog.blogspot.com/2012/09/historically-sharper-recoveries-from.html
Euro zone trade growth continues to be relatively strong as shown in Table VD-1. Exports grew at 9.0 percent and imports at 2.5 percent in Jan-Aug 2012 relative to Jan-Aug 2011. The 12-month rate of growth of exports was 10.4 percent in Aug 2012 while imports increased 1.3 percent. In Jul 2012, exports increased 11.0 percent in 12 months and imports increased 2.4 percent. At the margin, rates of growth of trade are declining in part because of moderation of commodity prices.
Table VD-1, Euro Zone, Exports, Imports and Trade Balance, Billions of Euros and Percent, NSA
| Exports | Imports | |
| Jan-Aug 2012 | 1,237.3 | 1,190.4 |
| Jan-Aug 2011 | 1,134.9 | 1,161.7 |
| ∆% | 9.0 | 2.5 |
| Aug 2012 | 152.1 | 145.4 |
| Aug 2011 | 137.8 | 143.5 |
| ∆% | 10.4 | 1.3 |
| Jul 2012 | 161.9 | 147.2 |
| Jul 2011 | 145.8 | 143.7 |
| ∆% | 11.0 | 2.4 |
| Trade Balance | Jan-Aug 2012 | Jan-Aug 2011 |
| € Billions | 46.9 | -26.8 |
Source: EUROSTAT http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/2-16102012-AP/EN/2-16102012-AP-EN.PDF
The structure of trade of the euro zone in Jan-Jul 2012 is provided in Table VD-2. Data are still not available for trade structure for Aug 2012. Manufactured exports increased 8.2 percent in Jan-Jul 2012 relative to Jan-Jul 2011 while imports fell 0.5 percent. The trade surplus in manufactured products was marginally higher than the trade deficit in primary products in Jan-Jul 2012 but lower in Jan-Jul 2011 largely because of the commodity shock caused by carry trades.
Table VD-2, Euro Zone, Structure of Exports, Imports and Trade Balance, € Billions, NSA, ∆%
| Primary | Manufactured | Other | Total | |
| Exports | ||||
| Jan-Jul 2012 € B | 167.5 | 887.2 | 30.6 | 1,085.3 |
| Jan-Jul 2011 € B | 150.3 | 820.1 | 26.7 | 997.1 |
| ∆% | 11.4 | 8.2 | 14.6 | 8.8 |
| Imports | ||||
| Jan-Jul 2012 € B | 383.9 | 642.4 | 18.6 | 1,044.9 |
| Jan-Jul 2011 € B | 356.8 | 645.7 | 15.7 | 1,018.2 |
| ∆% | 7.6 | -0.5 | 18.5 | 2.6 |
| Trade Balance € B | ||||
| Jan-Jul 2012 | -216.4 | 244.8 | 12.0 | 40.3 |
| Jan-Jul 2011 | -206.5 | 174.4 | 11.0 | -21.0 |
Source: EUROSTAT
http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/2-16102012-AP/EN/2-16102012-AP-EN.PDF
VE Germany. Table VE-DE provides yearly growth rates of the German economy from 1992 to 2011, price adjusted chain-linked and price and calendar-adjusted chain-linked. Germany’s GDP fell 5.1 percent in 2009 after growing below trend at 1.1 percent in 2008. Recovery has been robust in contrast with other advanced economy. The German economy grew at 3.7 percent in 2010 and at 3.0 percent in 2011. Growth slowed in 2011 from 1.3 percent in IQ2011, 0.3 percent in IIQ2011 and 0.6 percent in IIIQ2011 to decline of 0.2 percent in IVQ2011 and growth of 0.5 percent in IQ2012. The Federal Statistical Agency of Germany analyzes the fall and recovery of the German economy (http://www.destatis.de/jetspeed/portal/cms/Sites/destatis/Internet/EN/Content/Statistics/VolkswirtschaftlicheGesamtrechnungen/Inlandsprodukt/Aktuell,templateId=renderPrint.psml):
“The German economy again grew strongly in 2011. The price-adjusted gross domestic product (GDP) increased by 3.0% compared with the previous year. Accordingly, the catching-up process of the German economy continued during the second year after the economic crisis. In the course of 2011, the price-adjusted GDP again exceeded its pre-crisis level. The economic recovery occurred mainly in the first half of 2011. In 2009, Germany experienced the most serious post-war recession, when GDP suffered a historic decline of 5.1%. The year 2010 was characterised by a rapid economic recovery (+3.7%).”
Table VE-DE, Germany, GDP Annual ∆%
| Price Adjusted Chain-Linked | Price- and Calendar-Adjusted Chain Linked | |
| 2011 | 3.0 | 3.1 |
| 2010 | 4.2 | 4.0 |
| 2009 | -5.1 | -5.1 |
| 2008 | 1.1 | 0.8 |
| 2007 | 3.3 | 3.4 |
| 2006 | 3.7 | 3.9 |
| 2005 | 0.7 | 0.8 |
| 2004 | 1.2 | 0.7 |
| 2003 | -0.4 | -0.4 |
| 2002 | 0.0 | 0.0 |
| 2001 | 1.5 | 1.6 |
| 2000 | 3.1 | 3.3 |
| 1999 | 1.9 | 1.8 |
| 1998 | 1.9 | 1.7 |
| 1997 | 1.7 | 1.8 |
| 1996 | 0.8 | 0.8 |
| 1995 | 1.7 | 1.8 |
| 1994 | 2.5 | 2.5 |
| 1993 | -1.0 | -1.0 |
| 1992 | 1.9 | 1.5 |
Source: Statistisches Bundesamt Deutschland https://www.destatis.de/EN/PressServices/Press/pr/2012/08/PE12_287_811.html;jsessionid=A761BC574543A771416A9CF81034F7BA.cae1
The Markit Germany Composite Output Index of the Markit Germany Services PMI®, combining manufacturing and services with close association with Germany’s GDP, increased from 47.0 in Aug to 49.2 in Sep, indicating only moderate reduction in output (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10171). Tim Moore, Senior Economist at Markit and author of the report, finds that the economy of Germany stabilized after moderate contraction in prior months (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10171). There was marginal improvement in the Germany Services Business Activity Index from 48.3 in Aug to 49.7 in Sep, which is the second worst reading in a year and significantly lower than the long-term average of 53.0 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10171). The Markit/BME Germany Purchasing Managers’ Index® (PMI®), showing close association with Germany’s manufacturing output, increased from 44.7 in Aug to 47.3 in Sep, which is the most moderate deterioration since Mar (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10119). New export orders fell sharply but at a slower pace than in Aug when new export orders fell at a record in the past three and a half years. Tim Moore, Senior Economist at Markit and author of the report, finds that Germany’s manufacturing output and new orders supported the PMI index, suggesting that the bottom may have been reached (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10119).Table DE provides the country data table for Germany.
Table DE, Germany, Economic Indicators
| GDP | IIQ2012 0.3 ∆%; II/Q2012/IIQ2011 ∆% 0.5 1.0 CA 2011/2010: 3.0% GDP ∆% 1992-2011 Blog 8/26/12 5/27/12 |
| Consumer Price Index | Sep month NSA ∆%: 0.3 |
| Producer Price Index | Sep month ∆%: 0.5 CSA, 0.6 NSA |
| Industrial Production | Mfg Jul month CSA ∆%: -0.4 |
| Machine Orders | MFG Aug month ∆%: -1.3 |
| Retail Sales | Aug Month ∆% -0.8 12-Month ∆% 0.3 Blog 9/30/12 |
| Employment Report | Unemployment Rate Jul 5.4% |
| Trade Balance | Exports Aug 12-month NSA ∆%: 5.8 Blog 10/14/12 |
Links to blog comments in Table DE: 10/14/12 http://cmpassocregulationblog.blogspot.com/2012/10/recovery-without-hiring-imf-view-united.html
10/7/12 http://cmpassocregulationblog.blogspot.com/2012/10/twenty-nine-million-unemployed-or.html
9/30/12 http://cmpassocregulationblog.blogspot.com/2012/09/historically-sharper-recoveries-from.html
8/26/12 http://cmpassocregulationblog.blogspot.com/2012/08/expanding-bank-cash-and-deposits-with_26.html
VF France. Table VF-FR provides growth rates of GDP of France with the estimates of Institut National de la Statistique et des Études Économiques (INSEE). The long-term rate of GDP growth of France from IIQ1949 to IIQ2012 is quite high at 3.3 percent. France’s growth rates were quite high in the four decades of the 1950s, 1960, 1970s and 1980s with an average growth rate of 4.1 percent compounding the average rates in the decades and discounting to one decade. The growth impulse diminished with 1.8 percent in the 1990s and 1.7 percent from 2000 to 2007. The average growth rate from 2000 to 2012, using second quarter data, is 1.1 percent because of the sharp impact of the global recession from IVQ2007 to IIQ2009. Cobet and Wilson (2002) provide estimates of output per hour and unit labor costs in national currency and US dollars for the US, Japan and Germany from 1950 to 2000 (see Pelaez and Pelaez, The Global Recession Risk (2007), 137-44). The average yearly rate of productivity change from 1950 to 2000 was 2.9 percent in the US, 6.3 percent for Japan and 4.7 percent for Germany while unit labor costs in USD increased at 2.6 percent in the US, 4.7 percent in Japan and 4.3 percent in Germany. From 1995 to 2000, output per hour increased at the average yearly rate of 4.6 percent in the US, 3.9 percent in Japan and 2.6 percent in Germany while unit labor costs in US fell at minus 0.7 percent in the US, 4.3 percent in Japan and 7.5 percent in Germany. There was increase in productivity growth in the G7 in Japan and France in the second half of the 1990s but significantly lower than the acceleration of 1.3 percentage points per year in the US. Lucas (2011May) compares growth of the G7 economies (US, UK, Japan, Germany, France, Italy and Canada) and Spain, finding that catch-up growth with earlier rates for the US and UK stalled in the 1970s.
Table VF-FR, France, Average Growth Rates of GDP Fourth Quarter, 1949-2012
| Period | Average ∆% |
| 1949-2012* | 3.3 |
| 2000-2012* | 1.1 |
| 2000-2011 | 1.1 |
| 2000-2007 | 1.7 |
| 1990-1999 | 1.9 |
| 1980-1989 | 2.6 |
| 1970-1979 | 3.8 |
| 1960-1969 | 5.7 |
| 1950-1959 | 4.2 |
*Second Quarter on Second Quarter
Source: Institut National de la Statistique et des Études Économiques http://www.insee.fr/en/themes/info-rapide.asp?id=28
The Markit France Composite Output Index, combining services and manufacturing with close association with French GDP, decreased from 48.0 in Aug to 43.2 in Sep, indicating significant contraction of private sector activity at the highest rate since mar 2009 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10156). Jack Kennedy, Senior Economist at Markit and author of the France Services PMI®, finds that combined manufacturing and services weakness suggests that the French GDP may have contracted in IIIQ2012 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10156). The Markit France Services Activity index fell from 49.2 in Aug to 45.0 in Sep for the lowest reading in eleven months (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10156). The Markit France Manufacturing Purchasing Managers’ Index® fell to 42.7 in Sep from 46.0 in Aug, which was the sharpest decline of the manufacturing economy since Apr 2009 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10129). Jack Kennedy, Senior Economist at Markit and author of the France Manufacturing PMI®, finds continuing deterioration in manufacturing with weakening new orders in home and foreign markets, indicating that manufacturing deducted from GDP growth (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10129). Table FR provides the country data table for France.
Table FR, France, Economic Indicators
| CPI | Sep month ∆% -0.3 |
| PPI | Aug month ∆%: 1.2 Blog 9/30/12 |
| GDP Growth | IIQ2012/IQ2012 ∆%: 0.0 |
| Industrial Production | Aug ∆%: |
| Consumer Spending | Aug Manufactured Goods |
| Employment | IIQ2012 Unemployed 2.785 million |
| Trade Balance | Aug Exports ∆%: month 3.6, 12 months 2.8 Aug Imports ∆%: month 6.3, 12 months 3.4 Blog 10/14/12 |
| Confidence Indicators | Historical averages 100 Sep Mfg Business Climate 90 Blog 9/30/12 |
Links to blog comments in Table FR:
10/14/12 http://cmpassocregulationblog.blogspot.com/2012/10/recovery-without-hiring-imf-view-united.html
9/30/12 http://cmpassocregulationblog.blogspot.com/2012/09/historically-sharper-recoveries-from.html
9/9/12 http://cmpassocregulationblog.blogspot.com/2012/09/twenty-eight-million-unemployed-or_10.html
VG Italy. Table VG-IT provides annual percentage changes of Italy’s GDP and expenditure components. Growth of Italy’s economy was relatively strong in 2007 with GDP growth of 1.7 percent, growth of Gross Domestic Investment (GDI) of 1.8 percent and growth of exports of 6.2 percent. There was sharp impact of the contraction on the economy of Italy with decline of GDP of 1.2 percent in 2008 followed by sharper decline of 5.5 percent in 2009. GDI fell sharply by 11.7 percent in 2009. Exports (EXP) also contracted sharply by 17.5 percent. Recovery was strong in 2010 with growth of GDP of 1.8 percent, GDI 2.1 percent and EXP 11.4 percent. Recovery stalled in 2011 with growth of GDP of 0.4 percent moving toward contraction at the end of the year and contraction of GDI of 1.8 percent while EXP grew 6.0 percent.
Table VG-IT, Italy, Gross Domestic Product and Expenditure Components, Annual ∆%
| 2007 | 2008 | 2009 | 2010 | 2011 | |
| GDP | 1.7 | -1.2 | -5.5 | 1.8 | 0.4 |
| NCE | 1.1 | -0.5 | -1.0 | 0.7 | -0.1 |
| GDI | 1.8 | -3.7 | -11.7 | 2.1 | -1.8 |
| EXP | 6.2 | -2.8 | -17.5 | 11.4 | 6.0 |
| IMP | 5.2 | -3.0 | -13.4 | 12.5 | 0.6 |
Notes: NCE: National Consumption Expenditures; GDI: Gross Domestic Investment; EXP: Exports; IMP: Imports
Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/71887
The Markit/ADACI Business Activity Index increased from 44.0 in Aug to 44.5 in Sep, indicating sharp contraction of output of Italy’s services (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10167). Phil Smith, economist at Markit and author of the Italy Services PMI®, finds that the data suggest contraction of GDP in Italy in IIIQ2012 at a rate close to the contraction in IIQ2012 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10167). The Markit/ADACI Purchasing Managers’ Index® (PMI®), increased from 43.6 in Aug to 45.7 in Sep for 12 consecutive months of contraction of Italy’s manufacturing (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10122). There was more moderate decline in new foreign orders than sharper decline in domestic new orders. Phil Smith, economist at Markit and author of the Italian Manufacturing PMI®, finds slower contraction of employment, new orders and output, suggesting slower pace of deterioration of manufacturing in Italy (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10122). Table IT provides the country data table for Italy.
Table IT, Italy, Economic Indicators
| Consumer Price Index | Sep month ∆%: 0.0 |
| Producer Price Index | Aug month ∆%: 0.8 Blog 9/30/12 |
| GDP Growth | IIQ2012/IQ2012 SA ∆%: minus 0.8 |
| Labor Report | Jul 2012 Participation rate 64.0% Employment ratio 57.1% Unemployment rate 10.7% Blog 9/2/12 |
| Industrial Production | Jul month ∆%: -0.2 |
| Retail Sales | Jul month ∆%: -0.2 Jul 12-month ∆%: -3.2 Blog 9/30/12 |
| Business Confidence | Mfg Sep 88.3, May 86.5 Construction Sep 86.5, May 82.2 Blog 9/30/12 |
| Trade Balance | Balance Aug SA €507 million versus Jul €708 |
Links to blog comments in Table IT:
10/14/12 http://cmpassocregulationblog.blogspot.com/2012/10/recovery-without-hiring-imf-view-united.html
9/30/12 http://cmpassocregulationblog.blogspot.com/2012/09/historically-sharper-recoveries-from.html
9/16/12 http://cmpassocregulationblog.blogspot.com/2012/09/recovery-without-hiring-world-inflation.html
9/2/12 http://cmpassocregulationblog.blogspot.com/2012/09/collapse-of-united-states-dynamism-of_2.html
Exports and imports of Italy and monthly growth rates SA are provided in Table VG-1. There have been significant fluctuations. Seasonally-adjusted exports increased 3.9 percent in Aug 2012 while imports increased 4.4 percent. The SA trade balance deteriorated from surplus of €708 million in Jul 2012 to surplus of €587 million in Aug 2012.
Table VG-1, Italy, Exports, Imports and Trade Balance SA Million Euros and Month SA ∆%
| Exports | M ∆% | Imports | M ∆% | Balance | |
| 2010 | |||||
| Dec | 29,597 | 1.5 | 33,348 | 2.9 | -3,751 |
| 2011 | |||||
| Jan | 31,067 | 5.0 | 33,741 | 1.2 | -2,674 |
| Feb | 30,495 | -1.8 | 33,098 | -1.9 | -2,603 |
| Mar | 31,134 | 2.1 | 34,935 | 5.6 | -3,801 |
| Apr | 31,486 | 1.1 | 34,203 | -2.1 | -2,717 |
| May | 32,202 | 2.3 | 34,776 | 1.7 | -2,574 |
| Jun | 31,437 | -2.4 | 33,212 | -4.5 | -1,775 |
| Jul | 31,719 | 0.9 | 33,812 | 1.8 | -2,093 |
| Aug | 31,643 | -0.2 | 34,197 | 1.1 | -2,554 |
| Sep | 31,844 | 0.6 | 33,085 | -3.3 | -1,241 |
| Oct | 30,969 | -2.7 | 32,472 | -1.9 | -1,503 |
| Nov | 31,482 | 1.7 | 32,737 | 0.8 | -1,255 |
| Dec | 32,711 | 3.9 | 32,239 | -1.5 | 472 |
| 2012 | |||||
| Jan | 31,823 | -2.7 | 32,096 | -0.4 | -273 |
| Feb | 31,834 | 0.0 | 32,300 | 0.6 | -466 |
| Mar | 32,394 | 1.8 | 31,609 | -2.1 | 785 |
| Apr | 32,424 | 0.1 | 32,388 | 2.5 | 36 |
| May | 32,882 | 1.4 | 32,568 | 0.6 | 314 |
| Jun | 32,472 | -1.2 | 30,959 | -4.9 | 1,513 |
| Jul | 32,686 | 0.7 | 31,978 | 3.3 | 708 |
| Aug | 33,962 | 3.9 | 33,375 | 4.4 | 587 |
Source: Istituto Nazionale di Statistica
http://www.istat.it/it/archivio/72548
Italy’s trade account not seasonally adjusted is provided in Table VG-2. Values are different because the data are original and not adjusted. Exports increased 8.4 percent in the 12 months ending in Aug 2012 while imports decreased 1.1 percent. Twelve-month rates of growth picked up again in Aug 2011 with 14.9 percent for exports and 12.1 percent for imports. In Sep 2011, exports grew 10.2 percent relative to a year earlier while imports grew only 3.6 percent. In Oct 2011, exports grew 4.5 percent while imports fell 0.4 percent. In Nov 2011, exports grew 6.5 percent in 12 months while imports grew 0.5 percent. Exports continued to growth of 8.4 percent in the 12 months ending in Aug 2012 while imports fell 1.1 percent. The actual or not seasonally adjusted trade balance deficit fell from €2905 million in Aug 2011 to surplus of €1150 million in Dec but turned into deficit of €4346 million in Jan 2012, improving to lower deficit of €1136 million in Feb 2012 and surplus of €2067 million in Mar 2012, returning to deficit of €200 million in Apr and surplus of €1013 million in May. In Jun 2012, the actual surplus was €2516 million and then €4510 million in Jul 2012 which was the highest in 2012 but deteriorated to actual deficit of €598 million in Aug 2012. Exports fell 20.9 percent and imports 22.1 percent during the global recession in 2009.
Table VG-2, Italy, Exports, Imports and Trade Balance NSA Million Euros and 12 Month ∆%
| Exports | 12 M ∆% | Imports | 12 M ∆% | Balance | |
| Annual | |||||
| 2009 | 291,733 | -20.9 | 297,609 | -22.1 | -5,876 |
| 2010 | 337,346 | 15.6 | 367,390 | 23.4 | -30,044 |
| 2011 | 375,850 | 11.4 | 400,480 | 9.0 | -24,630 |
| 2010 | |||||
| Dec | 29,714 | 20.2 | 32,732 | 31.7 | -3,018 |
| 2011 | |||||
| Jan | 26,146 | 24.6 | 32,455 | 28.4 | -6,309 |
| Feb | 29,595 | 17.7 | 32,621 | 16.2 | -3,026 |
| Mar | 34,418 | 14.0 | 38,203 | 19.8 | -3,785 |
| Apr | 31,045 | 12.5 | 33,869 | 18.0 | -2,824 |
| May | 33,491 | 19.8 | 35,722 | 18.4 | -2,231 |
| Jun | 32,605 | 7.9 | 34,309 | 1.6 | -1,704 |
| Jul | 35,264 | 5.8 | 33,743 | 6.1 | 1,521 |
| Aug | 24,177 | 14.9 | 27,082 | 12.1 | -2,905 |
| Sep | 32,997 | 10.2 | 34,878 | 3.6 | -1,881 |
| Oct | 32,131 | 4.5 | 33,186 | -0.4 | -1,055 |
| Nov | 32,428 | 6.5 | 34,011 | 0.5 | -1,583 |
| Dec | 31,551 | 6.2 | 30,401 | -7.1 | 1,150 |
| 2012 | |||||
| Jan | 27,271 | 4.3 | 31,617 | -2.6 | -4,346 |
| Feb | 31,754 | 7.3 | 32,890 | 0.8 | -1,136 |
| Mar | 36,107 | 4.9 | 34,040 | -10.9 | 2,067 |
| Apr | 30,521 | -1.7 | 30,721 | -9.3 | -200 |
| May | 35,109 | 4.8 | 34,096 | -4.6 | 1,013 |
| Jun | 34,388 | 5.5 | 31,872 | -7.1 | 2,516 |
| Jul | 36,786 | 4.3 | 32,276 | -4.3 | 4,510 |
| Aug | 26,199 | 8.4 | 26,797 | -1.1 | -598 |
Source: Istituto Nazionale di Statistica
http://www.istat.it/it/archivio/72548
Growth rates of Italy’s trade and major products are provided in Table VG-3 for the period Jan-Aug 2012 relative to Jan-Aug 2011. Growth rates in 12 months of imports are negative with the exception of 9.7 percent for energy. The higher rate of growth of exports of 5.9 percent in Jan-Aug 2012/Jan-Jul 2011 relative to imports of minus 2.6 percent may reflect weak demand in Italy with GDP declining during four consecutive quarters from IIIQ2011 through IIQ2012.
Table VG-3, Italy, Exports and Imports % Share of Products in Total and ∆%
| Exports | Exports | Imports | Imports | |
| Consumer | 28.9 | 5.9 | 25.0 | -2.6 |
| Durable | 5.9 | 2.5 | 3.0 | -6.2 |
| Non | 23.0 | 6.8 | 22.0 | -2.1 |
| Capital Goods | 32.2 | 3.1 | 20.8 | -11.5 |
| Inter- | 34.3 | 3.3 | 34.5 | -11.3 |
| Energy | 4.7 | 17.0 | 19.7 | 9.7 |
| Total ex Energy | 95.3 | 4.0 | 80.3 | -8.7 |
| Total | 100.0 | 4.6 | 100.0 | -5.1 |
Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/72548
Table VG-4 provides Italy’s trade balance by product categories in Aug 2012 and cumulative Jan-Aug 2012. Italy’s trade balance excluding energy generated surplus of €5163 million in Aug 2012 and €47,109 million in Jan-Aug 2012 but the energy trade balance created deficit of €5761 million in Aug 2012 and €43,284 million in Jan-Aug 2012. The overall deficit in Aug 2012 was €598 million with surplus of €3825 million in Jan-Aug 2012. Italy has significant competitiveness in various economic activities in contrast with some other countries with debt difficulties.
Table VG-4, Italy, Trade Balance by Product Categories, € Millions
| Aug 2012 | Cumulative Jan-Aug 2012 | |
| Consumer Goods | 745 | 10,426 |
| Durable | 589 | 7,432 |
| Nondurable | 156 | 2,994 |
| Capital Goods | 3,808 | 32,763 |
| Intermediate Goods | 610 | 3,920 |
| Energy | -5,761 | -43,284 |
| Total ex Energy | 5,163 | 47,109 |
| Total | -598 | 3,825 |
Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/72548
Professors Ricardo Caballero and Francesco Giavazzi (2012Jan15) find that the resolution of the European sovereign crisis with survival of the euro area would require success in the restructuring of Italy. That success would be assured with growth of the Italian economy. A critical problem is that the common euro currency prevents Italy from devaluing the exchange rate to parity or the exchange rate that would permit export growth to promote internal economic activity, which could generate fiscal revenues for primary fiscal surplus that ensure creditworthiness. Fiscal consolidation and restructuring are important but of long-term gestation. Immediate growth of the Italian economy would consolidate the resolution of the sovereign debt crisis. Caballero and Giavazzi (2012Jan15) argue that 55 percent of the exports of Italy are to countries outside the euro area such that devaluation of 15 percent would be effective in increasing export revenue. Newly available data in Table VG-5 providing Italy’s trade with regions and countries supports the argument of Caballero and Giavazzi (2012Jan15). Italy’s exports to the European Monetary Union (EMU), or euro area, are only 42.7 percent of the total. Exports to the non-European Union area with share of 44.0 percent in Italy’s total exports are growing at 10.3 percent in Jan-Aug 2012 relative to Jan-Aug 2011 while those to EMU are falling at 1.0 percent.
Table VG-5, Italy, Exports and Imports by Regions and Countries, % Share and 12-Month ∆%
| Jul 2012 | Exports | ∆% Jan-Aug 2012/ Jan-Aug 2011 | Imports | Imports |
| EU | 56.0 | 0.3 | 53.3 | -6.6 |
| EMU 17 | 42.7 | -1.0 | 43.2 | -6.3 |
| France | 11.6 | 0.4 | 8.3 | -4.5 |
| Germany | 13.1 | 0.5 | 15.6 | -10.7 |
| Spain | 5.3 | -8.0 | 4.5 | -5.7 |
| UK | 4.7 | 10.5 | 2.7 | -12.8 |
| Non EU | 44.0 | 10.3 | 46.7 | -3.4 |
| Europe non EU | 13.3 | 11.5 | 11.1 | -4.6 |
| USA | 6.1 | 18.7 | 3.3 | 3.7 |
| China | 2.7 | -11.4 | 7.3 | -16.2 |
| OPEC | 4.7 | 24.2 | 8.6 | 23.6 |
| Total | 100.0 | 8.4 | 100.0 | -5.1 |
Notes: EU: European Union; EMU: European Monetary Union (euro zone)
Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/72548
Table VG-6 provides Italy’s trade balance by regions and countries. Italy had trade deficit of €674 million with the 17 countries of the euro zone (EMU 17) in Aug 2012 and deficit of €1375 million in Jan-Aug 2012. Depreciation to parity could permit greater competitiveness in improving the trade surpluses of €7128 million in Jan-Aug with Europe non European Union and of €8973 million with the US. There is significant rigidity in the trade deficits in Jan-Aug of €11,378 million with China and €14,150 million with members of the Organization of Petroleum Exporting Countries (OPEC). Higher exports could drive economic growth in the economy of Italy that would permit less onerous adjustment of the country’s fiscal imbalances, raising the country’s credit rating.
Table VG-6, Italy, Trade Balance by Regions and Countries, Millions of Euro
| Regions and Countries | Trade Balance Aug 2012 Millions of Euro | Trade Balance Cumulative Jan-Aug 2012 Millions of Euro |
| EU | 374 | 8,176 |
| EMU 17 | -674 | -1,375 |
| France | 637 | 7,926 |
| Germany | -449 | -3,600 |
| Spain | -26 | 1,136 |
| UK | 683 | 6,300 |
| Non EU | -972 | -4,351 |
| Europe non EU | 534 | 7,128 |
| USA | 902 | 8,973 |
| China | -1,345 | -11,378 |
| OPEC | -1,478 | -14,150 |
| Total | -598 | 3,825 |
Notes: EU: European Union; EMU: European Monetary Union (euro zone)
Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/72548
VH United Kingdom. Annual data in Table VH-UK show the strong impact of the global recession in the UK with decline of GDP of 4.0 percent in 2009 after dropping 1.0 percent in 2008. Recovery of 1.8 percent in 2010 is relatively low compared to annual growth rates in 2007 and earlier years. Growth was only 0.9 percent in 2011. The bottom part of Table VH-UK provides average growth rates of UK GDP since 1948. The UK economy grew at 2.7 percent on average between 1948 and 2011, which is relatively high for an advanced economy. The growth rate of GDP between 2000 and 2007 is higher at 3.0 percent. Growth in the current cyclical expansion has been only at 1.3 percent as advanced economies struggle with weak internal demand and world trade.
Table VH-UK, UK, Gross Domestic Product, ∆%
| ∆% on Prior Year | |
| 1998 | 3.5 |
| 1999 | 3.2 |
| 2000 | 4.2 |
| 2001 | 2.9 |
| 2002 | 2.4 |
| 2003 | 3.8 |
| 2004 | 2.9 |
| 2005 | 2.8 |
| 2006 | 2.6 |
| 2007 | 3.6 |
| 2008 | -1.0 |
| 2009 | -4.0 |
| 2010 | 1.8 |
| 2011 | 0.9 |
| Average ∆% per Year | |
| 1948-2011 | 2.7 |
| 1948-1959 | 2.9 |
| 1960-1969 | 3.3 |
| 1970-1979 | 2.5 |
| 1980-1989 | 3.2 |
| 1990-1999 | 2.6 |
| 2000-2011 | 1.7 |
| 2000-2007 | 3.0 |
| 2009-2011 | 1.3 |
Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/naa2/quarterly-national-accounts/q2-2012/index.html
The Business Activity Index of the Markit/CIPS UK Services PMI® decreased from 53.7 in Aug to 52.2 in Sep with growth during 21 consecutive months, decreasing at the margin (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10162). Chris Williamson, Chief Economist at Markit, finds that the UK economy could have grown at 0.1 in IIIQ2012 with moderate growth of services but marginal decline in construction and sharp decline in manufacturing (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10162). The Markit/CIPS UK Manufacturing Purchasing Managers’ Index® (PMI®) decreased from 49.6 in Aug to 48.4 in Sep (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10013). The PMI registered average 47.7 in IIIQ2012, which is the lowest reading since IIQ2009. New export orders fell for a sixth consecutive month with slowing demand from the European Union and Asia. Chris Williamson, Chief Economist at Markit and author of the Markit/CIPS Manufacturing PMI®, finds that the PMI data suggest contraction of manufacturing output in the UK at a quarterly rate higher than 1 percent that could restrain growth, maintaining the economy in recession (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10125).
Table UK, UK Economic Indicators
| CPI | Sep month ∆%: 0.4 |
| Output/Input Prices | Output Prices: |
| GDP Growth | IIQ2012 prior quarter ∆% minus 0.4; year earlier same quarter ∆%: minus 0.5 |
| Industrial Production | Aug 2012/Jul 2011 NSA ∆%: Production Industries minus 1.2; Manufacturing minus 1.2 |
| Retail Sales | Sep month ∆%: 0.6 |
| Labor Market | Jun-Aug Unemployment Rate: 7.9%; Claimant Count 4.8%; Earnings Growth 1.7% |
| Trade Balance | Balance Aug minus ₤4169 million |
Links to blog comments in Table UK:
10/14/12 http://cmpassocregulationblog.blogspot.com/2012/10/recovery-without-hiring-imf-view-united.html
9/30/12 http://cmpassocregulationblog.blogspot.com/2012/09/historically-sharper-recoveries-from.html
9/23/12 http://cmpassocregulationblog.blogspot.com/2012/09/collapse-of-united-states-creation-of.html
9/16/12 http://cmpassocregulationblog.blogspot.com/2012/09/recovery-without-hiring-world-inflation.html
9/9/12 http://cmpassocregulationblog.blogspot.com/2012/09/twenty-eight-million-unemployed-or_10.html
Labor market statistics of the UK for the quarter Jun-Aug 2012 are provided in Table VH-1. The unemployment rate fell to 7.9 percent and the number unemployed decreased 50,000 in the year, reaching 2.528 million. There are 904,000 unemployed over one year and 443,000 unemployed over two years, up 9,000 on the quarter. The employment rate is 71.3 percent. Earnings growth including bonuses was 1.7 percent over the earlier year. The claimant count or those receiving unemployment benefits stands at 4.8 percent, unchanged on the month and on the year. There are 8.13 million people working part time. The number of employees and self-employed part-time because they could not find full-time employment increased 16,000 to 1.42 million.
Table VH-1, UK, Labor Market Statistics
| Quarter Jun-Aug 2012 | |
| Unemployment Rate | 7.9% down 0.2 % points on quarter and -0.3 from year earlier |
| Number Unemployed | (1) -50,000 from year earlier to reach 2.528 million (2) Unemployment rate 16 to 24 years of age 20.5% of that age group (3) Unemployed 16 to 24 years excluding those in full-time education 957,000 (288,000 in full-time education) down 62,000 from year earlier; unemployment rate 20.5% |
| Number Unemployed > one and two years | (1) Number unemployed over one year: 904,000 up 22,000 (2) Number unemployed over two years: 443,000, up 9,000 on quarter |
| Inactivity Rate 16-64 Years of Age (Definition: Not in employment but have not been seeking employment in the past four weeks or are unable to start work in two weeks) | (1) 22.5%, down 0.3 % points on quarter (2) Economically inactive 16-64 years down 138,000 on quarter and down 314,000 on year to 9.042 million |
| Employment Rate | 71.3% Apr-Jun, up 0.5 % points on quarter |
| Number Employed | (1) Up 212,000 on quarter, +510,000 on year to 29.590 million (2) Number of employees up 162,000 on quarter to 25.12 million (3) Self-employed +35,000 on quarter to 4.20 million (5) Number in other job categories +26,000 to 210,000 |
| Earnings Growth Rates Year on Year | (1) Total +1.7% (including bonuses) over year earlier; regular 2.0%; private sector 1.8% on year earlier, public sector rose 1.2% on year earlier (2) Regular private +2.0% (excluding bonuses) +0.1over year earlier; regular public 2.6% on year earlier |
| Full-time and Part-time | (1) Number full-time 21.46 million, up 88,000 on quarter (2) Number part-time 8.13 million, up 125,000 on quarter (3) Number employees and self-employed working part-time because they could not find full-time employment 1.42 million up 16,000 on quarter |
| Claimant Count (Jobseeker’s Allowance, JSA) | (1) Latest estimate: 1.567 million; down 4,000 in month, down 21,800 on year earlier (2) Claimant count 4.8%, unchanged on month down 0.1 on year |
| Labor Productivity | (1) Output per worker fell 1.1% from IQ2012 to IIQ2012 |
Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/lms/labour-market-statistics/october-2012/index.html
Table VH-2 provides indicators of the labor force survey of the UK for Jun-Aug 2012 and earlier quarters. There has been deterioration in UK labor markets with the rate of unemployment increasing from 7.8 percent in May-Jul 2010 to 8.1 percent in May-Jul 2012 but declining to 7.9 percent in Jun-Aug 2012.
Table VH-2, UK, Labor Force Survey Indicators
| LFHP | EMP | PART | UNE | RATE | |
| Jun-Aug 2012 | 40,193 | 29,590 | 71.3 | 2,528 | 7.9 |
| Mar-May 2012 | 40,184 | 29,378 | 70.8 | 2,577 | 8.1 |
| Dec-Feb 2012 | 40,179 | 29,210 | 70.5 | 2,634 | 8.3 |
| Sep-Nov 2011 | 40,172 | 29,128 | 70.3 | 2,675 | 8.4 |
| Jun-Aug 2011 | 40,168 | 29,080 | 70.3 | 2,577 | 8.1 |
| Jun-Aug 2010 | 39,995 | 29,128 | 70.7 | 2,455 | 7.8 |
Notes: LFHP: Labor Force Household Population Ages 16 to 64 in thousands; EMP: Employed Ages 16 and over in thousands; PART: Employment as % of Population Ages 16 to 64; UNE: Unemployed Ages 16 and over in thousands; Rate: Number Unemployed Ages 16 and over as % of Employed plus Unemployed
Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/lms/labour-market-statistics/october-2012/index.html
The volume of retail sales in the UK increased 0.6 percent in Sep 2012 and increased 2.5 percent in the 12 months ending in Sep 2012, as shown in Table VH-3. Retail sales percentage changes in 12 months had been positive since Sep 2011 with exception of decline of 1.6 percent in Apr 2012. Cumulative growth from Sep 2011 to Mar 2012 was 3.0 percent, or at the high annual equivalent rate of 5.2 percent. Growth in the six months Apr-Sep 2012 was 0.2 percent because of the decline of 2.2 percent in Apr 2012. There has been significant volatility in monthly retail sales in the UK.
Table VH-3, UK, Volume of Retail Sales ∆%
| Month ∆% | 12-Month ∆% | |
| Sep 2012 | 0.6 | 2.5 |
| Aug | -0.1 | 2.5 |
| Jul | 0.1 | 2.2 |
| Jun | 0.4 | 2.2 |
| May | 1.4 | 1.9 |
| Apr | -2.2 | -1.6 |
| Mar | 1.9 | 2.9 |
| Feb | -0.5 | 0.6 |
| Jan | 0.2 | 0.6 |
| Dec 2011 | 0.4 | 2.5 |
| Nov | -0.4 | 0.2 |
| Oct | 0.8 | 0.6 |
| Sep | 0.6 | 0.3 |
| Aug | -0.4 | -1.2 |
| Jul | 0.2 | -0.9 |
| Jun | 0.1 | -0.7 |
| May | -2.1 | -0.8 |
| Apr | 2.2 | 2.1 |
| Mar | -0.3 | 0.0 |
| Feb | -0.6 | 0.1 |
| Jan | 2.1 | 3.4 |
| Dec 2010 | -1.9 | -2.2 |
Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/rsi/retail-sales/september-2012/index.html
Retail sales in the UK struggle with relatively high inflation. Table VH-4 provides 12-month percentage changes of the implied deflator of UK retail sales. The implied deflator of all retail sales increased 0.7 percent in the 12 months ending in Sep while that of sales excluding auto fuel increased 0.5 percent. The 12-month increase of the implied deflator of auto fuel sales rose to 16.9 percent in Sep 2011, which is the highest 12-month increase in 2011, but then declined to 14.7 percent in Oct 2011, 12.6 percent in Nov, 1.2 percent in May 2012 and minus 1.3 percent in Jul 2012, increasing 0.4 percent in Aug 2012 and 2.9 percent in Sep 2012. The percentage change of the implied deflator of sales of food stores at 2.0 percent in Sep 2012 is also higher than for total retail sales. Increases in fuel prices at the retail level have occurred throughout most years since 2005 with exception of the decline of 9.5 percent in 2008 when commodity carry trades were reversed in the panic of the financial crisis, as shown in Table VH-4. UK inflation is particularly sensitive to changes in commodity prices.
Table VH-4, UK, Implied Deflator of Retail Sales, 12-Month Percentage Changes, ∆%
| All Retail | Ex Auto | Food | Non- | Auto | |
| Sep 2012 | 0.7 | 0.5 | 2.0 | -0.6 | 2.9 |
| Aug | 0.2 | 0.3 | 2.0 | -1.1 | 0.4 |
| Jul | 0.2 | 0.5 | 1.9 | -0.6 | -1.3 |
| Jun | 0.3 | 0.7 | 2.2 | -0.5 | -1.1 |
| May | 1.2 | 1.3 | 3.1 | -0.1 | 1.2 |
| Apr | 2.0 | 1.7 | 3.7 | 0.0 | 5.2 |
| Mar | 2.9 | 2.5 | 4.5 | 0.9 | 4.9 |
| Feb | 2.6 | 2.2 | 4.0 | 0.6 | 5.3 |
| Jan | 2.5 | 2.1 | 3.5 | 0.9 | 5.3 |
| Dec 2011 | 2.8 | 2.0 | 4.3 | 0.6 | 9.1 |
| Nov | 3.8 | 2.7 | 4.6 | 1.4 | 12.6 |
| Oct | 4.6 | 3.4 | 5.0 | 2.1 | 14.7 |
| Sep | 5.1 | 3.6 | 6.1 | 1.5 | 16.9 |
| Aug | 5.4 | 4.0 | 6.0 | 2.3 | 16.2 |
| Jul | 5.1 | 3.8 | 5.9 | 2.1 | 14.4 |
| Jun | 4.6 | 3.3 | 6.1 | 1.0 | 14.5 |
| May | 4.6 | 3.4 | 5.5 | 1.7 | 13.1 |
| Apr | 4.2 | 3.2 | 4.8 | 1.9 | 12.2 |
| Mar | 4.3 | 2.9 | 4.3 | 1.7 | 14.8 |
| Feb | 4.9 | 3.6 | 5.5 | 2.0 | 15.0 |
| Jan | 4.2 | 3.0 | 5.3 | 1.1 | 14.4 |
| Dec 2010 | 3.4 | 2.9 | 5.2 | 1.1 | 12.4 |
| Dec 2009 | 3.6 | 2.4 | 2.1 | 1.7 | 16.8 |
| Dec 2008 | -0.3 | 0.4 | 7.1 | -4.1 | -9.5 |
| Dec 2007 | 1.8 | 0.6 | 3.9 | -1.7 | 15.3 |
| Dec 2006 | 1.1 | 0.9 | 3.3 | -1.0 | 1.1 |
| Dec 2005 | -0.4 | -1.0 | 1.3 | -2.6 | 6.6 |
Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/rsi/retail-sales/september-2012/index.html
UK monthly retail volume of sales is quite volatile, as shown in Table VH-5. Total volume of sales increased 0.6 percent in Sep 2012. There were increases in most major categories in Sep 2012, with exception of decline of 0.2 percent in food stores. Multiple positive and negative variations and changes in magnitudes confirm high volatility.
Table VH-5, UK, Growth of Retail Sales Volume by Component Groups Month SA ∆%
| All Retail | Ex Auto | Food | Non- | Auto | |
| Sep 2012 | 0.6 | 0.6 | -0.2 | 1.2 | 0.5 |
| Aug | -0.1 | -0.2 | 0.1 | -0.2 | 0.5 |
| Jul | 0.1 | -0.1 | 0.4 | -1.1 | 2.6 |
| Jun | 0.4 | 0.7 | 0.0 | 1.5 | -2.3 |
| May | 1.4 | 1.0 | 0.6 | 1.1 | 5.8 |
| Apr | -2.2 | -1.1 | -0.3 | -2.1 | -12.7 |
| Mar | 1.9 | 1.5 | -0.1 | 3.0 | 5.6 |
| Feb | -0.5 | -0.4 | 0.0 | -0.9 | -1.7 |
| Jan | 0.2 | 0.3 | 0.0 | 0.5 | -1.1 |
| Dec 2011 | 0.4 | 0.4 | 0.0 | 0.8 | -0.1 |
| Nov | -0.4 | -0.7 | -0.7 | -1.1 | 2.9 |
| Oct | 0.8 | 0.8 | 0.6 | 1.2 | 0.4 |
| Sep | 0.6 | 0.6 | 0.2 | 1.2 | 0.2 |
| Aug | -0.4 | -0.4 | 0.0 | -1.1 | -0.4 |
| Jul | 0.2 | 0.3 | 0.9 | 0.0 | -0.3 |
| Jun | 0.1 | 0.1 | -0.3 | -0.3 | 0.3 |
| May | -2.1 | -2.3 | -4.2 | -1.1 | 0.1 |
| Apr | 2.2 | 2.3 | 3.5 | 1.1 | 1.8 |
| Mar | -0.3 | -0.2 | 0.9 | -1.0 | 0.9 |
| Feb | -0.6 | -0.7 | -0.4 | -1.1 | 0.2 |
| Jan | 2.1 | 1.3 | 0.5 | 2.0 | 9.5 |
| Dec 2010 | -1.9 | -1.3 | -2.1 | -1.4 | -7.9 |
Source: UK Office for National Statistics
http://www.ons.gov.uk/ons/rel/rsi/retail-sales/september-2012/index.html
Percentage growth in 12 months of retail sales volume by component groups in the UK is provided in Table VH-6. Total retail sales increased 2.5 percent in the 12 months ending in Sep 2012 with increase of 2.9 percent in sales excluding auto fuel. Significant improvement since Aug 2011 was interrupted with sharp declines in Apr 2012 but recovery from May to Sep 2012.
Table VH-6, UK, Growth of Retail Sales Volume by Component Groups 12-Month ∆%
| All Retail | Ex Auto | Food | Non- | Auto | |
| Sep 2012 | 2.5 | 2.9 | 0.5 | 4.3 | -1.1 |
| Aug | 2.5 | 2.9 | 0.9 | 4.3 | -1.4 |
| Jul | 2.2 | 2.7 | 0.8 | 2.9 | -2.3 |
| Jun | 2.2 | 3.0 | 1.3 | 4.1 | -5.1 |
| May | 1.9 | 2.4 | 1.0 | 2.3 | -2.4 |
| Apr | -1.6 | -1.0 | -3.8 | 0.0 | -7.7 |
| Mar | 2.9 | 2.4 | -0.1 | 3.3 | 7.6 |
| Feb | 0.6 | 0.6 | 0.9 | -0.7 | 1.0 |
| Jan | 0.6 | 0.3 | 0.5 | -0.9 | 3.0 |
| Dec 2011 | 2.5 | 1.4 | 1.0 | 0.7 | 14.0 |
| Nov | 0.2 | -0.3 | -1.1 | -1.5 | 5.1 |
| Oct | 0.6 | 0.4 | 0.4 | -0.8 | 2.4 |
| Sep | 0.3 | 0.0 | -0.2 | -1.3 | 3.5 |
| Aug | -1.2 | -1.5 | -0.6 | -3.7 | 2.1 |
| Jul | -0.9 | -1.2 | -1.1 | -2.7 | 2.2 |
| Jun | -0.7 | -1.1 | -4.0 | -0.8 | 3.3 |
| May | -0.8 | -1.1 | -3.3 | -0.8 | 2.3 |
| Apr | 2.1 | 1.9 | 2.3 | 0.5 | 3.9 |
| Mar | 0.0 | -0.4 | -1.2 | -0.7 | 3.6 |
| Feb | 0.1 | -0.4 | -2.4 | -0.1 | 4.7 |
| Jan | 3.4 | 3.0 | -2.5 | 7.1 | 7.4 |
| Dec 2010 | -2.2 | -1.6 | -4.2 | -0.4 | -8.3 |
| Dec 2009 | 1.0 | 1.6 | 2.3 | 0.5 | -3.9 |
| Dec 2008 | 1.3 | 2.6 | -1.1 | 4.3 | -9.0 |
Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/rsi/retail-sales/september-2012/index.html
Table VH-7 provides the analysis of the UK Office for National Statistics of contributions to 12-month percentage changes of value and volume of retail sales in the UK. The volume of retail sales seasonally adjusted increased 2.5 percent in the 12 months ending in Sep 2012. Sales of predominantly food stores with weight of 41.3 percent increased 0.5 percent in the 12 months ending in Sep 2012, contributing 0.3 percentage points. Mostly nonfood stores with weight of 41.6 percent increased 4.3 percent with contribution of 1.8 percentage points. Positive contribution to 12-month percentage changes of volume was made by non-store retailing with weight of 5.3 percent, growth of 9.5 percent and positive contribution of 0.5 percentage points but automotive fuel with weight of 11.8 percent and growth of minus 1.1 percent deducted 0.1 percentage points. The value of retail sales increased 3.2 percent in the 12 months ending in Sep 2012. There were positive contributions: 1.2 percentage points for predominantly food stores, 1.5 percentage points for predominantly nonfood stores and 0.5 percentage points for non-store retailing. Automotive fuel stores did not contribute.
Table VH-7, UK, Value of Retail Sales 12-month ∆% and Percentage Points Contributions by Sectors
| Sep 2012 | Weight | Volume SA | PP Cont. | Value SA | PP Cont. |
| All Retailing | 100.0 | 2.5 | 3.2 | ||
| Mostly | 41.3 | 0.5 | 0.3 | 2.5 | 1.0 |
| Mostly Nonfood Stores | |||||
| Total | 41.6 | 4.3 | 1.8 | 3.6 | 1.5 |
| Non- | 7.8 | 7.7 | 0.6 | 6.2 | 0.5 |
| Textile, Clothing & Footwear | 12.3 | 5.1 | 0.6 | 5.0 | 0.6 |
| Household Goods Stores | 8.8 | -2.7 | -0.2 | -2.4 | -0.2 |
| Other | 12.7 | 6.5 | 0.8 | 5.0 | 0.6 |
| Non-store Retailing | 5.3 | 9.5 | 0.5 | 8.5 | 0.5 |
| Automotive Fuel | 11.8 | -1.1 | -0.1 | 1.7 | 0.2 |
Cont.: Contribution
Sources: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/rsi/retail-sales/september-2012/index.html
© Carlos M. Pelaez, 2010, 2011, 2012
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