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As with all commodity prices, oscillations of the PCE price index of food in Chart IV-3 are quite wide. Monetary policy of zero interest rates has caused trends of increase such as from 2007 into the global recession and in the current expansion phase after 2010 with interruptions by events of risk aversion.

Chart IV-2, US, Percentage Change of PCE Price Index Excluding Food and Energy from Prior Month, 1999-2012

Source: US Bureau of Economic Analysis

The band of fluctuation of the PCE price index of energy in Chart IV-4 is much wider. An interesting feature is the abundance of negative changes.

Chart IV-3, US, Percentage Change of PCE Price Index Food from Prior Month, 1999-2012

Source: US Bureau of Economic Analysis

Chart IV-4, US, Percentage Change of PCE Price Index Energy from Prior Month, 1999-2012

Source: US Bureau of Economic Analysis

Table IV-6 provides 12-month rates of PCE inflation since 2000. Headline PCE inflation has increased from 1.5 percent in Jan 2011 to 2.8 percent in Aug 2011 and 2.9 percent in Sep 2011, declining to 1.7 percent in Oct 2012. PCE inflation excluding food and energy (PCEX), used as indicator in monetary policy, has increased from 1.1 percent in Jan 2011 to 1.9 percent in Dec 2011 and 1.6 percent in Oct 2012, which is still below or at the tolerable maximum of 2.0 percent in monetary policy. The unintended effect of shocks of commodity prices from zero interest rates captured by PCE food prices (PCEF) and energy (PCEE) in the absence of risk aversion should be weighed in design and implementation of monetary policy. The final row of Table IV-6 provides average rates of 12-month change of PCE prices in Dec. The average for central PCE prices is 2.2 per cent per year from 2000 to 2011 and 1.9 percent for core PCE. PCE food grew at the average rate of 2.6 percent from 2000 to 2011 and energy PCE at 6.1 percent with significant oscillations.

Table IV-6, US, Percentage Change in 12 Months of Prices of Personal Consumption Expenditures ∆%

	PCE	PCEG	PCEG -D	PCES	PCEX	PCEF	PCEE
2012
Oct	1.7	1.3	-1.8	2.0	1.6	1.0	4.8
Sep	1.6	1.1	-1.6	1.9	1.6	0.9	3.2
Aug	1.4	0.6	-1.8	1.9	1.5	1.5	0.0
Jul	1.3	0.1	-1.8	2.0	1.7	2.0	-4.7
Jun	1.5	0.4	-1.6	2.1	1.8	2.4	-3.6
May	1.5	0.6	-1.3	2.0	1.7	2.4	-3.3
Apr	1.9	1.6	-1.2	2.1	1.9	2.9	1.5
Mar	2.2	2.5	-0.8	2.1	2.0	3.2	5.4
Feb	2.4	2.9	-0.7	2.2	1.9	3.9	8.0
Jan	2.4	3.0	-0.5	2.2	1.9	4.6	6.8
2011
Dec	2.4	3.1	-0.5	2.1	1.9	5.1	7.4
Nov	2.6	4.0	-0.6	1.9	1.7	5.0	13.5
Oct	2.6	4.2	-0.5	1.8	1.6	5.2	15.1
Sep	2.9	4.9	-0.7	1.9	1.6	5.1	20.7
Aug	2.8	4.9	-0.4	1.8	1.6	4.8	19.8
Jul	2.8	4.8	-0.2	1.8	1.5	4.3	20.6
Jun	2.7	4.7	-0.4	1.7	1.4	4.0	21.6
May	2.6	4.5	-0.9	1.7	1.4	3.6	22.0
Apr	2.4	3.8	-1.2	1.6	1.2	3.2	19.4
Mar	2.1	3.0	-1.6	1.6	1.1	3.0	16.1
Feb	1.8	2.1	-1.6	1.7	1.2	2.4	11.5
Jan	1.5	1.3	-2.0	1.7	1.1	1.8	7.7
2010
Dec	1.5	1.1	-2.2	1.7	1.1	1.3	8.6
Nov	1.4	0.6	-2.0	1.7	1.2	1.3	4.4
Oct	1.5	0.8	-1.7	1.8	1.2	1.3	6.3
Sep	1.6	0.5	-1.3	2.1	1.5	1.2	4.1
Aug	1.7	0.6	-0.9	2.2	1.6	0.7	4.0
Dec 2009	2.3	4.1	-0.7	1.4	1.6	-1.6	20.5
Dec 2008	0.6	-3.8	-2.4	2.8	1.8	6.8	-23.7
Dec 2007	3.5	3.6	-1.9	3.5	2.5	5.0	18.6
Dec 2006	2,3	0.5	-2.0	3.2	2.7	1.3	3.7
Dec 2005	3.0	1.7	-1.4	3.7	2.3	1.7	16.3
Dec 2004	3.0	2.6	-0.7	3.2	2.2	2.3	18.0
Dec 2003	2.0	-0.1	-3.9	3.2	1.5	3.6	9.4
Dec 2002	2.2	0.6	-2.8	3.0	1.8	1.0	12.7
Dec 2001	1.0	-2.0	-2.4	2.8	1.7	2.4	-13.8
Dec 2000	2.4	1.5	-1.3	2.9	1.8	2.8	14.1
Average ∆%2000-2011	2.2	1.0	-20.0*	2.8	1.9	2.6	6.1

*Percentage change from 2000 to 2011.

Source: US Bureau of Economic Analysis http://www.bea.gov/iTable/index_nipa.cfm

The headline PCE index is shown in Chart IV-5 from 1999 to 2012. There is an evident upward trend with the bump of the global recession after IVQ2008.

Chart IV-5, US, Price Index of Personal Consumption Expenditures 1999-2012

The headline consumer price index is shown in Chart IV-6. There is also an upward trend but with fluctuations and the 2008 bump.

Chart IV-6, US, Consumer Price Index, NSA, 1999-2012

Source: US Bureau of Labor Statistics

The PCE price index excluding food and energy is shown in Chart IV-7. There is less pronounced long-term trend with fewer bumps because of excluding more volatile commodity items.

Chart IV-7, US, Price Index of Personal Consumption Expenditures Excluding Food and Energy 1999-2012

The core consumer price index, excluding food and energy, is shown in Chart IV-8. There is also an upward trend but with fluctuations.

Chart IV-8, US, Consumer Price Index Excluding Food and Energy, NSA, 1999-2012

Source: US Bureau of Labor Statistics

The PCE price index of food is shown in Chart IV-9. There is a more pronounced upward trend and sharper fluctuations.

Chart IV-9, US, Price Index of Personal Consumption Expenditures Food 1999-2012

There is similar behavior in the consumer price index of food in Chart IV-10. There is an upward trend from 1999 to 2011 with a major bump in 2009 when commodity futures positions were unwound. Zero interest rates with bouts of risk aversion dominate the trend into 2011. Risk aversion softens the trend toward the end of 2011 and in 2012.

Chart IV-10, US, Consumer Price Index, Food, NSA, 1999-2012

Source: US Bureau of Labor Statistics

The most pronounced trend of PCE price indexes is that of energy in Chart IV-11. It is impossible to explain the hump in 2008 in the middle of the global recession without the carry trade from zero interest rates to leveraged positions in commodity futures. Risk aversion after Sep 2008 caused flight to the safe haven of government obligations. The return of risk appetite with zero interest rates caused a first wave of carry trades with another upward trend interrupted by the first European sovereign risk crisis in Apr-Jul 2010. Zero interest rates with risk appetite caused another sharp upward trend of commodity prices interrupted by risk aversion from the second sovereign crisis. In the absence of risk aversion, carry trades from zero interest rates to positions in risk financial assets will continue to cause distortions such as commodity price trends and fluctuations.

Chart IV-11, US, Price Index of Personal Consumption Expenditures Energy Goods and Services 1999-2012

Chart IV-12 provides the consumer price index of energy commodities. Unconventional monetary policy of zero or near zero interest rates causes upward trends in commodity prices reflected in (1) increase from 2003 to 2007; (2) sharp increase during the global contraction in 2008; (3) collapse from 2008 into 2009 as positions in commodity futures were unwound in a flight to government obligations; (4) new upward trend after 2010; and (5) episodes of decline during risk aversion shocks such as the more recent segment during the worsening European debt crisis in Nov and Dec of 2011 and with new strength of commodity prices in the beginning of 2012 followed by softness in another episode of risk aversion and increases during risk appetite

Chart IV-12, US, Consumer Price Index, Energy, NSA, 1999-2012

Source: US Bureau of Labor Statistics

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=RCLC1&f=D

Chart IV-13 of the US Energy Information Administration provides prices of the crude oil futures contract. Unconventional monetary policy of very low interest rates and quantitative easing with suspension of the 30-year bond to lower mortgage rates caused a sharp upward trend of oil prices. There is no explanation for the jump of oil prices to $149/barrel in 2008 during a sharp global recession other than carry trades from zero interest rates to commodity futures. Prices collapsed in the flight to government obligations. Risk appetite with zero interest rates resulted in another upward trend of commodity prices after 2009 with fluctuations during periods of risk aversion. All price indexes are affected by unconventional monetary policy.

Chart IV-13, US, Crude Oil Futures Contract

Source: US Energy Information Administration

Source: Energy Information Administration

Unconventional monetary policy of zero interest rates and quantitative easing has been used in Japan and now also in the US. Table IV-7 provides the consumer price index of Japan, with inflation of minus 0.4 percent in 12 months ending in Oct, increase of 0.0 percent NSA (not-seasonally-adjusted) in Oct and decrease of 0.2 percent SA (seasonally-adjusted) in the month of Oct. Inflation of consumer prices in the first four months of 2012 annualizes at 2.1 percent SA and 3.0 percent NSA. Annual equivalent inflation in the first three months of 2012 is 2.8 percent SA and 3.7 percent NSA. There are negative percentage changes in most of the 12-month rates in 2011 with the exception of Jul and Aug both with 0.2 percent and stability in Sep. All monthly and 12-month rates of inflation are nonnegative in the first four months of 2012. There are eight years of deflation and one of zero inflation in the 12-month rate of inflation in Dec from 1995 to 2010. This experience is entirely different from that of the US that shows long-term inflation. It is difficult to justify unconventional monetary policy because of risks of deflation similar to that experienced in Japan.

Table IV-7, Japan, Consumer Price Index, All Items ∆%

	∆% Month SA	∆% Month NSA	∆% 12-Month NSA
Oct 2012	-0.2	0.0	-0.4
Sep	0.1	0.1	-0.3
Aug	-0.2	0.1	-0.4
Jul	0.0	-0.3	-0.4
Jun	-0.4	-0.5	-0.2
May	-0.4	-0.3	0.2
Apr	0.0	0.1	0.4
Mar	0.1	0.5	0.5
Feb	0.3	0.2	0.3
Jan	0.3	0.2	0.1
Dec 2011	0.1	0.0	-0.2
Nov	-0.1	-0.6	-0.5
Oct	0.0	0.1	-0.2
Sep	-0.1	0.0	0.0
Aug	-0.2	0.1	0.2
Jul	0.3	0.0	0.2
Jun	-0.1	-0.2	-0.4
May	-0.1	0.0	-0.4
Apr	-0.1	0.1	-0.4
Mar	0.0	0.3	-0.5
Feb	0.1	0.0	-0.5
Jan	0.0	-0.1	-0.6
Dec 2010	-0.2	–0.3	0.0
Dec 2009			-1.7
Dec 2008			0.4
Dec 2007			0.7
Dec 2006			0.3
Dec 2005			-0.1
Dec 2004			0.2
Dec 2003			-0.4
Dec 2002			-0.3
Dec 2001			-1.2
Dec 2000			-0.2
Dec 1999			-1.1
Dec 1998			0.6
Dec 1997			1.8
Dec 1996			0.6
Dec 1995			-0.3
Dec 1994			0.7
Dec 1993			1.0
Dec 1992			1.2
Dec 1991			2.7
Dec 1990			3.8
Dec 1989			2.6
Dec 1988			1.0
Dec 1987			0.8
Dec 1986			-0.3
Dec 1985			1.9
Dec 1984			2.6
Dec 1983			1.7
Dec 1982			2.0
Dec 1981			4.3
Dec 1980			6.9
Dec 1979			5.6
Dec 1978			3.9
Dec 1977			5.0
Dec 1976			10.5
Dec 1975			7.8
Dec 1974			21.0
Dec 1973			18.3
Dec 1972			5.7
Dec 1971			4.8

Source: http://www.stat.go.jp/english/data/cpi/1581.htm

Chart IV-14 provides the US consumer price index NSA from 1913 to 2012. The dominating characteristic is the increase in slope during the Great Inflation from the middle of the 1960s through the 1970s. There is long-term inflation in the US and no evidence of deflation risks.

Chart IV-14, US, Consumer Price Index, All Items, NSA, 1913-2012

Source: US Bureau of Labor Statistics

Chart IV-15 provides 12-month percentage changes of the US consumer price index from 1914 to 2012. There are actually three waves of inflation in the second half of the 1960s, in the mid 1970s and again in the late 1970s. Table IV-7 provides similar inflation waves in the economy of Japan with 18.3 percent in 1973 and 21.0 percent in 1974. The Great Inflation of the 1970s is analyzed in various comments of this blog (http://cmpassocregulationblog.blogspot.com/2012/06/rules-versus-discretionary-authorities.html http://cmpassocregulationblog.blogspot.com/2011/05/slowing-growth-global-inflation-great.html http://cmpassocregulationblog.blogspot.com/2011/04/new-economics-of-rose-garden-turned.html http://cmpassocregulationblog.blogspot.com/2011/03/is-there-second-act-of-us-great.html) and in Appendix I. Inflation rates then stabilized in the US in a range with only two episodes above 5 percent. There are isolated cases of deflation concentrated over extended periods only during the 1930s.

Chart IV-15, US, Consumer Price Index, All Items, NSA, 12-Month Percentage Change 1914-2012

Source: US Bureau of Labor Statistics

Chart IV-16 provides the US consumer price index excluding food and energy from 1957 (when it first becomes available) to 2012. There is long-term inflation in the US without episodes of deflation.

IV-16, US, Consumer Price Index Excluding Food and Energy, NSA, 1957-2012

Source: US Bureau of Labor Statistics

Chart IV-17 provides 12-month percentage changes of the consumer price index excluding food and energy from 1958 (when it first becomes available) to 2012. There are three waves of inflation in the 1970s during the Great Inflation. There is no episode of deflation.

Chart IV-17, US, Consumer Price Index Excluding Food and Energy, 12-Month Percentage Change, NSA, 1958-2012

Source: US Bureau of Labor Statistics

More detail on the consumer price index of Japan in Oct is shown in Table IV-8. Inflation in the 12 months ending in Oct 2012 has been driven by items rich in commodities such as 3.8 percent in fuel, light and water charges with decrease of 0.2 percent in the month of Oct. There is similar behavior in the preliminary estimate for Nov for the Ku Area of Tokyo with decrease of 0.3 percent of fuel, light and water charges and increase of 5.9 percent in 12 months. There is increase in several items in the consumer price index in Oct. There is mild deflation in the CPI excluding food, alcoholic beverages and energy with minus 0.5 percent in the 12 months ending in Oct and no change in Oct. The CPI excluding imputed rent was unchanged in Oct and decreased 0.4 percent in 12 months. The all-items CPI estimate for Oct of the Ku-Area of Tokyo decreased 0.4 percent in Nov and declined 0.5 percent in 12 months.

Table IV-8, Japan, Consumer Price Index, ∆%

2012	Oct 2012/Sep 2012 ∆%	Year ∆%
CPI All Items	0.0	-0.4
CPI Excluding Fresh Food	0.0	0.0
CPI Excluding Food, Alcoholic Beverages and Energy	0.0	-0.5
CPI Goods	0.0	-0.6
CPI Services	0.0	-0.2
CPI Excluding Imputed Rent	0.0	-0.4
CPI Fuel, Light, Water Charges	-0.2	3.8
CPI Transport & Communications	0.2	0.8
CPI Ku-Area Tokyo All Items	-0.4	-0.5
Fuel, Light, Water Charges Ku Area Tokyo	-0.3	5.9

Note: Ku-area Tokyo CPI data preliminary for Nov 2012

Sources: http://www.stat.go.jp/english/data/cpi/1581.htm

Italy’s producer price inflation in Table IV-9 also has the same waves in 2011 and into 2012 observed for many countries (http://cmpassocregulationblog.blogspot.com/2012/11/united-states-unsustainable-fiscal.html). The annual equivalent producer price inflation in the first wave Jan-Apr 2011 was 10.7 percent, which was driven by increases in commodity prices resulting from the carry trades from zero interest rates to risk financial assets, in particular leveraged positions in commodities. In the second wave, producer price inflation was minus 0.2 percent in May and flat in Jun for annual equivalent inflation rate in May-Jun 2011 of minus 1.2 percent. In the third wave, annual equivalent inflation was 2.4 percent in Jul-Sep 2011 in a pause of risk aversion. With the return of risk aversion in the fourth wave coinciding with the worsening sovereign debt crisis in Europe, annual equivalent inflation was 0.4 percent in Oct-Dec 2011. Inflation accelerated in the fifth wave in Jan and Feb 2012 to annual equivalent 7.4 percent and annual equivalent of 6.6 percent in Jan-Mar. In the sixth wave, annual equivalent inflation in Mar-Apr was at 4.3 percent. In the seventh wave, risk aversion originating in world economic slowdown and financial turbulence softened carry trades with annual equivalent inflation falling to minus 2.4 percent in May-Jun 2012. In the eighth wave, more aggressive carry trades into commodity futures exposures resulted in increase of inflation at annual equivalent 4.1 percent in Jul-Sep 2012 and 6.8 percent in Jul-Aug 2012. In the ninth wave, risk aversion caused unwinding carry trades with annual equivalent inflation of minus 2.4 percent in Sep-Oct 2012.

Table IV-9, Italy, Industrial Prices, Internal Market

	Month ∆%	12-Month ∆%
Oct 2012	-0.3	2.6
Sep	-0.1	2.8
AE ∆% Sep-Oct	-2.4
Aug	0.9	3.0
Jul	0.2	2.2
AE ∆% Jul-Aug	6.8
Jun	-0.1	2.2
May	-0.3	2.3
AE ∆% May-Jun	-2.4
Apr	0.3	2.5
Mar	0.4	2.8
AE ∆% Mar-Apr	4.3
Feb	0.4	3.2
Jan	0.8	3.5
AE ∆% Jan-Feb	7.4
Dec 2011	0.0	3.9
Nov	0.3	4.7
Oct	-0.2	4.7
AE ∆% Oct-Dec	0.4
Sep	0.2	4.7
Aug	0.1	4.8
Jul	0.3	4.9
AE ∆% Jul-Sep	2.4
Jun	0.0	4.6
May	-0.2	4.8
AE ∆% May-Jun	-1.2
Apr	0.7	5.6
Mar	0.8	6.2
Feb	0.7	5.8
Jan	1.2	5.3
AE ∆% Jan-Apr	10.7
Dec 2010	0.7	4.7
Year
2011		5.0
2010		3.0
2009		-5.4
2008		5.9
2007		3.3
2006		5.2
2005		4.0
2004		2.7
2003		1.6
2002		0.2
2001		1.9
Average ∆% 2000-2011		2.5

Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/75933

Chart IV-15 of the Istituto Nazionale di Statistica provides 12-month percentage changes of the producer price index of Italy. Rates of change in 12 months stabilized from Jul to Nov 2011 and then fell to 3.5 percent in Jan 2012 with increases of 0.8 percent in the month of Jan 2012 and 0.4 percent in Feb. Inflation was 0.4 percent in Mar 2012 and 2.8 percent in 12 months. The decline of annual equivalent inflation from 7.4 percent in Jan-Feb 2012 to 4.3 percent in Mar-Apr pulled down 12-month inflation to 2.8 percent in Mar and 2.5 percent in Apr. Percentage declines of inflation of 0.3 percent in May and 0.1 percent in Jun pulled down the 12-month rate of inflation to 2.2 percent in Jun 2012. Renewed inflation of 0.2 percent in Jul 2012 and 0.9 percent in Aug 2012 pulled up the 12-month rate to 3.0 percent. The decline of producer prices by 0.1 percent in Sep 2012 followed by decline of 0.3 percent in Oct 2012 pulled down the 12-month rate to 2.6 percent in Oct 2012.

Chart IV-18, Italy, Producer Price Index 12-Month Percentage Changes

Source: Istituto Nazionale di Statistica

Monthly and 12-month inflation of the producer price index of Italy and individual components is provided in Table IV-10. Energy prices decreased 1.7 percent in Oct 2012 and rose 9.7 percent in 12 months. Producer-price inflation is positive for all components in the month of Oct with the exception of decline of 0.2 percent in intermediate goods and 1.7 percent in energy. There is higher inflation in 12 months of 2.2 percent for nondurable goods than 1.3 percent for durable goods.

Table IV-10, Italy, Industrial Prices, Internal Market, ∆%

	Oct 2012/ Sep 2012	Oct 2012/ Oct 2011
Total	-0.3	2.6
Consumer Goods	0.3	2.1
Durable Goods	0.1	1.3
Nondurable	0.3	2.2
Capital Goods	0.1	0.7
Intermediate	-0.2	0.4
Energy	-1.7	9.7

Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/75933

The first wave of commodity price increases in the first four months of Jan-Apr 2011 also influenced the surge of consumer price inflation in Italy shown in Table IV-11. Annual equivalent inflation in the first four months of 2011 was 4.9 percent. The crisis of confidence or risk aversion resulted in reversal of carry trades on commodity positions. Consumer price inflation in Italy was subdued in the second wave in Jun and May 2011 at 0.1 percent for annual equivalent 1.2 percent. In the third wave in Jul-Sep 2011, annual equivalent inflation increased to 2.4 percent. In the fourth wave, annual equivalent inflation in Oct-Nov 2011 jumped again at 3.0 percent. Inflation returned in the fifth wave from Dec 2011 to Jan 2012 at annual equivalent 4.3 percent. In the sixth wave, annual equivalent inflation rose to 5.7 percent in Feb-Apr 2012. In the seventh wave, annual equivalent inflation was 1.2 percent in May-Jun 2012. In the eighth wave, annual equivalent inflation increased to 3.0 percent in Jul-Aug 2012. In the ninth wave, inflation collapsed to zero in Sep-Oct 2012. In the tenth wave, annual equivalent inflation in Nov 2012 was minus 2.4 percent. Economies are shocked worldwide by intermittent waves of inflation originating in combination of zero interest rates and quantitative easing with alternation of risk appetite and risk aversion

Table IV-11, Italy, Consumer Price Index

	Month	12 Months
Nov 2012	-0.2	2.5
AE ∆% Nov	-2.4
Oct	0.0	2.6
Sep	0.0	3.2
AE ∆% Sep-Oct	0.0
Aug	0.4	3.2
Jul	0.1	3.1
AE ∆% Jul-Aug	3.0
June	0.2	3.3
May	0.0	3.2
AE ∆% May-Jun	1.2
Apr	0.5	3.3
Mar	0.5	3.3
Feb	0.4	3.3
AE ∆% Feb-Apr	5.7
Jan	0.3	3.2
Dec 2011	0.4	3.3
AE ∆% Dec-Jan	4.3
Nov	-0.1	3.3
Oct	0.6	3.4
AE ∆% Oct-Nov	3.0
Sep	0.0	3.0
Aug	0.3	2.8
Jul	0.3	2.7
AE ∆% Jul-Sep	2.4
Jun	0.1	2.7
May	0.1	2.6
AE ∆% May-Jun	1.2
Apr	0.5	2.6
Mar	0.4	2.5
Feb	0.3	2.4
Jan	0.4	2.1
AE ∆% Jan-Apr	4.9
Dec 2010	0.4	1.9
Annual
2011		2.8
2010		1.5
2009		0.8
2008		3.3
2007		1.8
2006		2.1

Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/75904

Consumer price inflation in Italy by segments in the estimate by ISTAT for Nov 2012 is provided in Table IV-12. Total consumer price inflation in Nov 2012 was minus 0.2 percent and 2.6 percent in 12 months. Inflation of goods was minus 0.1 percent in Nov and 2.9 percent in 12 months. Prices of durable goods increased 0.2 percent in Nov and decreased 0.3 percent in 12 months, as typical in most countries. Prices of energy decreased 1.2 percent in Nov and increased 11.5 percent in 12 months. Food prices increased 0.4 percent in Nov and increased 2.4 percent in 12 months. Prices of services fell 0.6 percent in Nov and rose 1.8 percent in 12 months. Transport prices, also influenced by commodity prices, decreased 0.8 percent in Nov and increased 3.7 percent in 12 months. Carry trades from zero interest rates to positions in commodity futures cause increases in commodity prices. Waves of inflation originate in periods when there is no risk aversion and commodity prices decline during periods of risk aversion (http://cmpassocregulationblog.blogspot.com/2012/11/united-states-unsustainable-fiscal.htm).

Table IV-12, Italy, Consumer Price Index and Segments, Month and 12-Month ∆%

Oct 2012	Month ∆%	12-Month ∆%
General Index	-0.2	2.5
I Goods	-0.1	2.9
Food	0.4	2.4
Energy	-1.2	11.5
Durable	0.2	-0.3
Nondurable	0.1	0.4
II Services	-0.6	1.8
Housing	0.2	2.6
Communications	0.1	0.0
Transport	-0.8	3.7

Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/75904

Chart IV-16 of the Istituto Nazionale di Statistica shows moderation in 12-month percentage changes of the consumer price index of Italy with marginal increase followed by decline to 2.5 percent in ONov 2012.

Chart, IV-19, Italy, Consumer Price Index, 12-Month Percentage Changes

Source: Istituto Nazionale di Statistica

http://www.bea.gov/national/index.htm#gdp

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 ∆% 2012	Real GDP ∆% 2013	Real GDP ∆% 2014	Real GDP ∆% 2015
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 for all countries. 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 0.1 percent in IIQ2012 at the seasonally adjusted annual rate (SAAR) of 0.3 percent, which is much lower than 5.2 percent in IQ2012. Growth of 3.3 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. Japan’s GDP contracted 0.9 percent in IIIQ2012 at the SAAR of minus 3.5 percent and increased 0.1 percent relative to a year earlier. 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). There is decennial change in leadership in China (http://www.xinhuanet.com/english/special/18cpcnc/index.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 and 7.4 percent in IIIQ2012 relative to IIIQ2011. 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. In IIIQ2012, euro area GDP fell 0.1 percent and declined 0.6 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. In IIIQ2012, Germany’s GDP increased 0.2 percent and 0.4 percent relative to a year earlier. 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. In IIIQ2012, GDP grew 0.7 percent, 2.7 percent at SAAR and 2.5 percent relative to IIIQ2011 (Section I and earlier at http://cmpassocregulationblog.blogspot.com/2012/10/mediocre-and-decelerating-united-states.html) but with substantial unemployment and underemployment (http://cmpassocregulationblog.blogspot.com/2012/11/twenty-eight-million-unemployed-or.html ) and weak hiring (http://cmpassocregulationblog.blogspot.com/2012/11/recovery-without-hiring-united-states.html). In IQ2012, UK GDP fell 0.3 percent, declining 0.1 percent relative to a year earlier. UK GDP fell 0.4 percent in IIQ2012 and 0.5 percent relative to a year earlier. UK GDP increased 1.0 percent in IIIQ2012 and fell 0.1 percent relative to a year earlier. Italy has experienced decline of GDP in five consecutive quarters from IIIQ2011 to IIIQ2012. Italy’s GDP fell 0.8 percent in IQ2012 and declined 1.4 percent relative to IQ2011. Italy’s GDP fell 0.7 percent in IIQ2012 and declined 2.4 percent relative to a year earlier. In IIIQ2012, Italy’s GDP fell 0.2 percent and declined 2.4 percent relative to a year earlier. France’s GDP stagnated in IQ2012 and increased 0.4 percent relative to a year earlier. France’s GDP decreased 0.1 percent in IIQ2012 and increased 0.1 percent relative to a year earlier. In IIIQ2012, France’s GDP increased 0.2 percent and increased 0.2 percent relative to a year earlier.

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: 5.2	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: 0.1 SAAR: 0.3	3.3
China	1.8	7.6
Euro Area	-0.2	-0.4
Germany	0.3	0.5 1.0 CA
France	-0.1	0.1
Italy	-0.7	-2.4
United Kingdom	-0.4	-0.5
	IIIQ2012/ IIQ2012	IIIQ2012/ IIIQ2011
United States	QOQ: 0.7 SAAR: 2.7	2.5
Japan	QOQ: –0.9 SAAR: –3.5	0.1
China	2.2	7.4
Euro Area	-0.1	-0.6
Germany	0.2	0.4
France	0.2	0.2
Italy	-0.2	-2.4
United Kingdom	1.0	-0.1

QOQ: Quarter relative to prior quarter; SAAR: seasonally adjusted annual rate

Source: Country Statistical Agencies

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/2012/11/contraction-of-united-states-real_25.html and earlier http://cmpassocregulationblog.blogspot.com/2012/10/mediocre-and-decelerating-united-states_28.html and for GDP Section VB http://cmpassocregulationblog.blogspot.com/2012/11/united-states-unsustainable-fiscal_18.html ). Japan’s exports decreased 6.5 percent in the 12 months ending in Oct, 10.3 percent in the 12 months ending in Sep, 5.8 percent in the 12 months ending in Aug and 8.1 percent in 12 months ending in Jul while imports decreased 1.6 percent in the 12 months ending in Oct, increased 4.1 in the 12 months ending in Sep, 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 and deducted 2.9 percentage points from GDP growth in IIIQ2012. 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. There was further growth in China’s exports of 11.6 percent in the 12 months ending in Oct while imports increased 2.4 percent. Germany’s exports decreased 2.5 percent in the month of Sep and decreased 3.4 percent in the 12 months ending in Sep while imports decreased 1.6 percent in the month of Sep and decreased 3.6 percent in the 12 months ending in Sep. Net trade contributed 1.4 percentage points to growth of Germany’s GDP in IIQ2012 and contributed 1.4 percentage points in IIIQ2012. The Markit/BME Germany Purchasing Managers’ Index^® (PMI^®), showing close association with Germany’s manufacturing output, fell from 47.4 in Sep to 46.0 in Oct for the eighth consecutive month in contraction territory below 50.0 and much lower than the long-term average of the index of 52.0 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10278). New export orders fell for sixteen consecutive months at the fastest rate of decline since Apr 2009. UK’s exports increased 0.6 percent in Sep and decreased 0.7 percent in Jul-Sep 2012 relative to a year earlier while imports decreased 3.1 percent in Sep and 0.3 percent in Jul-Sep 2012 relative to a year earlier. Net trade deducted 0.8 percentage points from UK GDP growth in IIQ2012 and added 0.7 percentage points in IIIQ2012. France’s exports decreased 1.5 percent in Sep while imports decreased 1.9 percent and net trade deducted 0.4 percentage points from GDP growth in IIQ2012, adding 0.3 percentage points in IIIQ2012. US exports increased 3.1 percent in Sep 2012 and goods exports increased 5.1 percent in Jan-Sep relative to a year earlier but net trade added 0.14 percentage points to GDP growth in IIIQ2012. The Markit Flash US Manufacturing Purchasing Managers’ Index^™ (PMI^™) seasonally adjusted increased to 52.4 in Nov from 51.0 in Oct, which was the sharpest improvement in five months, indicating mild expansion of manufacturing (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10327).

New export orders registered 48.9 in Nov nearly still in neutral territory with 47.2 in Oct, indicating stability after contraction during five consecutive months. The Markit US Manufacturing Purchasing Managers’ Index^™ (PMI^™) declined to 51.0 in Oct from 51.1 in Sep, which is the weakest reading since Oct 2009 when recovery began (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10255). New export orders declined at the highest rate in 12 months with the index of new exports orders falling from 48.0 in Sep to 47.2 in Oct while total new orders decreased from 52.3 in Sep to 51.1 in Oct because of orders from the internal market. In the six months ending in Oct, United States national industrial production accumulated decrease of 0.6 percent at the annual equivalent rate of 1.2 percent, which is much lower than 1.7 percent growth in 12 months. Capacity utilization for total industry in the United States fell 0.4 percentage points in Oct to 77.8 percent from 78.2 percent in Sep, which is 2.5 percentage points lower than the long-run average from 1972 to 2011. Manufacturing decreased 0.9 percent in Oct seasonally adjusted, increasing 1.8 percent not seasonally adjusted in 12 months, and decreased 1.8 percent in the six months ending in Oct or at the annual equivalent rate of 3.6 percent (Section VA http://cmpassocregulationblog.blogspot.com/2012/11/united-states-unsustainable-fiscal_18.html and earlier http://cmpassocregulationblog.blogspot.com/2012/10/world-inflation-waves-stagnating-united_21.html). The report on industry by the Board of Governors of the Federal Reserve System states estimates that hurricane Sandy could have “reduced the rate of change in total output by nearly 1 percentage points” (http://www.federalreserve.gov/releases/g17/current/). 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 M ∆%	Exports 12 M ∆%	Imports M ∆%	Imports 12 M ∆%
USA	3.1 Sep	5.1 Jan-Sep	1.5 Aug	3.9 Jan-Sep
Japan		Oct -6.5 Sep -10.3 Aug -5.8 Jul -8.1		Oct -1.6 Sep 4.1 Aug -5.4 Jul 2.1
China	-1.8 Jul 0.6 Aug 4.7 Sep -5.7 Oct	1.0 Jul 7.8 Jan-Jul 2.7 Aug 7.1 Jan-Aug 9.9 Sep Jan-Sep 7.4 11.6 Oct 7.8 Jan-Oct	2.2 Jul -0.3 Aug 4.9 Sep -9.4 Oct	4.7 Jul 6.5 Jan-Jul -2.6 Aug 5.2 Jan-Aug 2.4 Sep 4.8 Jan-Sep 2.4 Oct 4.6 Jan-Oct
Euro Area	10.4 12-M Aug	9.0 Jan-Aug	1.3 12-M Aug	2.5 Jan-Aug
Germany	-2.5 Sep CSA	-3.4 Sep	-1.6 Sep CSA	-3.6 Sep
France Sep	-1.5	5.2	-1.9	0.0
Italy Sep	-2.0	-4.2	-4.2	-10.6
UK	0.6 Sep	-0.7 Jul-Sep 12/Jul-Sep 11	-3.1 Sep	-0.3 Jul-Sep 12/Jul-Sep 11
Net Trade % Points GDP Growth	% Points
USA IIIQ2012	0.14
Japan	-0.3 IIQ2012 -2.9 IIIQ2012
Germany	1.4 IIQ2012 1.4 IIIQ2012
France	-0.4 IIQ2012 0.3 IIIQ2012
UK	-0.8 IIQ2012 0.7 IIIQ2012

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.insee.fr/en/

http://www.istat.it/it/

http://www.statistics.gov.uk/hub/index.html

The geographical breakdown of exports and imports of Japan with selected regions and countries is provided in Table V-5 for Oct 2012. The share of Asia in Japan’s trade is more than one half, 55.2 percent of exports and 47.1 percent of imports. Within Asia, exports to China are 18.4 percent of total exports and imports from China 23.8 percent of total imports. The second largest export market for Japan in Oct 2012 is the US with share of 17.9 percent of total exports and share of imports from the US of 8.9 percent in total imports. Western Europe has share of 10.2 percent in Japan’s exports and of 11.0 percent in imports. Rates of growth of exports of Japan in Oct are sharply negative for all countries and regions with the exception of 3.1 percent for exports to the US, 8.0 percent for Canada, 8.5 percent for Mexico and 0.1 percent for the Middle East. 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 6.5 percent in Oct 2012 while imports decreased by 1.6 percent but higher levels after the earthquake and declining prices may be another factor. Growth rates of imports in the 12 months ending in Oct are negative for some trading partners: minus 12.2 percent for Brazil, minus 14.0 percent for the Middle East and minus 0.9 percent for Australia. Imports from Asia increased 2.0 percent in the 12 months ending in Oct while imports from China increased 3.6 percent.

Table V-5, Japan, Value and 12-Month Percentage Changes of Exports and Imports by Regions and Countries, ∆% and Millions of Yens

Oct 2012	Exports Millions Yens	12 months ∆%	Imports Millions Yens	12 months ∆%
Total	5,149,993	-6.5	5,698,965	-1.6
Asia	2,840,904	-4.9	2,684,524	2.0
China	947,766	-11.6	1,354,298	3.6
USA	921,094	3.1	504,661	0.1
Canada	68,425	8.0	95,185	3.7
Brazil	40,816	-9.9	86,524	-12.2
Mexico	72,546	8.5	33,040	27.5
Western Europe	526,663	-23.5	628,625	5.7
Germany	132,834	-17.2	169,561	6.2
France	40,252	-28.3	89,505	11.6
UK	85,584	-12.6	49,634	2.2
Middle East	189,249	0.1	870,364	-14.0
Australia	109,197	-25.5	369,236	-0.9

Source: Japan, Ministry of Finance, 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 Trade Volume	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, decreased to 51.3 in Oct from 52.4 in Sep, indicating expansion at a moderate rate (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10308). This index has remained above the contraction territory of 50.0 during 39 consecutive months. Both global manufacturing and services have slowed down considerably with services increasing marginally while manufacturing contracted for a fifth consecutive month. (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10177). Service activity continued in the US with increases also in the Brazil, China, India, Russia and Ireland. The employment index increased from 49.8 in Sep to 51.0 in Oct with continuing increases in input prices. David Hensley, Director of Global Economic Coordination at JP Morgan, finds growth below long-term trend with restrained growth in services and contraction in manufacturing (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10308). The JP Morgan Global Manufacturing PMI^™, produced by JP Morgan and Markit in association with ISM and IFPSM, increased to 49.2 in Oct from 48.8 in Sep, for five consecutive months of contraction but at a milder rate (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10286). New export orders declined for the sixth consecutive month in Oct at a firm rate. The HSBC Brazil Composite Output Index, compiled by Markit, decreased 52.2 in Sep to 50.7 in Oct with continuing expansion at a marginal pace (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10284). Andre Loes, Chief Economist, Brazil, at HSBC, finds slower growth of services activity in Oct (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10284). The HSBC Brazil Purchasing Managers’ Index^TM (PMI^™) increased slightly to 50.2 in Oct from 49.8 in Sep, indicating marginal improvement of business conditions in Brazilian manufacturing (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10252). Andre Loes, Chief Economist, Brazil at HSBC, finds recovery improving with gains in both output and new orders (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10252).

VA United States. The Markit Flash US Manufacturing Purchasing Managers’ Index^™ (PMI^™) seasonally adjusted increased to 52.4 in Nov from 51.0 in Oct, which was the sharpest improvement in five months, indicating mild expansion of manufacturing (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10327).

New export orders registered 48.9 in Nov nearly still in neutral territory with 47.2 in Oct, indicating stability after contraction during five consecutive months. Chris Williams, Chief Economist at Markit, finds that the survey data are consistent with that the index is consistent with output growth in Nov at an annual rate of 1.0 percent (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10327). The Markit US Manufacturing Purchasing Managers’ Index^™ (PMI^™) declined to 51.0 in Oct from 51.1 in Sep, which is the weakest reading since Oct 2009 when recovery began (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10255). New export orders declined at the highest rate in 12 months with the index of new exports orders falling from 48.0 in Sep to 47.2 in Oct while total new orders decreased from 52.3 in Sep to 51.1 in Oct because of orders from the internal market. Trevor Balchin, Senior Economist at Markit, finds that the index began IVQ2012 at a weak pace that can restrain overall economic growth with export orders being an important source of weakness in the private goods-producing sector (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10255). The purchasing managers’ index (PMI) of the Institute for Supply Management (ISM) Report on Business^® increased 0.2 percentage points from 51.5 in Sep to 51.7 in Oct, (http://www.ism.ws/ISMReport/MfgROB.cfm?navItemNumber=12942). The index of new orders increased 1.9 percentage points from 52.3 in Sep to 54.2 in Oct. The index of exports decreased 0.5 percentage points from 48.5 in Sep to 48.0 in Oct, remaining in mild contraction territory. The Non-Manufacturing ISM Report on Business^® PMI decreased 0.9 percentage points from 55.1 in Sep to 54.2 in Oct, indicating growth during 39 consecutive months, while the index of new orders decreased 2.9 percentage points from 57.7 in Sep to 54.8 in Oct (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	Oct 12 months NSA ∆%: 2.2; ex food and energy ∆%: 2.0 Oct month ∆%: 0.1; ex food and energy ∆%: 0.2 Blog11/18/12
Producer Price Index	Oct 12-month NSA ∆%: 2.3; ex food and energy ∆% 2.1 Oct month SA ∆% = -0.2; ex food and energy ∆%: -0.2 Blog 11/18/12
PCE Inflation	Oct 12-month NSA ∆%: headline 1.7; ex food and energy ∆% 1.6 Blog 12/2/12
Employment Situation	Household Survey: Oct Unemployment Rate SA 7.9% Blog calculation People in Job Stress Oct: 28.1 million NSA, 17.4% of Labor Force Establishment Survey: Oct Nonfarm Jobs +171,000; Private +184,000 jobs created Sep 12-month Average Hourly Earnings Inflation Adjusted ∆%: 0.6 Blog 11/4/12
Nonfarm Hiring	Nonfarm Hiring fell from 63.8 million in 2006 to 50.1 million in 2011 or by 13.7 million Private-Sector Hiring Sep 2012 3.991 million lower by 1.224 million than 5.215 million in Aug 2005 Blog 11/11/12
GDP Growth	BEA Revised National Income Accounts IQ2012/IQ2011 ∆%: 2.4 IIQ2012/IIQ2011 2.1 IIIQ2012/IIIQ2012 2.5 IQ2012 SAAR 2.0 IIQ2012 SAAR 1.3 IIIQ2012 SAAR 2.7 Blog 12/2/12
Real Private Fixed Investment	SAAR IIIQ2012 0.7 ∆% IVQ2007 to IIIQ2012: minus 12.7% Blog 12/2/12
Personal Income and Consumption	Oct month ∆% SA Real Disposable Personal Income (RDPI) SA ∆% minus 0.1 Real Personal Consumption Expenditures (RPCE): minus 0.3 12-month Oct NSA ∆%: RDPI: 1.9; RPCE ∆%: 1.2 Blog 12/2/2012
Quarterly Services Report	IQ12/IQ11 SA ∆%: Information 3.8 Professional 10.3 Administrative 4.9 Hospitals 5.2 Blog 6/10/12
Employment Cost Index	Compensation Private IIIQ2012 SA ∆%: 0.5 Sep 12 months ∆%: 2.0 Blog 11/4/12
Industrial Production	Oct month SA ∆%: minus 0.4 Oct 12 months SA ∆%: 1.7 Manufacturing Oct SA ∆% minus 0.9 Oct 12 months SA ∆% 1.8, NSA 3.2 Capacity Utilization: 77.8 Blog 11/18/12
Productivity and Costs	Nonfarm Business Productivity IIIQ2012∆% SAAE 1.9; IIIQ2012/IIIQ2011 ∆% 1.5; Unit Labor Costs SAAE IIQ2012 ∆% -0.1; IIIQ2012/IIIQ2011 ∆%: 1.1 Blog 11/4/2012
New York Fed Manufacturing Index	General Business Conditions From Oct -6.16 to Nov -5.22 New Orders: From Oct -8.97 to Nov 3.08 Blog 11/18/12
Philadelphia Fed Business Outlook Index	General Index from Oct 5.7 to Nov minus Oct 10.7 New Orders from Oct minus 0.6 to Nov minus 4.6 Blog 11/18/12
Manufacturing Shipments and Orders	New Orders SA Sep ∆% 4.8 Ex Transport 1.4 Jan-Sep NSA New Orders 3.3 Ex transport 2.5 Blog 11/4/12
Durable Goods	Oct New Orders SA ∆%: 0.0; ex transport ∆%: 1.5 Jan-Oct New Orders NSA ∆%: 4.9; ex transport ∆% 3.0 Blog 12/2/12
Sales of New Motor Vehicles	Jan-Oct 2012 11,992,114; Jan-Oct 2011 10,539,485. Oct SAAR 14.29 million, Sep SAAR 14.94 million, Oct 2011 SAAR 13.34 million Blog 11/4/12
Sales of Merchant Wholesalers	Jan-Sep 2012/Jan-Sep 2011 NSA ∆%: Total 5.2; Durable Goods: 6.2; Nondurable Goods: 4.4 Blog 11/11/12
Sales and Inventories of Manufacturers, Retailers and Merchant Wholesalers	Sep 12/Sep 11 NSA ∆%: Sales Total Business 0.9; Manufacturers 1.6 Retailers 2.9; Merchant Wholesalers -1.6 Blog 11/18/12
Sales for Retail and Food Services	Jan-Oct 2012/Jan-Oct 2011 ∆%: Retail and Food Services 5.5; Retail ∆% 5.3 Blog 11/18/12
Value of Construction Put in Place	Sep SAAR month SA ∆%: 0.6 Sep 12-month NSA: 6.1 Jan-Sep 2012 ∆% 8.9 Blog 11/4/12
Case-Shiller Home Prices	Sep 2012/Sep 2011 ∆% NSA: 10 Cities 2.1; 20 Cities: 3.0 ∆% Sep SA: 0.3 Cities 0.4 ; 20 Cities: 0.4 Blog 12/2/12
FHFA House Price Index Purchases Only	Sep SA ∆% 0.2; 12 month NSA ∆%: 4.5 Blog 12/2/12
New House Sales	Oct 2012 month SAAR ∆%: minus 0.3 Jan-Oct 2012/Jan-Oct 2011 NSA ∆%: 20.5 Blog 12/2/12
Housing Starts and Permits	Oct Starts month SA ∆%: 3.6 ; Permits ∆%: -2.7 Jan-Oct 2012/Jan-Oct 2011 NSA ∆% Starts 28.2; Permits ∆% 33.2 Blog 11/25/12
Trade Balance	Balance Sep SA -$44217 million versus Aug -$42790 million Exports Sep SA ∆%: 3.1 Imports Sep SA ∆%: 1.5 Goods Exports Jan-Sep 2012/2011 NSA ∆%: 5.1 Goods Imports Jan-Sep 2012/2011 NSA ∆%: 3.9 Blog 11/11/12
Export and Import Prices	Oct 12-month NSA ∆%: Imports 0.4; Exports 1.4 Blog 11/11/12
Consumer Credit	Sep ∆% annual rate: 5.0 Blog 11/11/12
Net Foreign Purchases of Long-term Treasury Securities	Sep Net Foreign Purchases of Long-term Treasury Securities: $3.3 billion Major Holders of Treasury Securities: China $1156 billion; Japan $1131 billion; Total Foreign US Treasury Holdings Aug $5455 billion Blog 11/18/12
Treasury Budget	Fiscal Year 2013/2012 ∆% Oct: Receipts 13.0; Outlays 16.4; Individual Income Taxes 17.6 Deficit Fiscal Year 2011 $1,300 billion Deficit Fiscal Year 2012 $1,089,353 million Blog 11/18/2012
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 11/18/12
Commercial Banks Assets and Liabilities	Oct 2012 SAAR ∆%: Securities 8.3 Loans 4.4 Cash Assets -66.6 Deposits 7.3 Blog 11/25/12
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:

11/25/12 http://cmpassocregulationblog.blogspot.com/2012/11/contraction-of-united-states-real.html

11/18/12 http://cmpassocregulationblog.blogspot.com/2012/11/united-states-unsustainable-fiscal.html

11/11/12 http://cmpassocregulationblog.blogspot.com/2012/11/recovery-without-hiring-united-states.html

11/4/12 http://cmpassocregulationblog.blogspot.com/2012/11/twenty-eight-million-unemployed-or.html

9/23/12 http://cmpassocregulationblog.blogspot.com/2012/09/collapse-of-united-states-creation-of.html

8/26/12 http://cmpassocregulationblog.blogspot.com/2012/08/expanding-bank-cash-and-deposits-with_26.html

Manufacturers’ shipments of durable goods decreased 0.6 percent in Oct 2012 after increasing 0.5 percent in Sep and declining 2.9 percent in Aug. New orders were unchanged in Oct after increasing 9.2 percent in Sep and decreasing 13.1 percent in Aug, as shown in Table VA-1. These data are very volatile. Volatility is illustrated by decrease of 5.8 percent in Oct after increase of orders for nondefense aircraft of 2651.8 percent in Sep after decrease of 97.2 percent in Aug and increases of 51.1 percent in Jul and 32.5 percent in Jun. New orders excluding transportation equipment increased 1.5 percent in Oct and 1.7 percent in Sep after decreasing 2.1 percent in Aug. Capital goods new orders, indicating investment, decreased 0.1 percent in Oct after increase of 24.4 percent in Sep and decrease of 25.8 percent in Aug. New orders of nondefense capital goods increased 0.8 percent in Oct and 23.0 percent in Sep after decrease of 23.9 percent in Aug. Excluding more volatile aircraft, capital goods orders increased 1.7 percent in Oct with decrease of 0.4 percent in Sep and increase of 0.3 percent in Aug.

Table VA-1, US, Durable Goods Value of Manufacturers’ Shipments and New Orders, SA, Month ∆%

	Oct 2012 ∆%	Sep 2012 ∆%	Aug 2012 ∆%
Total
S	-0.6	0.5	-2.9
NO	0.0	9.2	-13.1
Excluding Transport
S	-0.3	0.4	-0.7
NO	1.5	1.7	-2.0
Excluding Defense
S	-0.6	0.5	-3.2
NO	0.1	8.5	-12.3
Machinery
S	0.0	-0.7	-1.1
NO	2.9	8.0	-6.1
Computers & Electronic Products
S	-0.1	2.4	-3.5
NO	0.9	-0.5	-4.0
Computers
S	-9.1	1.4	-9.1
NO	-9.3	0.3	-4.4
Transport Equipment
S	-1.3	0.7	-8.0
NO	-3.1	29.7	-33.7
Motor Vehicles
S	-1.9	-1.2	-11.7
NO	-1.6	-1.9	-11.7
Nondefense Aircraft
S	-0.2	13.6	-5.9
NO	-5.8	2,651.8	-97.2
Capital Goods
S	-0.7	1.9	-1.8
NO	-0.1	24.4	-25.8
Nondefense Capital Goods
S	-0.5	1.4	-1.8
NO	0.8	23.0	-23.9
Capital Goods ex Aircraft
S	-0.4	-0.3	-1.1
NO	1.7	-0.4	0.3

Note:Mfg: manufacturing; S: shipments; NO: new orders; Transport: transportation http://www.census.gov/manufacturing/m3/

Chart VA-1 of the US Census Bureau shows monthly changes in manufacturers’ new orders in the past 12 months. Trends are difficult to discern for these data because of the significant volatility. Twelve-month percentage rates have fallen from the highs in 2010.

Chart VA-1, US, Manufacturers’ Durable Goods New Orders 2010-2011

Source: US Census Bureau http://www.census.gov/manufacturing/m3/

Additional perspective on manufacturers’ shipments and new orders of durable goods is provided by Table VA-2. Values are cumulative millions of dollars in Jan-Oct 2012 not seasonally adjusted (NSA). Shipments of all manufacturing industries in Jan-Oct 2012 total $2247.7 billion and new orders total $2178.2 billion, growing respectively by 7.4 percent and 4.9 percent relative to the same period in 2011. Excluding transportation equipment, shipments grew 6.1 percent and new orders increased 3.0 percent. Excluding defense, shipments grew 8.0 percent and new orders grew 5.8 percent. Important information not in Table VA-2 is the large share of nondurable goods: with shipments of $3 trillion in 2011, growing by 14.0 percent, and new orders of $3 trillion, growing by 14.0 percent, in part driven by higher prices for food and energy. Durable goods were lower in value in 2011, with shipments of $2.4 trillion, growing by 7.9 percent, and new orders of $2.4 trillion, growing by 10.0 percent. Capital goods have relatively high value of $778.6 billion for shipments, growing 5.7 percent, and new orders $789.3 billion, growing 0.7 percent. Excluding aircraft, capital goods shipments reached $634.6 billion, growing by 5.3 percent, and new orders $632.5 billion, growing 0.0 percent. There is no suggestion in these data that the US economy is close to recession but performance at the margin appears somewhat weaker without enough data to discern trends.

Table VA-2, US, Value of Manufacturers’ Shipments and New Orders of Durable Goods, NSA, Millions of Dollars

Jan-Oct 2012	Shipments	∆% 2012/ 2011	New Orders	∆% 2012/ 2011
Total	2,247,721	7.4	2,178,240	4.9
Excluding Transport	1,608,433	6.1	1,529,811	3.0
Excluding Defense	2,141,049	8.0	2,074,554	5.8
Machinery	323,433	9.3	313,534	-3.3
Computers & Electronic Products	281,606	-0.4	214,130	-0.1
Computers & Related Products	27,166	-10.2	27,216	-9.7
Transport Equipment	639,288	10.9	648,429	9.5
Motor Vehicles	437,552	12.3	435,759	12.0
Nondefense Aircraft	93,118	21.6	110,910	21.6
Capital Goods	778,590	5.7	789,324	0.7
Nondefense Capital Goods	695,937	7.5	709,887	3.0
Capital Goods ex Aircraft	634,648	5.3	632,500	0.0

Note: Transport: transportation

Source: US Census Bureau http://www.census.gov/manufacturing/m3/

Output of durable manufacturing accelerated in the 1980s and 1990s with slower growth in the 2000s perhaps because processes matured, as shown in Chart VA-2. Growth was robust after the major drop during the global recession but appears to vacillate in the final segment.

Chart VA-2, US, Output of Durable Manufacturing, 1972-2012

http://www.federalreserve.gov/releases/g17/current/

Manufacturing jobs increased 13,000 in Oct 2012 relative to Sep 2012, seasonally adjusted but fell 16,000 in Oct 2012 relative to Sep 2012, not seasonally adjusted, as shown in Table I-10 at http://cmpassocregulationblog.blogspot.com/2012/11/twenty-eight-million-unemployed-or.html, because of the weaker economy and international trade. In the six months ending in Oct, United States national industrial production accumulated decline of 0.6 percent at the annual equivalent rate of decline of 1.2 percent, which is substantially lower than 1.7 percent growth in 12 months. Capacity utilization for total industry in the United States fell 0.4 percentage point in Oct to 77.8 percent, which is 2.5 percentage points lower than the long-run average from 1972 to 2011. Manufacturing decreased 0.9 percent in Oct seasonally adjusted, increasing 1.8 percent not seasonally adjusted in 12 months, and decreased 1.8 percent in the six months ending in Oct or at the annual equivalent rate of 3.6 percent Table VA-3 provides national income by industry without capital consumption adjustment (WCCA). “Private industries” or economic activities have share of 86.3 percent in US national income in IIQ2012 and 86.4 percent in IIIQ2012. Most of US national income is in the form of services. In Oct 2012, there were 134.792 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 112.399 million NSA in Oct 2012 accounted for 83.4 percent of total nonfarm jobs of 134.792 million, of which 11.777 million, or 10.5 percent of total private jobs and 8.7 percent of total nonfarm jobs, were in manufacturing. Private service-producing jobs were 93.774 million NSA in Oct 2012, or 69.6 percent of total nonfarm jobs and 83.4 percent of total private-sector jobs. Manufacturing has share of 11.2 percent in US national income in IIIQ2011, as shown in Table VA-3. Most income in the US originates in services. Subsidies and similar measures designed to increase 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 IIQ2012	% Total	SAAR IIIQ2012	% Total
National Income WCCA	13,833.6	100.0	13,991.9	100.0
Domestic Industries	13,586.3	98.2	13,741.8	98.2
Private Industries	11,933.2	86.3	12,083.1	86.4
Agriculture	131.7	0.9
Mining	208.3	1.5
Utilities	214.6	1.6
Construction	583.7	4.2
Manufacturing	1548.1	11.2
Durable Goods	894.3	6.5
Nondurable Goods	653.8	4.7
Wholesale Trade	853.5	6.2
Retail Trade	951.9	6.9
Transportation & WH	414.5	3.0
Information	499.1	3.6
Finance, insurance, RE	2237.5	16.2
Professional, BS	1971.7	14.3
Education, Health Care	1378.1	10.0
Arts, Entertainment	540.4	3.9
Other Services	400.30	2.9
Government	1653.0	11.9	1658.7	11.9
Rest of the World	247.3	1.8	250.1	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

B 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/gor1210a.pdf). For fiscal 2013, the forecast is of growth of GDP between 1.3 and 1.8 percent, with domestic producer price inflation (Corporate Goods Price Index, CGPI) in the range of 0.1 to 0.7 percent and the all items CPI less fresh food of 0.2 to 0.6 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 Date of Forecast	Real GDP	Domestic CGPI	CPI All Items Less Fresh Food
2011
Apr 2012	-0.2 to –0.2 [-0.2]	+1.7	0.0
Jan 2012	-0.4 to –0.3 [-0.4]	+1.8 to +1.9 [+1.8]	-0.1 to 0.0 [-0.1]
2012
Oct 2012	+1.4 to +1.6 [+1.5]	-1.2 to -0.9 [-1.1]	-0.1 to -0.1 [-0.1]
Jul 2012	+2.2 to +2.4 [+2.2]	-0.3 to 0.0 [-0.2]	+0.1 to +0.3 [+0.2]
Apr 2012	+2.1 to +2.4 [+2.3]	+0.4 to +0.7 [+0.6]	+0.1 to +0.4 [+0.3]
Jan 2012	+1.8 to +2.1 [+2.0]	-0.1 to +0.2 [+0.1]	0.0 to +0.2 [+0.1]
2013
Oct 2012	+1.3 to +1.8 [+1.6]	+0.1 to +0.7 [+0.5]	+0.2 to +0.6 [+0.4]
Jul 2012	+1.6 to +1.8 [+1.7]	+0.6 to +0.8 [+0.6]	+0.5 to +0.7 [+0.7]
Apr 2012	+1.6 to +1.8 [+1.7]	+0.7 to +0.9 [+0.8]	+0.5 to +0.7 [+0.7]
Jan 2012	+1.4 to +1.7 [+1.6]	+0.6 to 1.0 [+0.8]	+0.4 to +0.5 [+0.5]
2014
Oct 2012	+0.2 to +0.7] [+0.6]	+3.7 to +4.4 [+4.2]	+2.4 to +3.0 [+2.8]

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/gor1210a.pdf

Private-sector activity in Japan contracted at a moderate rate with the Markit Composite Output PMI^™ Index increasing from 48.4 in Sep to 48.9 in Oct, which is still below 50 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10238). Paul Smith, economist at Markit and author of the report, finds that weak manufacturing and unchanged services data suggest unchanged GDP in the beginning of IVQ2012 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10238). The Markit Business Activity Index of Services increased from 48.9 in Sep to 50.0 in Oct, showing no change relative to the prior month (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10238). The Markit/JMMA Purchasing Managers’ Index^™ (PMI™), seasonally adjusted, decreased from 48.0 in Sep to 46.9 in Oct for the lowest reading in 18 months (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10214). Foreign orders fell for the seventh consecutive months. Paul Smith, economist at Markit and author of the report, finds the data consistent with quarterly contraction of manufacturing output at a quarterly rate in excess of 3 percent with shipments overseas falling at a quarterly rate of about 4 percent because of weak world growth especially in export markets including China (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10214).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 Blog 8/9/11 Table 26
Corporate Goods Prices	Oct ∆% minus 0.3 12 months ∆% minus 1.0 Blog 11/18/12
Consumer Price Index	Oct NSA ∆% 0.0; Oct 12 months NSA ∆% -0.4 Blog 12/2/12
Real GDP Growth	IIIQ2012 ∆%: minus 0.9 on IIQ2012; IIIQ2012 SAAR minus 3.5; ∆% from quarter a year earlier: 0.1 % Blog 11/18/12
Employment Report	Oct Unemployed 2.71 million Change in unemployed since last year: minus 180 thousand Unemployment rate: 4.2% Blog 12/2/12
All Industry Indices	Sep month SA ∆% -0.3 12-month NSA ∆% -1.1 Blog 11/25/12
Industrial Production	Oct SA month ∆%: 1.8 12-month NSA ∆% -4.3 Blog 12/2/12
Machine Orders	Total Sep ∆% 9.6 Private ∆%: 15.4 Sep ∆% Excluding Volatile Orders -4.3 Blog 11/11/12
Tertiary Index	Sep month SA ∆% 0.3 Sep 12 months NSA ∆% 0.2 Blog 11/18/12
Wholesale and Retail Sales	Oct 12 months: Total ∆%: -1.7 Wholesale ∆%: -1.8 Retail ∆%: -1.2 Blog 12/2/12
Family Income and Expenditure Survey	Oct 12-month ∆% total nominal consumption -0.5, real -0.1 Blog 12/2/12
Trade Balance	Exports Oct 12 months ∆%: minus 6.5 Imports Oct 12 months ∆% minus 1.6 Blog 11/25/12

Links to blog comments in Table JPY:

11/25/12 http://cmpassocregulationblog.blogspot.com/2012/11/contraction-of-united-states-real.html

11/18/12 http://cmpassocregulationblog.blogspot.com/2012/11/united-states-unsustainable-fiscal.html

11/11/12 http://cmpassocregulationblog.blogspot.com/2012/11/recovery-without-hiring-united-states.html

8/9/11 http://cmpassocregulationblog.blogspot.com/2011/08/turbulence-in-world-financial-markets.html

In Oct 2012, industrial production in Japan increased 1.8 percent and decreased 4.1 percent in the 12 months ending in Oct 2012, as shown in Table VB-1. In the six months Apr-Sep 2012, industrial production fell cumulative 9.6 or at the annual equivalent rate of 18.2 percent. As a result, growth of industrial production in 12 months fell from 14.2 percent in Mar 2012 to minus 8.1 percent in Sep 2012. Japan’s industrial production increased during two consecutive months by revised 2.3 percent in Dec 2011 and revised 0.9 percent in Jan 2012, reducing the percentage decline in 12 months from minus 3.0 percent in Dec to minus 1.6 percent in Jan 2012 and positive 1.5 percent in Feb. Monthly industrial production had climbed in every month since the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011, with exception of Sep 2011 but fell again in Nov by 1.7 percent. Industrial production was higher in 12 months for the first month in Aug 2011 by 1.6 percent and again in Oct by 0.9 percent but fell 2.9 percent in Nov and 3.0 percent in Dec 2011 relative to a year earlier. Industrial production fell 21.9 percent in 2009 after falling 3.4 percent in 2008 but recovered by 16.4 percent in 2010. The annual average in calendar year 2011 fell 2.3 percent largely because of the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011.

Table VB-1, Japan, Industrial Production ∆%

	∆% Month SA	∆% 12 Months NSA
Oct 2012	1.8	-4.3
Sep	-4.1	-8.1
Aug	-1.6	-4.6
Jul	-1.0	-0.8
Jun	0.4	-1.5
May	-3.4	6.0
Apr	-0.2	12.9
Mar	1.3	14.2
Feb	-1.6	1.5
Jan	0.9	-1.6
Dec 2011	2.3	-3.0
Nov	-1.7	-2.9
Oct	1.8	0.9
Sep	-1.9	-2.4
Aug	0.9	1.6
Jul	1.1	-1.7
Jun	3.8	-0.6
May	5.8	-4.6
Apr	2.4	-12.7
Mar	-16.2	-12.4
Feb	1.1	4.5
Jan	1.2	6.1
Dec 2010	2.4	5.9
Calendar Year
2011		-2.3
2010		16.4
2009		-21.9
2008		-3.4

Source: http://www.meti.go.jp/english/statistics/index.html

The employment report for Japan in Oct 2012 is in Table VB-2. The rate of unemployment seasonally adjusted decreased to 4.2 percent in Sep 2012 from 4.3 percent in Jul 2012 and remained at 4.2 percent in Oct 2012. The rate of unemployment not seasonally adjusted fell to 4.1 in Oct 2012 and 0.3 percentage points from a year earlier. The employment rate at 57.0 percent in Oct 2012 fell 0.3 percentage points from a year earlier.

Table VB-2, Japan, Employment Report Oct 2012

Unemployed	2.71 million
Change since last year	-180 thousand; ∆% –6.2
Unemployment rate	4.2% SA 0.0; NSA 4.1%, -0.3 from earlier year
Population ≥ 15 years	110.99 million
Change since last year	∆% -0.1
Labor Force	65.92 million
Change since last year	∆% –0.1
Employed	63.21 million
Change since last year	∆% 0.2
Labor force participation rate	59.4
Change since last year	0.0
Employment rate	57.0%
Change since last year	0.3

Source: Japan, Statistics Bureau, Ministry of Internal Affairs and Communications http://www.stat.go.jp/english/data/roudou/154.htm

Chart VB-1 of Japan’s Statistics Bureau at the Ministry of Internal Affairs and Communications provides the unemployment rate of Japan from 2010 to 2012. The sharp decline in Sep 2011 was the best reading in 2011 but the rate increased in the final quarter of the year, declining in Feb 2012 and stabilizing in Mar 2012 but increasing to 4.6 percent in Apr 2012 and declining again to 4.4 percent in May 2012 and 4.3 percent in both Jun and Jul 2012 with further decline to 4.2 percent in Aug, Sep and Oct 2012.

Chart VB-1, Japan, Unemployment Rate

Source: Japan, Statistics Bureau, Ministry of Internal Affairs and Communications

http://www.stat.go.jp/english/data/roudou/154.htm

During the “lost decade” of the 1990s from 1991 to 2002 (Pelaez and Pelaez, The Global Recession Risk (2007), 82-3), Japan’s GDP grew at the average yearly rate of 1.0 percent, the CPI at 0.1 percent and the implicit deflator at minus 0.8 percent. Japan’s growth rate from the mid 1970s to 1992 was 4 percent (Ito 2004). Table VB-3 provides Japan’s rates of unemployment, participation in labor force and employment for 1968, 1975, 1980 and 1985 and yearly from 1990 to 2011. The rate of unemployment jumped from 2.1 percent in 1991 to 5.4 percent in 2002, which was a year of global economic weakness. The participation rate dropped from 64.0 percent in 1992 to 61.2 percent in 2002 and the employment rate fell from 62.4 percent in 1992 to 57.9 percent in 2002. The rate of unemployment rose from 3.9 percent in 2007 to 5.1 percent in 2010, falling to 4.6 percent in 2011, while the participation rate fell from 60.4 percent to 59.6 percent, falling to 59.3 percent in 2011, and the employment rate fell from 58.1 percent to 56.6 percent in 2010 and 56.5 percent in 2011. The global recession adversely affected labor markets in advanced economies.

Table VB-3, Japan, Rates of Unemployment, Participation in Labor Force and Employment, %

	Unemployment Rate	Participation Rate	Employment Rate
1968	1.2	65.9	65.1
1975	1.9	63.0	61.9
1980	2.0	63.3	62.0
1985	2.6	63.0	61.4
1990	2.1	63.3	61.9
1991	2.1	63.8	62.4
1992	2.2	64.0	62.6
1993	2.5	63.8	62.2
1994	2.9	63.8	61.8
1995	3.2	63.4	61.4
1996	3.4	63.5	61.4
1997	3.4	63.7	61.5
1998	4.1	63.3	60.7
1999	4.7	62.9	59.9
2000	4.7	62.4	59.5
2001	5.0	62.0	58.9
2002	5.4	61.2	57.9
2003	5.3	60.8	57.6
2004	4.7	60.4	57.6
2005	4.4	60.4	57.7
2006	4.1	60.4	57.9
2007	3.9	60.4	58.1
2008	4.0	60.2	57.8
2009	5.1	59.9	56.9
2010	5.1	59.6	56.6
2011	4.6	59.3	56.5

Source: Japan, Statistics Bureau, Ministry of Internal Affairs and Communications http://www.stat.go.jp/english/data/roudou/154.htm

The survey of household income and consumption of Japan in Table VB-4 is showing noticeable improvement in recent months relative to earlier months, which can be appreciated in the chart in the link in parentheses but followed by decline in Nov, renewed strength in Dec, another decline in Jan 2012 and increase in Feb and Mar 2012 with stabilization in Apr and May 2012 but sharp decline into Jun 2012 with recovery in Jul and Aug 2012, interrupted in Sep-Oct 2012 (http://www.stat.go.jp/english/data/kakei/156.htm). Total consumption decreased 0.1 percent in real terms in Oct 2012 and decreased 0.5 percent in nominal terms. There are several segments of decreasing real consumption: clothing and footwear declining 1.6 percent in real terms and 2.1 percent in nominal terms, fuel, light and water charges declining 1.6 percent in real terms but increasing 2.1 percent in nominal terms and culture and recreation declining 0.6 percent in real terms and 2.6 percent in nominal terms. Real household income increased 0.9 percent; real disposable income decreased 0.1 percent; and real consumption expenditures increased 0.7 percent.

Table VB-4, Japan, Family Income and Expenditure Survey 12-months ∆% Relative to a Year Earlier

Oct 2012	Nominal	Real
Households of Two or More Persons
Total Consumption	-0.5	-0.1
Excluding Housing, Vehicles & Remittance		0.5*
Food	-1.9	-0.3
Housing	-13.8	-13.5
Fuel, Light & Water Charges	2.1	-1.6
Furniture & Household Utensils	10.0	12.0
Clothing & Footwear	-6.9	-6.7
Medical Care	3.7	4.1
Transport and Communications	8.7	7.8
Education	2.6	2.2
Culture & Recreation	-2.6	-0.6
Other Consumption Expenditures	1.4	-1.0*
Workers’ Households
Income	0.5	0.9
Disposable Income	-0.5	-0.1
Consumption Expenditures	0.3	0.7

*Real: nominal deflated by CPI excluding imputed rent

Source: http://www.stat.go.jp/english/data/kakei/156.htm

Percentage changes in 12 months of nominal and real consumption expenditures in Japan are provided in Table VB-5. There was sharp decline in nominal consumption of 8.8 percent in Mar 2011 and 8.2 percent in real consumption because of the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Dec was the first month in 2011 with increases in 12 months in both nominal and real consumption expenditures followed by Feb 2012 through Aug 2012. Nominal and real consumption fell in both Sep and Oct 2012. Consumption was an important driver of GDP growth in Japan in IQ2012. Real GDP grew at the seasonally adjusted annual rate (SAAR) of 5.2 percent in IQ2012 with private consumption contributing 2.9 percentage points for the highest contribution to growth (Table VB-2 at http://cmpassocregulationblog.blogspot.com/2012/11/united-states-unsustainable-fiscal_18.html ). There was deceleration in IIQ2012 with growth of GDP at SAAR of 0.3 percent and contribution of minus 0.2 percentage points of personal consumption. In IIIQ2012, Japan’s GDP contracted at the SAAR of 3.5 percent and personal consumption contracted at 1.1 percent. Nominal consumption increased 4.3 percent in May 2012 but at a lower 1.5 percent in Jun 2012, 1.2 percent in Jul 2012 and 1.4 percent in Aug 2012, decreasing 1.2 percent in Sep 2012 and 0.5 percent in Oct 2012. Real consumption expenditures increased 4.0 percent in May 2012 but at a lower 1.6 percent in Jun 2012, 1.7 percent in Jul 2012 and 1.8 percent in Aug 2012, declining 0.9 percent in Sep 2012 and 0.1 percent in Oct 2012. Both nominal and real consumption expenditures increased in 2009, 0.3 percent and 2.1 percent, respectively.

Table VB-5, Japan, Family Income and Expenditure Survey 12-months ∆% Relative to a Year Earlier

	Nominal Consumption Expenditures ∆% Relative to a Year Earlier	Real Consumption Expenditures ∆% Relative to a Year Earlier
Oct 2012	-0.5	-0.1
Sep	-1.2	-0.9
Aug	1.4	1.8
Jul	1.2	1.7
Jun	1.5	1.6
May	4.3	4.0
Apr	3.2	2.6
Mar	4.1	3.4
Feb	2.7	2.3
Jan	-2.1	-2.3
Dec 2011	0.3	0.5
Nov	-3.8	-3.2
Oct	-0.6	-0.4
Sep	-1.9	-1.9
Aug	-3.9	-4.1
Jul	-1.8	-2.1
Jun	-3.9	-3.5
May	-1.6	-1.2
Apr	-2.5	-2.0
Mar	-8.8	-8.2
Feb	-0.1	0.5
Jan	-0.9	-0.3
Dec 2010	-3.2	-3.3
Dec 2009	0.3	2.1

Source: http://www.stat.go.jp/english/data/kakei/156.htm

Japan is experiencing weak internal demand as in most advanced economies, interrupted by strong growth in IQ2012 but renewed weakening at the end of IIQ2012 and beginning of IIIQ2012. Table VB-6 provides Japan’s wholesale and retail sales. Retail sales decreased 1.2 percent in the 12 months ending in Oct 2012. Total sales decreased 1.7 percent in the 12 months ending in Oct 2012. Retail sales are recovering from deep drops in Mar and Apr 2011 following the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Retail sales have been increasing in 12-month percentage changes from Dec 2011 through Jun 2012 but fell again by 0.7 percent in Jul 2012, increasing 1.7 percent in Aug 2012 and 0.4 percent in Sep 2012 but declining 1.2 percent in Oct 2012.

Table VB-6, Japan, Wholesale and Retail Sales 12 Month ∆%

	Total	Wholesale	Retail
Oct 2012	-1.7	-1.8	-1.2
Sep	-3.6	-4.9	0.4
Aug	-2.6	-4.2	1.7
Jul	-3.1	-4.0	-0.7
Jun	-2.8	-3.8	0.2
May	2.5	2.1	3.6
Apr	1.7	0.3	5.7
Mar	2.9	0.5	10.3
Feb	-0.1	-1.3	3.4
Jan	-2.0	-3.5	1.8
Dec 2011	-0.8	-2.0	2.5
Nov	-2.3	-2.4	-2.2
Oct	1.1	0.8	1.9
Sep	0.3	0.8	-1.1
Aug	3.1	5.2	-2.6
Jul	2.3	3.0	0.6
Jun	3.1	3.8	1.2
May	1.3	2.3	-1.3
Apr	-2.6	-1.7	-4.8
Mar	-1.3	1.2	-8.3
Feb	5.3	7.2	0.1
Jan	3.3	4.6	0.1
Dec 2010	3.5	5.7	-2.1
Calendar Year
2011	1.0	1.8	-1.2
2010	1.5	1.1	2.5
2009	-20.5	-25.6	-2.3
2008	1.2	1.5	0.3

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 Oct 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 but rebounded to 56.5 in Oct.

Table CIPMNM, China, Nonmanufacturing Index of Purchasing Managers, %, Seasonally Adjusted

2012	Total Index	New Orders	Interm. Input Prices	Subs Prices	Exp
Oct	55.5	51.6	58.1	50.5	63.4
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

Chart CIPMNM provides China’s nonmanufacturing purchasing managers’ index from Oct 2011 to Oct 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, rebounding to 55.5 in Oct 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/t20121102_402847908.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 and movement to 50.2 in Oct 2012 into positive territory.

Table CIPMMFG, China, Manufacturing Index of Purchasing Managers, %, Seasonally Adjusted

2012	IPM	PI	NOI	INV	EMP	SDEL
Oct	50.2	52.1	50.4	47.3	49.2	50.1
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

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 with movement to 50.2 in Oct 2012 above the neutral zone of 50.0.

Chart CIPMMFG, China, Manufacturing Index of Purchasing Managers, Seasonally Adjusted

Source: National Bureau of Statistics of China

The World Economic Outlook (WEO) of the International Monetary Fund (IMF) estimates China’s GDP in current US dollars (USD) at $8250.2 billion in 2012 (http://www.imf.org/external/pubs/ft/weo/2012/02/weodata/index.aspx). Table VC-GDP provides the estimate of current value of China’s GDP at CNY 35.3 trillion in IIIQ2012. Cumulative growth in the first three quarters of 2012 relative to the same period in 2011 was 7.7 percent. Secondary industry accounts for 46.8 percent of GDP of which industry alone for 40.1 percent and construction with the remaining 6.7 percent. Tertiary industry accounts for 43.8 percent of GDP and primary industry for 9.4 percent. China’s growth strategy consisted of rapid increases in productivity in industry to absorb population from agriculture where incomes are lower (Pelaez and Pelaez, The Global Recession Risk (2007), 56-80). The bottom block of Table VC-GDP provides quarter-on-quarter growth rates of GDP and their annual equivalent. China’s GDP growth decelerated significantly from annual equivalent 9.9 percent in IIIQ2011 to 7.0 percent in IVQ2011 and 6.1 percent in IQ2012, rebounding to 8.2 percent in IIQ2012 and 9.1 percent in IIIQ2012.

Table VC-GDP, China, Cumulative and Quarterly Growth of GDP, Current CNY 100 Million and Inflation Adjusted ∆%

Cumulative GDP	Value Current CNY 100 Million	Cumulative Three First Quarters of 2012 Relative to Cumulative Three First Quarters of 2012 ∆% Inflation Adjusted
GDP	353,480.0	7.7
Primary Industry	33,088.0	4.2
Farming	33,088.0	4.2
Secondary Industry	165,428.5	8.1
Industry	141,641.5	7.9
Construction	23,787.0	9.2
Tertiary Industry	154,963.5	7.9
Transport, Storage, Post	18,941.0	6.7
Wholesale, Retail Trades	31,651.2	11.8
Hotel & Catering Services	7,015.6	7.6
Financial Intermediation	22,465.2	9.5
Real Estate	20,789.6	2.7
Other	54,101.0	7.7
Growth in Quarter Relative to Prior Quarter	∆% on Prior Quarter	∆% Annual Equivalent
2012
IIIQ2012	2.2	9.1
IIQ2012	2.0	8.2
IQ2012	1.5	6.1
2011
IVQ2011	1.7	7.0
IIIQ2011	2.4	9.9
IIQ2011	2.5	10.4
IQ2011	2.2	9.1

Source: National Bureau of Statistics of China

http://www.stats.gov.cn/enGliSH

Table VD-GDPb provides growth of GDP in China relative to a year earlier and relative to prior quarter. Growth of GDP relative to a year earlier decelerated from 12.1 percent in IQ2010 to 7.4 percent in IIIQ2012. Growth of secondary industry decelerated from 14.5 percent in IQ2010 to 7.9 percent in IIIQ2012.

Table VC-GDPb, 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

The HSBC Flash China Manufacturing Purchasing Managers’ Index^™ (PMI^™) compiled by Markit (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10326) is improving. The overall Flash China Manufacturing PMI^™ increased marginally from 49.5 in Oct to 50.4 in Nov for a thirteen-month high high while the Flash China Manufacturing Output Index increased from 48.2 in Oct to 51.3 in Nov, both expansion territory above 50.0. Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds that the movement of the HSBC into expansion territory for the first time in 12 months verifies improving recovery but stimulus policies should continue because of the fragility of world economic growth (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10326).The HSBC China Services PMI^™, compiled by Markit, shows marginally improving business activity in China with the HSBC Composite Output, combining manufacturing and services, increasing from 50.3 in Sep to 50.5 in Oct for second consecutive month of increasing output (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10289). 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 to sustain recovery in manufacturing (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10289). The HSBC Business Activity index decreased from 54.3 in Sep to 53.5 in Oct with continuing growth in services at a slower rate (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10289). The HSBC Purchasing Managers’ Index^™ (PMI^™), compiled by Markit, increased to 49.5 in Oct from 47.9 in Sep, indicating moderate reduction of activity and the twelfth monthly deterioration of the index (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10259). New exports orders registered declines for the sixth consecutive month at a slower but strong rate of decline. Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds stabilization of the decline with increase in new orders but weak exports, requiring further stimulus measures (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10259).

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	Oct 12-month ∆%: minus 2.8 Oct month ∆%: 0.2 Blog 11/11/12
Consumer Price Index	Oct month ∆%: -0.1 Oct 12 months ∆%: 1.7 Blog 11/11/12
Value Added of Industry	Oct month ∆%: 0.81 Jan-Oct 2012/Jan-Oct 2011 ∆%: 10.0 Blog 11/18/12
GDP Growth Rate	Year IIIQ2012 ∆%: 7.4 Quarter IIQ2012 ∆%: 2.2 Blog 10/21/12
Investment in Fixed Assets	Oct month ∆%: 1.94 Total Jan-Oct 2012 ∆%: 20.7 Real estate development: 15.4 Blog 11/18/12
Retail Sales	Oct month ∆%: 1.34 Oct 12 month ∆%: 14.5 Jan-Oct ∆%: 14.1 Blog 11/18/12
Trade Balance	Oct balance $31.99 billion Exports ∆% 11.6 Imports ∆% 2.4 Cumulative Oct: $180.42 billion Blog 11/11/12

Links to blog comments in Table CNY:

11/18/12 http://cmpassocregulationblog.blogspot.com/2012/11/united-states-unsustainable-fiscal.html

11/11/12 http://cmpassocregulationblog.blogspot.com/2012/11/recovery-without-hiring-united-states.html

10/21/12 http://cmpassocregulationblog.blogspot.com/2012/10/world-inflation-waves-stagnating-united.html

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 0.4 percent in 2012 and 0.1 percent in 2013 but 1.4 percent in 2014.

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	10.2	1.4
2012*			-0.4
2013*			0.1
2014*			1.4

*EUROSTAT forecast Source: EUROSTAT http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database

The Flash Eurozone PMI Composite Output Index of the Markit Flash Eurozone PMI^®, combining activity in manufacturing and services, increased from 45.7 in Oct to 45.8 in Nov, for ten consecutive declines and fourteen drops in fifteen months, with Oct registering the lowest reading since IIQ2009 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10329). Chris Williamson, Chief Economist at Markit, finds that the Markit Flash Eurozone PMI index is consistent with significant worsening of economic activity with GDP declining even by 0.5 percent in IVQ2012 compared with contraction of 0.1 percent in IIIQ2012 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10329). The Markit Eurozone PMI^® Composite Output Index, combining services and manufacturing activity with close association with GDP, decreased from 46.1 in Sep to 45.7 in Oct, which is the ninth consecutive contraction; contraction spread in manufacturing and services throughout the four largest economies of Germany, France, Italy and Spain (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10267). Rob Robson, Senior Economist at Markit, finds that the data are historically consistent with likely decline of GDP at a rate of 0.5 percent per quarter with companies concerned about weakness in both the internal economy and the world economy (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10267). The Markit Eurozone Services Business Activity Index declined from 46.1 in Sep to 46.0 in Oct, which is the lowest reading since Jul 2009 with service providers concerned about the internal market and those in the United States and Asia (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10267). The Markit Eurozone Manufacturing PMI^® fell to 45.4 in Oct from 46.1 in Sep (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10253). New export orders declined in Oct for sixteenth consecutive month, with declines for the two largest economies of France and Germany. Rob Dobson, Chief Economist at Markit, finds that manufacturing output declined through all sectors of consumer, intermediate and investment goods with constraint of demand by internally and from abroad, including trade within the euro area and with third regions (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10253). Table EUR provides the regional data table for the euro area.

Table EUR, Euro Area Economic Indicators

GDP	IIIQ2012 ∆% -0.1; IIIQ2012/IIIQ2011 ∆% -0.6 Blog 11/18/12
Unemployment	Oct 2012: 11.7% unemployment rate Oct 2012: 18.703 million unemployed Blog 12/2/12
HICP	Oct month ∆%: 0.2 12 months Oct ∆%: 2.5 Blog 11/18/12
Producer Prices	Euro Zone industrial producer prices Sep ∆%: 0.2 Sep 12-month ∆%: 2.7 Blog 11/11/12
Industrial Production	Sep month ∆%: -2.5; Sep 12 months ∆%: -2.3 Blog 11/18/12
Retail Sales	Sep month ∆%: minus 0.2 Sep 12 months ∆%: minus 0.8 Blog 11/11/12
Confidence and Economic Sentiment Indicator	Sentiment 85.7 Nov 2012 Consumer minus 26.9 Nov 2012 Blog 12/2/12
Trade	Jan-Sep 2012/Jan-Sep 2011 Exports ∆%: 8.0 Imports ∆%: 1.8 Sep 2012 12-month Exports ∆% 1.4 Imports ∆% -4.1 Blog 11/18/12

Links to blog comments in Table EUR:

11/18/12 http://cmpassocregulationblog.blogspot.com/2012/11/united-states-unsustainable-fiscal.html

11/11/12 http://cmpassocregulationblog.blogspot.com/2012/11/recovery-without-hiring-united-states.html

EUROSTAT estimates the rate of unemployment in the euro area at 11.7 percent in Oct 2012, as shown in Table VD-1. The number of unemployed in Oct 2012 was 18.703 million, which was 2.174 million higher than 16.529 million in Oct 2011. The rate of unemployment jumped from 10.4 percent in Oct 2011 to 11.7 percent in Oct 2012.

Table VD-1, Euro Area, Unemployment Rate and Number of Unemployed, % and Millions, SA

	Unemployment Rate %	Number Unemployed Millions
Oct 2012	11.7	18.703
Sep	11.6	18.530
Aug	11.5	18.375
Jul	11.5	18.280
Jun	11.4	18.136
May	11.3	17.921
Apr	11.2	17.729
Mar	11.0	17.483
Feb	10.9	17.269
Jan	10.8	17.089
Dec 2011	10.7	16.920
Nov	10.6	16.819
Oct	10.4	16.529
Sep	10.3	16.332
Aug	10.2	16.069
Jul	10.1	15.931
Jun	10.0	15.748
May	9.9	15.671
Apr	9.9	15.562
Mar	9.9	15.604
Feb	9.9	15.632
Jan	10.0	15.709
Dec 2010	10.1	15.814

Source: EUROSTAT http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database

Table VD-2 shows the disparity in rates of unemployment in the euro area with 11.7 percent for the region as a whole and 18.703 million unemployed but 5.4 percent in Germany and 2.274 million unemployed. At the other extreme is Spain with rate of unemployment of 26.2 percent and 6.076 million unemployed. The rate of unemployment of the European Union in Oct is 10.7 percent with 25.913 million unemployed.

Table VD-2, Unemployed and Unemployment Rate in Countries and Regions, Millions and %

Oct 2012	Unemployment Rate %	Unemployed Millions
Euro Zone	11.7	18.703
Germany	5.4	2.274
France	10.7	3.147
Netherlands	5.5	0.491
Finland	7.7	0.207
Portugal	16.3	0.888
Ireland	14.7	0.316
Italy	11.1	2.870
Greece	NA	NA
Spain	26.2	6.076
Belgium	7.5	0.362
European Union	10.7	25.913

Source: EUROSTAT http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database

Chart VD-1 provides Eurosat estimates of unemployment rates in the European Union. There is significant diversity in the rates of unemployment in members of the euro zone and the European Union.

Chart VD-1, Unemployment Rate in Various Countries and Regions

Source: EUROSTAT

http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database

The Economic Sentiment Indicator of the European Economic Commission, Economic and Financial Affairs, provides correlation with the economic cycle since 1990, capturing all three recessions in the period and even the threat of recession from 1994 to 1995. The latest chart of this index accessible in the link in parenthesis shows trend of decline in 2011 and 2012 that has punctured the historical average of 100 and resumed downward trend in 2012 (http://ec.europa.eu/economy_finance/db_indicators/surveys/index_en.htm). This deterioration is shown in Table VD-3 with the index falling from 102.5 in Jul 2011 to 85.7 in Nov 2012 with improvement at the margin from 84.3 in Oct 2012. There is downward trend in 2012 with the index still above the minimum value of 69.1 reached in Mar 2009 but still below the average of 100.

Table VD-3, Euro Area, Indicators of Confidence and Economic Sentiment SA

	ESI	IND	SERV	CON	RET	CONS
Historical Average	100.0	-6.8	10.2	-13.0	-9.1	-17.8
Maximum	117.9 05-00	7.8 04-07	35.3 08-98	2.5 05-00	5.3 06-90	6.1 02-90
Minimum	69.1 03-09	-38.2 03-09	-27.3 03-09	-34.3 03-09	-24.9 01-93	-46.3 09-93
Nov 2012	85.7	-15.1	-11.9	-26.9	-14.9	-35.5
Oct	84.3	-18.3	-12.1	-25.7	-17.4	-32.9
Sep	85.2	-15.9	-11.9	-25.9	-18.5	-31.7
Aug	86.1	-15.4	-10.8	-24.6	-17.2	-33.1
Jul	87.9	-15.1	-8.5	-21.5	-15.0	-28.5
Jun	89.9	-12.8	-7.4	-19.8	-14.4	-28.1
May	90.5	-11.4	-5.2	-19.3	-18.1	-30.2
Apr	92.8	-9.0	-2.4	-19.9	-11.1	-27.5
Mar	94.4	-7.1	-0.3	-19.1	-12.0	-26.7
Feb	94.5	-5.7	-0.9	-20.3	-14.0	-24.6
Jan	93.5	-7.0	-0.7	-20.7	-15.5	-28.1
Dec 2011	92.8	-7.2	-2.6	-21.3	-12.2	-28.9
Nov	93.5	-7.3	-2.0	-20.5	-11.2	-26.0
Oct	94.4	-6.6	-0.2	-20.1	-9.9	-27.3
Sep	94.6	-6.0	-0.3	-19.3	-9.9	-29.8
Aug	98.1	-2.9	3.4	-16.8	-8.8	-26.0
Jul	102.5	0.5	7.5	-11.5	-3.7	-27.2
Jun	104.9	3.1	9.7	-10.0	-2.7	-26.8

ESI: Economic Sentiment Index; IND: Industry; SERV: Services; CON: Consumer; RET: Retail Trade; CONS: Construction

Source: European Commission Services

ESI: Economic Sentiment Index; IND: Industry; SERV: Services; CON: Consumer; RET: Retail Trade; CONS: Construction

Source: European Commission Services http://ec.europa.eu/economy_finance/db_indicators/surveys/index_en.htm

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 Flash Germany Composite Output Index of the Markit Flash Germany PMI^®, combining manufacturing and services, increased from 49.7 in Oct to 47.9 in Nov, which is the seventh consecutive reading below 50, indicating mild contraction (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10331). The pace of decline of new export orders for manufacturing was at the lowest in six months, with some respondents finding enhanced demand in China. Tim Moore, Senior Economist at Markit, finds that difficult short-term output for manufacturing and services firms because of decline at the sharpest rate in three years of stocks of purchases (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10331). The Markit Germany Composite Output Index of the Markit Germany Services PMI^®, combining manufacturing and services with close association with Germany’s GDP, decreased from 49.2 in Sep to 47.7 in Oct, indicating a level below the neutral zone of 50.0 for six consecutive months (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10305). Tim Moore, Senior Economist at Markit and author of the report, finds that the composite index of manufacturing and services suggests the possibility that the economy of Germany could experience contracting GDP in IVQ2012 lost strength in Oct (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10305). The Germany Services Business Activity Index fell from 49.7 in Sep to 48.4 in Oct, which is below the long-term average of 52.9 and also lower than readings in the first half of 2012 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10305). The Markit/BME Germany Purchasing Managers’ Index^® (PMI^®), showing close association with Germany’s manufacturing output, fell from 47.4 in Sep to 46.0 in Oct for the eighth consecutive month in contraction territory below 50.0 and much lower than the long-term average of the index of 52.0 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10278). New export orders fell for sixteen consecutive months at the fastest rate of decline since Apr 2009. Tim Moore, Senior Economist at Markit and author of the report, continuing weakness in orders from major export sectors with output declining in part because of lower demand from the south of Europe together with deteriorating investment throughout Asia (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10278).Table DE provides the country data table for Germany.

Table DE, Germany, Economic Indicators

GDP	IIIQ2012 0.2 ∆%; III/Q2012/IIIQ2011 ∆% 0.4 2011/2010: 3.0% GDP ∆% 1992-2011 Blog 8/26/12 5/27/12 11/25/12
Consumer Price Index	Oct month NSA ∆%: 0.0 Oct 12-month NSA ∆%: 2.0 Blog 11/11/12
Producer Price Index	Oct month ∆%: 0.1 CSA, 0.0 NSA 12-month NSA ∆%: 1.5 Blog 11/25/12
Industrial Production	Mfg Sep month CSA ∆%: -2.3 12-month NSA: -8.5 Blog 11/11/12
Machine Orders	MFG Sep month ∆%: -3.3 Aug 12-month ∆%: -10.2 Blog 11/11/12
Retail Sales	Oct Month ∆% -0.8 12-Month ∆% -2.8 Blog 12/2/12
Employment Report	Unemployment Rate Sep 5.4% Blog 12/2/12
Trade Balance	Exports Sep 12-month NSA ∆%: -3.4 Imports Sep 12 months NSA ∆%: -3.6 Exports Sep month CSA ∆%: minus 2.5; Imports Sep month SA minus 1.6 Blog 11/11/12

Links to blog comments in Table DE:

11/25/12 http://cmpassocregulationblog.blogspot.com/2012/11/contraction-of-united-states-real.html

11/11/12 http://cmpassocregulationblog.blogspot.com/2012/11/recovery-without-hiring-united-states.html

8/26/12 http://cmpassocregulationblog.blogspot.com/2012/08/expanding-bank-cash-and-deposits-with_26.html

Germany’s labor market continues to show strength not found in most of the advanced economies, as shown in Table VE-1. The number unemployed, not seasonally adjusted, increased from 2.20 million in Oct 2011 to 2.24 million in Nov 2012, or 1.8 percent, while the unemployment rate increased from 5.2 percent in Oct 2011 to 5.3 percent in Oct 2012. The number of persons in employment, not seasonally adjusted, increased from 39.81 million in Oct 2011 to 40.14 million in Oct 2012, or 0.8 percent, while the employment rate increased from 63.6 percent in Oct 2011 to 64.0 percent in Oct 2012. The number unemployed, seasonally adjusted, fell from 2.29 million in Oct 2012 to 2.27 million in Sep 2012, while the unemployment rate was unchanged from 5.4 percent in Sep 2012 to 5.4 percent in Oct 2012. The number of persons in employment, seasonally adjusted, increased from 40.09 million in Sep 2012 to 40.14 million in Oct 2012, or 0.1 percent.

Table VE-1, Germany, Unemployment Labor Force Survey

	Oct 2012	Sep 2012	Oct 2011
NSA
Number Unemployed Millions	2.24 ∆% Oct 2012/Sep 2012: 1.8 ∆% Oct 2012/Oct 2011: 1.8	2.20	2.20
% Rate Unemployed	5.3	5.1	5.2
Persons in Employment Millions	40.14 ∆% Oct 2012/Sep 2012: 0.1 ∆% Oct 2012/Oct 2011: 0.8	40.09	39.81
Employment Rate	64.0	64.5	63.6
SA
Number Unemployed Millions	2.27 ∆% Oct 2012/Sep 2012: -0.9 ∆% Oct 2012/Oct 2011: –5.4	2.29	2.40
% Rate Unemployed	5.4	5.4	5.7
Persons in Employment Millions	40.14 ∆% Oct 2012/Sep 2012: 0.1 ∆% Oct 2012/Oct 2011: 0.8	40.09	39.81

NSA: not seasonally adjusted; SA: seasonally adjusted

Source: Statistisches Bundesamt Deutschland https://www.destatis.de/EN/PressServices/Press/pr/2012/11/PE12_414_132.html;jsessionid=DFB8C89E15B052AAA879DD858B4D62C9.cae4

The unemployment rate in Germany as percent of the labor force in Table VE-2 stood at 6.5 percent in Sep and Oct 2012. The rate is much lower than 11.1 percent in 2005 and 9.6 percent in 2006.

Table VE-2, Germany, Unemployment Rate in Percent of Labor Force

	Percent of Labor Force
Oct	6.5
Sep	6.5
Aug	6.8
Jul	6.8
Jun	6.6
May	6.7
Apr	7.0
Mar	7.2
Feb	7.4
Jan	7.3
Dec 2011	6.6
Nov	6.4
Oct	6.5
Sep	6.6
Aug	7.0
Jul	7.0
Jun	6.9
May	7.0
Apr	7.3
Mar	7.6
Feb	7.9
Jan	7.9
Dec 2010	7.1
Dec 2009	7.8
Dec 2008	7.4
Dec 2007	8.1
Dec 2006	9.6
Dec 2005	11.1

Source: Statistisches Bundesamt Deutschland https://www.destatis.de/EN/FactsFigures/Indicators/ShortTermIndicators/ShortTermIndicators.html

Chart VE-1 of Statistisches Bundesamt Deutschland, or Federal Statistical Office of Germany, shows the long-term decline of the rate of unemployment in Germany from more than 12 percent in early 2005 to 6.6 percent in Dec 2011, 6.6 percent in Jun 2012, 6.8 percent in Jul and Aug 2012 and 6.5 percent in Sep and Oct 2012.

Chart VE-1, Germany, Unemployment Rate, Unadjusted, Percent

Source: Statistisches Bundesamt Deutschland https://www.destatis.de/EN/PressServices/Press/pr/2012/11/PE12_414_132.html;jsessionid=DFB8C89E15B052AAA879DD858B4D62C9.cae4

Retail sales in Germany adjusted for inflation are provided in Table VE-3. There have been sharp fluctuations in monthly and 12 months percentage changes. Retail sales decreased 2.8 percent in Oct 2012 and increased 0.5 percent in Sep after declines in multiple months in 2012. The 12-month percentage change is minus 0.8 percent in Oct 2012.

Table VE-3, Retail Sales in Germany Adjusted for Inflation

	12-Month ∆% NSA	Month ∆% SA and Calendar Adjusted
Oct 2012	-0.8	-2.8
Sep	-3.4	0.5
Aug	-0.9	-0.5
Jul	-1.2	-0.8
Jun	4.4	0.6
May	-0.8	-0.1
Apr	-4.6	-0.9
Mar	4.1	1.4
Feb	2.4	-0.2
Jan	1.8	-1.0
Dec 2011	0.9	0.5
Nov	1.1	-0.4
Oct	-0.4	0.4
Sep	1.5	0.1
Aug	3.7	-0.9
Jul	-2.1	1.0
Jun	-2.1	2.9
May	4.6	-2.6
Apr	4.8	0.8
Mar	-2.8	-2.3
Feb	2.8	0.7
Jan	3.1	0.8
Dec 2010	0.6	0.9
Dec 2009	-2.2
Dec 2008	3.3
Dec 2007	-6.2
Dec 2006	1.3

Source: Statistisches Bundesamt Deutschland (Destatis) https://www.destatis.de/EN/FactsFigures/Indicators/ShortTermIndicators/ShortTermIndicators.html

Chart VE-2 of the Statistisches Bundesamt Deutschland, Federal Statistical Office of Germany, shows retail sales at constant prices from 2007 to 2012. There appear to be fluctuations without trend.

Chart VE-2, Germany, Turnover in Retail Trade at Constant Prices 2005=100

Source: Statistisches Bundesamt Deutschland (Destatis), Federal Statistical Office of Germany

https://www.destatis.de/EN/FactsFigures/Indicators/ShortTermIndicators/ShortTermIndicators.html

Chart VE-3 of the Statistisches Bundesamt Deutschland, Federal Statistical Office of Germany, shows retail sales at current prices from 2007 to 2011. There are also sharp fluctuations but without trend.

Chart VE-3, Germany, Turnover in Retail Sales at Current Prices, Original Values, 2005=100

Source: Statistisches Bundesamt Deutschland (Destatis), Federal Statistical Office of Germany

https://www.destatis.de/EN/FactsFigures/Indicators/ShortTermIndicators/ShortTermIndicators.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 Flash France Composite Output Index increased marginally from 43.5 in Oct to 44.6 in Nov for the ninth consecutive contraction, indicating fast rate of decline (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10328). Jack Kennedy, Senior Economist at Markit and author of the report, finds weakness in the index suggesting that GDP growth of 0.2 percent in IIIQ2012 may not be sustained in IVQ2012 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10328).

The Markit France Composite Output Index, combining services and manufacturing with close association with French GDP, increased marginally from 43.2 in Sep to 43.5 in Oct, indicating significant contraction of private sector activity for an eighth consecutive month at a fast rate (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10301). Jack Kennedy, Senior Economist at Markit and author of the France Services PMI^®, finds that combined manufacturing and services weakness contracted at the sharpest rate since Sep 2008 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10301). The Markit France Services Activity index fell from 45.0 in Sep to 43.5 in Oct for the lowest reading in twelve months (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10301). The Markit France Manufacturing Purchasing Managers’ Index^® increased to 43.7 in Oct from 42.7 in Sep (which was the sharpest decline of the manufacturing economy since Apr 2009), remaining deeply below the neutral level of 50.0 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10247). Jack Kennedy, Senior Economist at Markit and author of the France Manufacturing PMI^®, finds continuing weakness in manufacturing with export orders falling at the fastest rate since the middle of 2009 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10247). Table FR provides the country data table for France.

Table FR, France, Economic Indicators

CPI	Oct month ∆% 0.2 12 months ∆%: 1.9 11/18/12
PPI	Sep month ∆%: 0.3 Sep 12 months ∆%: 2.9 Blog 11/4/12
GDP Growth	IIIQ2012/IIQ2012 ∆%: 0.2 IIIQ2012/IIIQ2011 ∆%: 0.2 Blog 11/18/12
Industrial Production	Sep ∆%: Manufacturing minus 3.2 12-Month ∆%: Manufacturing minus 2.5 Blog 11/11/12
Consumer Spending	Sep Manufactured Goods ∆%: 0.2 Aug 12-Month Manufactured Goods ∆%: -0.5 Blog 11/4/12
Employment	IIQ2012 Unemployed 2.785 million Unemployment Rate: 9.7% Employment Rate: 63.9% Blog 9/9/12
Trade Balance	Sep Exports ∆%: month -1.5, 12 months 5.2 Sep Imports ∆%: month -1.9, 12 months 0.0 Blog 11/11/12
Confidence Indicators	Historical averages 100 Nov Mfg Business Climate 88 Blog 11/25/12

Links to blog comments in Table FR:

11/25/12 http://cmpassocregulationblog.blogspot.com/2012/11/contraction-of-united-states-real_25.html

11/18/12 http://cmpassocregulationblog.blogspot.com/2012/11/united-states-unsustainable-fiscal.html

11/11/12 http://cmpassocregulationblog.blogspot.com/2012/11/recovery-without-hiring-united-states.html

11/4/12 http://cmpassocregulationblog.blogspot.com/2012/11/twenty-eight-million-unemployed-or.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 44.5 in Sep to 46.0 in Oct, indicating significant contraction of output of Italy’s services at a marginally slower rate (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10304). Phil Smith, economist at Markit and author of the Italy Services PMI^®, finds that the data suggest contraction of GDP in Italy in IVQ2012 but with rate and movement of private-sector activity toward improvement (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10304). The Markit/ADACI Purchasing Managers’ Index^® (PMI^®), decreased from 45.7 in Sep to 45.5 in Oct for 15 consecutive months of contraction of Italy’s manufacturing (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10273). There was more moderate increase in new foreign orders than sharper decline in domestic new orders. Phil Smith, economist at Markit and author of the Italian Manufacturing PMI^®, finds that growth of foreign orders was moderate because of weakness in the economies of France and Germany (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10273). Table IT provides the country data table for Italy.

Table IT, Italy, Economic Indicators

Consumer Price Index	Nov month ∆%: -0.2 Oct 12-month ∆%: 2.5 Blog 12/2/12
Producer Price Index	Oct month ∆%: -0.3 Oct 12-month ∆%: 2.6 Blog 12/2/12
GDP Growth	IIQ2012/IQ2012 SA ∆%: minus 0.8 IIQ2012/IIQ2011 NSA ∆%: minus 2.6 Blog 11/18/12
Labor Report	Oct 2012 Participation rate 64.0% Employment ratio 56.9% Unemployment rate 11.1% Blog 12/2/12
Industrial Production	Sep month ∆%: minus 1.5 12 months ∆%: minus 4.8 Blog 11/11/12
Retail Sales	Sep month ∆%: 0.0 Sep 12-month ∆%: -1.7 Blog 11/25/12
Business Confidence	Mfg Nov 88.5, Jul 87.3 Construction Oct 79.7, Jul 83.5 Blog 12/2/12
Trade Balance	Balance Sep SA €1556 million versus Aug €968 Exports Sep month SA ∆%: minus 2.0; Imports Sep month minus ∆%: 4.2 Exports 12 months Sep NSA ∆%: minus 4.2 Imports 12 months NSA ∆%: minus 10.6 Blog 11/18/12

Links to blog comments in Table IT:

11/25/12 http://cmpassocregulationblog.blogspot.com/2012/11/contraction-of-united-states-real.html

11/18/12 http://cmpassocregulationblog.blogspot.com/2012/11/united-states-unsustainable-fiscal.html

11/11/12 http://cmpassocregulationblog.blogspot.com/2012/11/recovery-without-hiring-united-states.html

11/4/12 http://cmpassocregulationblog.blogspot.com/2012/11/twenty-eight-million-unemployed-or.html

10/28/12 http://cmpassocregulationblog.blogspot.com/2012/10/mediocre-and-decelerating-united-states.html

Data on Italy’s labor market since 2004 are provided in Table VG-1. The unemployment rate has risen from 6.2 percent in Dec 2006 to 11.1 percent in Oct 2012. As in other advanced economies, unemployment has reached high levels.

Table VG-1, Italy, Labor Report

	Participation Rate %	Employment Ratio %	Unemployment Rate %
Oct 2012	64.0	56.9	11.1
Sep	63.8	56.9	10.8
Aug	63.7	57.0	10.5
Jul	63.9	57.1	10.5
Jun	63.8	57.0	10.6
May	63.7	57.0	10.5
Apr	63.6	56.9	10.5
Mar	63.5	56.9	10.3
Feb	63.3	56.9	10.0
Jan	63.1	56.9	9.7
Dec 2011	63.0	56.9	9.5
Nov	62.7	56.8	9.4
Oct	62.6	56.9	8.8
Sep	62.4	56.8	8.8
Aug	62.5	57.0	8.4
Jul	62.3	57.1	8.3
Jun	62.0	57.0	8.0
May	62.0	57.0	8.0
Apr	61.9	56.9	7.8
Mar	62.2	57.1	7.9
Feb	61.8	56.8	8.0
Jan	61.9	56.8	8.1
Dec 2010	62.1	56.9	8.2
Dec 2009	62.3	57.1	8.3
Dec 2008	62.4	58.0	6.9
Dec 2007	63.1	58.9	6.5
Dec 2006	62.5	58.6	6.2
Dec 2005	62.5	57.8	7.5
Dec 2004	62.5	57.4	7.9

Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/75867

Table VG-2 provides more detail on the labor report for Italy in Oct 2012. The level of employment decreased 8,000 from Sep to Oct 2012 and fell 45,000 Oct 2011 to Oct 2012. Unemployment increased 93,000 in Oct 2012 and increased 644,000 from a year earlier. A dramatic aspect found in most advanced economies is the high rate of unemployment of youth at 36.5 percent in Oct 2012 for ages 15 to 24.

Table VG-2, Italy, Labor Report

Oct 2012	1000s	Change from Prior Month 1000s	∆% from Prior Month	Change from Prior Year 1000s	∆% from Prior Year
EMP	22.930	-8	0.0	-45	-0.2
UNE	2.870	93	3.3	644	28.9
INA 15-64	14.231	-95	-0.7	-611	-4.1
EMP %	56.9		0.1		0.0
UNE %	11.1		0.3		2.3
Youth UNE % 15-24	36.5		0.6		5.8
INA % 15-64	36.0		-0.2		-1.5

Notes: EMP: Employed; UNE: Unemployed; INA 15-64: Inactive aged 15 to 64; EMP %: Employment Rate; UNE %: Unemployment Rate; Youth UNE % 15-24: Youth Unemployment Rate aged 15 to 24; INA % 15-64: Inactive Rate aged 15 to 64.

Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/75867

Chart VG-1 of the Istituto Nazionale di Statistica provides the rate of unemployment in Italy. The rate stabilized in 2011 at around 8 percent until mid year and then climbed to 11.1 percent in Oct 2012.

Chart VG-1, Italy, Rate of Unemployment, %

Source: Istituto Nazionale di Statistica

Chart VG-2 of the Istituto Nazionale di Statistica provides the total number of employed persons in Italy. The level dropped from slightly above 23 million in 2011, climbing back to 23 million May-Jul 2012 and fell to 22.930 million in Oct 2012.

Chart VG-2, Italy, Total Number of Employed Persons, Millions, SA

Source: Istituto Nazionale di Statistica