Thirty One Million Unemployed or Underemployed, Stagnating Real Wages, Global Financial and Economic Risk, United States International Trade, World Economic Slowdown and Global Recession Risk
Carlos M. Pelaez
© Carlos M. Pelaez, 2010, 2011, 2012, 2013
Executive Summary
IA Thirty One Million Unemployed or Underemployed
IA1 Summary of the Employment Situation
IA2 Number of People in Job Stress
IA3 Long-term and Cyclical Comparison of Employment
IA4 Job Creation
IA5 Stagnating Real Wages
II United States International Trade
III World Financial Turbulence
IIIA Financial Risks
IIIE Appendix Euro Zone Survival Risk
IIIF Appendix on Sovereign Bond Valuation
IV Global Inflation
V World Economic Slowdown
VA United States
VB Japan
VC China
VD Euro Area
VE Germany
VF France
VG Italy
VH United Kingdom
VI Valuation of Risk Financial Assets
VII Economic Indicators
VIII Interest Rates
IX Conclusion
References
Appendixes
Appendix I The Great Inflation
IIIB Appendix on Safe Haven Currencies
IIIC Appendix on Fiscal Compact
IIID Appendix on European Central Bank Large Scale Lender of Last Resort
IIIG Appendix on Deficit Financing of Growth and the Debt Crisis
IIIGA Monetary Policy with Deficit Financing of Economic Growth
IIIGB Adjustment during the Debt Crisis of the 1980s
IV Global Inflation. There is inflation everywhere in the world economy, with slow growth and persistently high unemployment in advanced economies. Table IV-1, updated with every blog comment, provides the latest annual data for GDP, consumer price index (CPI) inflation, producer price index (PPI) inflation and unemployment (UNE) for the advanced economies, China and the highly-indebted European countries with sovereign risk issues. The table now includes the Netherlands and Finland that with Germany make up the set of northern countries in the euro zone that hold key votes in the enhancement of the mechanism for solution of sovereign risk issues (Peter Spiegel and Quentin Peel, “Europe: Northern Exposures,” Financial Times, Mar 9, 2011 http://www.ft.com/intl/cms/s/0/55eaf350-4a8b-11e0-82ab-00144feab49a.html#axzz1gAlaswcW). Newly available data on inflation is considered below in this section. Data in Table IV-1 for the euro zone and its members are updated from information provided by Eurostat but individual country information is provided in this section as soon as available, following Table IV-1. Data for other countries in Table IV-1 are also updated with reports from their statistical agencies. Economic data for major regions and countries is considered in Section V World Economic Slowdown following with individual country and regional data tables.
Table IV-1, GDP Growth, Inflation and Unemployment in Selected Countries, Percentage Annual Rates
| GDP | CPI | PPI | UNE | |
| US | 1.6 | 1.6 | 1.3 | 7.9 |
| Japan | 0.5 | -0.3 | -0.2 | 4.2 |
| China | 7.9 | 2.0 | -1.6 | |
| UK | 0.3 | 2.7* | 2.0* output | 7.8 |
| Euro Zone | -0.9 | 2.0 | 1.9 | 11.9 |
| Germany | 0.4 | 1.9 | 1.7 | 5.3 |
| France | -0.3 | 1.4 | 1.4 | 10.6 |
| Nether-lands | -0.9 | 3.2 | 1.2 | 6.0 |
| Finland | -1.4 | 2.6 | 2.2 | 7.9 |
| Belgium | -0.4 | 1.5 | 5.4 | 7.4 |
| Portugal | -3.8 | 0.4 | 1.9 | 17.6 |
| Ireland | 0.8 | 1.5 | 1.0 | 14.7 |
| Italy | -2.7 | 2.4 | 2.0 | 11.7 |
| Greece | -6.0 | 0.0 | -0.1 | NA |
| Spain | -1.9 | 2.8 | 2.6 | 26.2 |
Notes: GDP: rate of growth of GDP; CPI: change in consumer price inflation; PPI: producer price inflation; UNE: rate of unemployment; all rates relative to year earlier
*Office for National Statistics http://www.ons.gov.uk/ons/rel/cpi/consumer-price-indices/january-2013/index.html **Core
PPI http://www.ons.gov.uk/ons/rel/ppi2/producer-price-index/january-2013/index.html
Source: EUROSTAT http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/; country statistical sources http://www.census.gov/aboutus/stat_int.html
Table IV-1 shows the simultaneous occurrence of low growth, inflation and unemployment in advanced economies. The US grew at 1.6 percent in IVQ2012 relative to IVQ2011 (Table 8 in http://www.bea.gov/newsreleases/national/gdp/2013/pdf/gdp4q12_2nd.pdf See I Mediocre and Decelerating United States Economic Growth at http://cmpassocregulationblog.blogspot.com/2013/03/mediocre-gdp-growth-at-16-to-20-percent.html and earlier at http://cmpassocregulationblog.blogspot.com/2013/02/thirty-one-million-unemployed-or.html). Japan’s GDP 0.3 percent in IVQ2011 relative to IVQ2010 and contracted 1.6 percent in IIQ2011 relative to IIQ2010 because of the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011 but grew at the seasonally-adjusted annual rate (SAAR) of 10.6 percent in IIIQ2011, increasing at the SAAR of 0.4 percent in IVQ 2011, increasing at the SAAR of 6.1 percent in IQ2012 and decreasing at 0.9 percent in IIQ2012 but contracting at the SAAR of 3.7 percent in IIIQ2012 and increasing at the SAAR of 0.2 percent in IVQ2012 (see Section VB and earlier at
http://cmpassocregulationblog.blogspot.com/2013/02/recovery-without-hiring-united-states.html); the UK grew at minus 0.3 percent in IVQ2012 relative to IIIQ2012 and GDP increased 0.3 percent in IVQ2012 relative to IVQ2011 (see Section VH at http://cmpassocregulationblog.blogspot.com/2013/03/mediocre-gdp-growth-at-16-to-20-percent.html and earlier at http://cmpassocregulationblog.blogspot.com/2013/01/united-states-commercial-banks-assets_27.html); and the Euro Zone grew at minus 0.6 percent in IVQ2012 and minus 0.9 percent in IVQ2012 relative to IVQ2011 (see Section VD and earlier at
http://cmpassocregulationblog.blogspot.com/2013/02/recovery-without-hiring-united-states.html). These are stagnating or “growth recession” rates, which are positive or about nil growth rates with some contractions that are insufficient to recover employment. The rates of unemployment are quite high: 7.9 percent in the US but 19.0 percent for unemployment/underemployment or job stress of 30.8 million (see Table I-4 and earlier at http://cmpassocregulationblog.blogspot.com/2013/02/thirty-one-million-unemployed-or.html), 4.2 percent for Japan (see Section VB at http://cmpassocregulationblog.blogspot.com/2013/03/mediocre-gdp-growth-at-16-to-20-percent.html and earlier at http://cmpassocregulationblog.blogspot.com/2013/02/thirty-one-million-unemployed-or.html), 7.8 percent for the UK with high rates of unemployment for young people (see the labor statistics of the UK in Subsection VH at http://cmpassocregulationblog.blogspot.com/2013/02/world-inflation-waves-united-states.html and earlier at http://cmpassocregulationblog.blogspot.com/2013/01/united-states-commercial-banks-assets.html). Twelve-month rates of inflation have been quite high, even when some are moderating at the margin: 1.7 percent in the US, -0.3 percent for Japan, 2.0 percent for China, 2.0 percent for the Euro Zone and 2.7 percent for the UK. Stagflation is still an unknown event but the risk is sufficiently high to be worthy of consideration (see http://cmpassocregulationblog.blogspot.com/2011/06/risk-aversion-and-stagflation.html). The analysis of stagflation also permits the identification of important policy issues in solving vulnerabilities that have high impact on global financial risks. There are six key interrelated vulnerabilities in the world economy that have been causing global financial turbulence: (1) sovereign risk issues in Europe resulting from countries in need of fiscal consolidation and enhancement of their sovereign risk ratings (see Section III and earlier http://cmpassocregulationblog.blogspot.com/2013/03/mediocre-gdp-growth-at-16-to-20-percent.html); (2) the tradeoff of growth and inflation in China now with change in growth strategy to domestic consumption instead of investment and political developments in a decennial transition; (3) slow growth by repression of savings with de facto interest rate controls (http://cmpassocregulationblog.blogspot.com/2013/03/mediocre-gdp-growth-at-16-to-20-percent.html and earlier at http://cmpassocregulationblog.blogspot.com/2013/02/thirty-one-million-unemployed-or.html), weak hiring with the loss of 10 million full-time jobs (http://cmpassocregulationblog.blogspot.com/2013/02/recovery-without-hiring-united-states.html and earlier http://cmpassocregulationblog.blogspot.com/2013/01/recovery-without-hiring-world-inflation.html) and continuing job stress of 24 to 30 million people in the US and stagnant wages in a fractured job market (Section I and earlier at http://cmpassocregulationblog.blogspot.com/2013/02/thirty-one-million-unemployed-or.html); (4) the timing, dose, impact and instruments of normalizing monetary and fiscal policies (see http://cmpassocregulationblog.blogspot.com/2013/02/united-states-unsustainable-fiscal.html http://cmpassocregulationblog.blogspot.com/2012/11/united-states-unsustainable-fiscal.html http://cmpassocregulationblog.blogspot.com/2012/08/expanding-bank-cash-and-deposits-with.html http://cmpassocregulationblog.blogspot.com/2012/02/thirty-one-million-unemployed-or.html http://cmpassocregulationblog.blogspot.com/2011/08/united-states-gdp-growth-standstill.html http://cmpassocregulationblog.blogspot.com/2011/03/is-there-second-act-of-us-great.html http://cmpassocregulationblog.blogspot.com/2011/03/global-financial-risks-and-fed.html http://cmpassocregulationblog.blogspot.com/2011/02/policy-inflation-growth-unemployment.html) in advanced and emerging economies; (5) the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011 that had repercussions throughout the world economy because of Japan’s share of about 9 percent in world output, role as entry point for business in Asia, key supplier of advanced components and other inputs as well as major role in finance and multiple economic activities (http://professional.wsj.com/article/SB10001424052748704461304576216950927404360.html?mod=WSJ_business_AsiaNewsBucket&mg=reno-wsj); and (6) geopolitical events in the Middle East.
In the effort to increase transparency, the Federal Open Market Committee (FOMC) provides both economic projections of its participants and views on future paths of the policy rate that in the US is the federal funds rate or interest on interbank lending of reserves deposited at Federal Reserve Banks. These projections and views are discussed initially followed with appropriate analysis.
Charles Evans, President of the Federal Reserve Bank of Chicago, proposed an “economic state-contingent policy” or “7/3” approach (Evans 2012 Aug 27):
“I think the best way to provide forward guidance is by tying our policy actions to explicit measures of economic performance. There are many ways of doing this, including setting a target for the level of nominal GDP. But recognizing the difficult nature of that policy approach, I have a more modest proposal: I think the Fed should make it clear that the federal funds rate will not be increased until the unemployment rate falls below 7 percent. Knowing that rates would stay low until significant progress is made in reducing unemployment would reassure markets and the public that the Fed would not prematurely reduce its accommodation.
Based on the work I have seen, I do not expect that such policy would lead to a major problem with inflation. But I recognize that there is a chance that the models and other analysis supporting this approach could be wrong. Accordingly, I believe that the commitment to low rates should be dropped if the outlook for inflation over the medium term rises above 3 percent.
The economic conditionality in this 7/3 threshold policy would clarify our forward policy intentions greatly and provide a more meaningful guide on how long the federal funds rate will remain low. In addition, I would indicate that clear and steady progress toward stronger growth is essential.”
Evans (2012Nov27) modified the “7/3” approach to a “6.5/2.5” approach:
“I have reassessed my previous 7/3 proposal. I now think a threshold of 6-1/2 percent for the unemployment rate and an inflation safeguard of 2-1/2 percent, measured in terms of the outlook for total PCE (Personal Consumption Expenditures Price Index) inflation over the next two to three years, would be appropriate.”
The Federal Open Market Committee (FOMC) decided at its meeting on Dec 12, 2012 to implement the “6.5/2.5” approach (http://www.federalreserve.gov/newsevents/press/monetary/20121212a.htm):
“To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored.”
Another rising risk is division within the Federal Open Market Committee (FOMC) on risks and benefits of current policies as expressed in the minutes of the meeting held on Jan 29-30, 2013 (http://www.federalreserve.gov/monetarypolicy/files/fomcminutes20130130.pdf 13):
“However, many participants also expressed some concerns about potential costs and risks arising from further asset purchases. Several participants discussed the possible complications that additional purchases could cause for the eventual withdrawal of policy accommodation, a few mentioned the prospect of inflationary risks, and some noted that further asset purchases could foster market behavior that could undermine financial stability. Several participants noted that a very large portfolio of long-duration assets would, under certain circumstances, expose the Federal Reserve to significant capital losses when these holdings were unwound, but others pointed to offsetting factors and one noted that losses would not impede the effective operation of monetary policy.
Jon Hilsenrath and Victoria McGrane, writing on “Fed slip over how long to keep cash spigot open,” published on Feb 20, 2013 in the Wall street Journal (http://professional.wsj.com/article/SB10001424127887323511804578298121033876536.html), analyze the minutes of the Fed, comments by members of the FOMC and data showing increase in holdings of riskier debt by investors, record issuance of junk bonds, mortgage securities and corporate loans. Jon Hilsenrath, writing on “Jobs upturn isn’t enough to satisfy Fed,” on Mar 8, 2013, published in the Wall Street Journal (http://professional.wsj.com/article/SB10001424127887324582804578348293647760204.html), finds that much stronger labor market conditions are required for the Fed to end quantitative easing. Unconventional monetary policy with zero interest rates and quantitative easing is quite difficult to unwind because of the adverse effects of raising interest rates on valuations of risk financial assets and home prices, including the very own valuation of the securities held outright in the Fed balance sheet. Gradual unwinding of 1 percent fed funds rates from Jun 2003 to Jun 2004 by seventeen consecutive increases of 25 percentage points from Jun 2004 to Jun 2006 to reach 5.25 percent caused default of subprime mortgages and adjustable-rate mortgages linked to the overnight fed funds rate. The zero interest rate has penalized liquidity and increased risks by inducing carry trades from zero interest rates to speculative positions in risk financial assets. There is no exit from zero interest rates without provoking another financial crash.
Unconventional monetary policy will remain in perpetuity, or QE→∞, changing to a “growth mandate.” There are two reasons explaining unconventional monetary policy of QE→∞: insufficiency of job creation to reduce unemployment/underemployment at current rates of job creation; and growth of GDP at 1.5 percent, which is well below 3.0 percent estimated by Lucas (2011May) from 1870 to 2010. Unconventional monetary policy interprets the dual mandate of low inflation and maximum employment as mainly a “growth mandate” of forcing economic growth in the US at a rate that generates full employment. A hurdle to this “growth mandate” is that the US economy grew at 6.2 percent on average during cyclical expansions in the postwar period while growth has been at only 2.1 percent on average in the cyclical expansion in the 14 quarters from IIIQ2009 to IVQ2012. Zero interest rates and quantitative easing have not provided the impulse for growth and were not required in past successful cyclical expansions.
First, total nonfarm payroll employment seasonally adjusted (SA) increased 236,000 in Feb 2013 and private payroll employment rose 246,000. The number of nonfarm jobs and private jobs created has been declining in 2012 from 311,000 in Jan 2012 to 87,000 in Jun, 138,000 in Sep, 160,000 in Oct, 247,000 in Nov and 219,000 in Dec 2012 for total nonfarm jobs and from 323,000 in Jan 2012 to 78,000 in Jun, 118,000 in Sep, 217,000 in Oct, 256,000 in Nov and 224,000 in Dec 2012 for private jobs. Average new nonfarm jobs in the quarter Dec 2011 to Feb 2012 were 270,667 per month, declining to average 157,273 per month in the eleven months from Mar 2012 to Jan 2013. Average new private jobs in the quarter Dec 2011 to Feb 2012 were 279,000 per month, declining to average 165,545 per month in the eleven months from Mar 2012 to Jan 2013. The number of 140,000 new private new jobs created in Jan 2013 is lower than the average 165,545 per month in Mar 2012 to Jan 2013. New farm jobs created in Feb 2013 were 236,000 and 246,000 in private jobs, which exceeds the average for the prior eleven months. The US labor force increased from 153.617 million in 2011 to 154.975 million in 2012 by 1.358 million or 113,167 per month. The average increase of nonfarm jobs in the six months from Sep 2012 to Feb 2013 was 186,500, which is a rate of job creation inadequate to reduce significantly unemployment and underemployment in the United States because of 113,167 new entrants in the labor force per month with 30.8 million unemployed or underemployed. The difference between the average increase of 186,500 new private nonfarm jobs per month in the US from Sep 2012 to Feb 2013 and the 113,167 average monthly increase in the labor force from 2011 to 2012 is 73,333 monthly new jobs net of absorption of new entrants in the labor force. There are 30.8 million in job stress in the US currently. The provision of 73,333 new jobs per month net of absorption of new entrants in the labor force would require 419 months to provide jobs for the unemployed and underemployed (30.761 million divided by 73,333) or 34.9 years (419 divided by 12). The civilian labor force of the US in Feb 2013 not seasonally adjusted stood at 154.727 million with 12.500 million unemployed or effectively 19.849 million unemployed in this blog’s calculation by inferring those who are not searching because they believe there is no job for them for effective labor force of 162.076 million. Reduction of one million unemployed at the current rate of job creation without adding more unemployment requires 1.1 years (1 million divided by product of 73,333 by 12, which is 879,996). Reduction of the rate of unemployment to 5 percent of the labor force would be equivalent to unemployment of only 7.736 million (0.05 times labor force of 154.727 million) for new net job creation of 4.764 million (12.500 million unemployed minus 7.736 million unemployed at rate of 5 percent) that at the current rate would take 5.4 years (4.764 million divided by 879,996). Under the calculation in this blog there are 19.849 million unemployed by including those who ceased searching because they believe there is no job for them and effective labor force of 162.076 million. Reduction of the rate of unemployment to 5 percent of the labor force would require creating 12.614 million jobs net of labor force growth that at the current rate would take 13.3 years (19.849 million minus 0.05(162.076 million) or 11.745 million divided by 879,996, using LF PART 66.2% and Total UEM in Table I-4). These calculations assume that there are no more recessions, defying United States economic history with periodic contractions of economic activity when unemployment increases sharply. The number employed in the US fell from 147.118 million in Nov 2007 to 142.228 million in Feb 2013, by 4.890 million, or decline of 3.3 percent, while the noninstitutional population increased from 232.939 million in Nov 2007 to 244.828 million in Feb 2013, by 11.889 million or increase of 5.1 percent, using not seasonally adjusted data. There is actually not sufficient job creation to merely absorb new entrants in the labor force because of those dropping from job searches, worsening the stock of unemployed or underemployed in involuntary part-time jobs.
Second, calculations show that actual growth is around 1.6 to 2.0 percent per year. This rate is well below 3 percent per year in trend from 1870 to 2010, which has been always recovered after events such as wars and recessions (Lucas 2011May). Growth is not only mediocre but sharply decelerating to a rhythm that is not consistent with reduction of unemployment and underemployment of 30.8 million people corresponding to 19.0 percent of the effective labor force of the United States (Section I and earlier http://cmpassocregulationblog.blogspot.com/2013/02/thirty-one-million-unemployed-or.html). In the four quarters of 2011 and the four quarters of 2012, US real GDP grew at the seasonally-adjusted annual equivalent rates of 0.1 percent in the first quarter of 2011 (IQ2011), 2.5 percent in IIQ2011, 1.3 percent in IIIQ2011, 4.1 percent in IVQ2011, 2.0 percent in IQ2012, 1.3 percent in IIQ2012, 3.1 percent in IIIQ2012 and revised 0.1 percent in IVQ2012. GDP growth in IIIQ2012 was revised from 2.7 percent seasonally adjusted annual rate (SAAR) to 3.1 percent but mostly because of contribution of 0.73 percentage points of inventory accumulation and one-time contribution of 0.64 percentage points of expenditures in national defense that without them would have reduced growth from 3.1 percent to 1.73 percent. Equally, GDP growth in IVQ2012 is measured in the advanced estimate as 0.1 percent but mostly because of deduction of divestment of inventories of 1.55 percentage points and deduction of one-time national defense expenditures of 1.28 percentage points. The annual equivalent rate of growth of GDP for the four quarters of 2011 and the four quarters of 2012 is 2.0 percent, obtained as follows. Discounting 0.1 percent to one quarter is 0.025 percent {[(1.001)1/4 -1]100 = 0.025}; discounting 2.5 percent to one quarter is 0.62 percent {[(1.025)1/4 – 1]100}; discounting 1.3 percent to one quarter is 0.32 percent {[(1.013)1/4 – 1]100}; discounting 4.1 percent to one quarter is 1.0 {[(1.04)1/4 -1]100; discounting 2.0 percent to one quarter is 0.50 percent {[(1.020)1/4 -1]100); discounting 1.3 percent to one quarter is 0.32 percent {[(1.013)1/4 -1]100}; discounting 3.1 percent to one quarter is 0.77 {[(1.031)1/4 -1]100); and discounting 0.1 percent to one quarter is 0.025 percent {[(1.001)1/4 – 1]100}. Real GDP growth in the four quarters of 2011 and the four quarters of 2012 accumulated to 3.6 percent {[(1.00025 x 1.0062 x 1.0032 x 1.010 x 1.005 x 1.0032 x 1.0077 x 1.00025) - 1]100 = 3.6%}. This is equivalent to growth from IQ2011 to IVQ2012 obtained by dividing the seasonally-adjusted annual rate (SAAR) of IVQ2012 of $13,656.8 billion by the SAAR of IVQ2010 of $13,181.2 (http://www.bea.gov/iTable/iTable.cfm?ReqID=9&step=1) and expressing as percentage {[($13,658.8/$13,181.2) - 1]100 = 3.6%}. The growth rate in annual equivalent for the four quarters of 2011 and the four quarters of 2012 is 1.8 percent {[(1.00025 x 1.0062 x 1.0032 x 1.010 x 1.005 x 1.0032 x 1.0077 x 1.00025)4/8 -1]100 = 1.8%], or {[($13,656.8/$13,181.2)]4/8-1]100 = 1.8%} dividing the SAAR of IVQ2012 by the SAAR of IVQ2010 in Table II-6 below, obtaining the average for eight quarters and the annual average for one year of four quarters. Growth in the four quarters of 2012 accumulates to 1.6 percent {[(1.02)1/4(1.013)1/4(1.031)1/4(1.001)1/4 -1]100 = 1.6%}. This is equivalent to dividing the SAAR of $13,656.8 billion for IVQ2012 by the SAAR of $13,441.0 billion in IVQ2011 to obtain 1.6 percent {[($13,656.8/$13,441.0) – 1]100 = 1.6%}. The US economy is still close to a standstill especially considering the GDP report in detail. Excluding growth at the SAAR of 2.5 percent in IIQ2011 and 4.1 percent in IVQ2011 while converting growth in IIIQ2012 to 1.73 percent by deducting from 3.1 percent one-time inventory accumulation of 0.73 percentage points and national defense expenditures of 0.64 percentage points and converting growth in IVQ2012 by adding 1.55 percentage points of inventory divestment and 1.28 percentage points of national defense expenditure reductions to obtain 2.84 percent, the US economy grew at 1.5 percent in the remaining six quarters {[(1.00025x1.0032x1.005x1.0032x1.0043x1.0070)4/6 – 1]100 = 1.5%} with declining growth trend in three consecutive quarters from 4.1 percent in IVQ2011, to 2.0 percent in IQ2012, 1.3 percent in IIQ2012, 3.1 percent in IIIQ2012 that is more like 1.73 percent without inventory accumulation and national defense expenditures and 0.1 percent in IVQ2012 that is more likely 2.84 percent by adding 1.55 percentage points of inventory divestment and 1.28 percentage points of national defense expenditures. Weakness of growth is more clearly shown by adjusting the exceptional one-time contributions to growth from items that are not aggregate demand: 2.53 percentage points contributed by inventory change to growth of 4.1 percent in IVQ2011; 0.64 percentage points contributed by expenditures in national defense together with 0.73 points of inventory accumulation to growth of 3.1 percent in IIIQ2012; and deduction of 1.55 percentage points of inventory divestment and 1.28 percentage points of national defense expenditure reductions. The Bureau of Economic Analysis (BEA) of the US Department of Commerce released on Thus Feb 28, 2012, the second estimate of GDP for IVQ2012 at 0.1 percent seasonally-adjusted annual rate (SAAR) (http://www.bea.gov/newsreleases/national/gdp/2013/pdf/gdp4q12_2nd.pdf). In the four quarters of 2012, the US economy is growing at the annual equivalent rate of 2.0 percent {([(1.021/4(1.013)1/4(1.0173)1/4(1.0284)1/4]-1)100 = 2.0%} by excluding inventory accumulation of 0.73 percentage points and exceptional defense expenditures of 0.64 percentage points from growth 3.1 percent at SAAR in IIIQ2012 to obtain adjusted 1.73 percent SSAR and adding 1.28 percentage points of national defense expenditure reductions and 1.55 percentage points of inventory divestment to growth of 0.1 percent SAAR in IVQ2012 to obtain 2.84 percent.
In fact, it is evident to the public that this policy will be abandoned if inflation costs rise. There is concern of the production and employment costs of controlling future inflation. Even if there is no inflation, QE→∞ cannot be abandoned because of the fear of rising interest rates. The economy would operate in an inferior allocation of resources and suboptimal growth path, or interior point of the production possibilities frontier where the optimum of productive efficiency and wellbeing is attained, because of the distortion of risk/return decisions caused by perpetual financial repression. Not even a second-best allocation is feasible with the shocks to efficiency of financial repression in perpetuity.
The statement of the FOMC at the conclusion of its meeting on Dec 12, 2012, revealed the following policy intentions (http://www.federalreserve.gov/newsevents/press/monetary/20121212a.htm) practically unchanged in the statement at the conclusion of its meeting on Jan 30, 2013 (http://www.federalreserve.gov/newsevents/press/monetary/20130130a.htm):
“Release Date: December 12, 2012
For immediate release
Information received since the Federal Open Market Committee met in October suggests that economic activity and employment have continued to expand at a moderate pace in recent months, apart from weather-related disruptions. Although the unemployment rate has declined somewhat since the summer, it remains elevated. Household spending has continued to advance, and the housing sector has shown further signs of improvement, but growth in business fixed investment has slowed. Inflation has been running somewhat below the Committee’s longer-run objective, apart from temporary variations that largely reflect fluctuations in energy prices. Longer-term inflation expectations have remained stable.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee remains concerned that, without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee also anticipates that inflation over the medium term likely will run at or below its 2 percent objective.
To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee will continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will purchase longer-term Treasury securities after its program to extend the average maturity of its holdings of Treasury securities is completed at the end of the year, initially at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and, in January, will resume rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.
The Committee will closely monitor incoming information on economic and financial developments in coming months. If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until such improvement is achieved in a context of price stability. In determining the size, pace, and composition of its asset purchases, the Committee will, as always, take appropriate account of the likely efficacy and costs of such purchases.
To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored. The Committee views these thresholds as consistent with its earlier date-based guidance. In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent.”
There are several important issues in this statement.
1. Mandate. The FOMC pursues a policy of attaining its “dual mandate” of (http://www.federalreserve.gov/aboutthefed/mission.htm):
“Conducting the nation's monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates”
2. Open-ended Quantitative Easing or QE∞. Earlier programs are continued with an additional open-ended $85 billion of bond purchases per month: “To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee will continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will purchase longer-term Treasury securities after its program to extend the average maturity of its holdings of Treasury securities is completed at the end of the year, initially at a pace of $45 billion per month.”
3. Advance Guidance on “6 ¼ 2 ½ “Rule. Policy will be accommodative even after the economy recovers satisfactorily: “o support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored.”
4. Monitoring and Policy Focus on Jobs. The FOMC reconsiders its policy continuously in accordance with available information: “The Committee views these thresholds as consistent with its earlier date-based guidance. In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent.”
Unconventional monetary policy drives wide swings in allocations of positions into risk financial assets that generate instability instead of intended pursuit of prosperity without inflation. There is insufficient knowledge and imperfect tools to maintain the gap of actual relative to potential output constantly at zero while restraining inflation in an open interval of (1.99, 2.0). Symmetric targets appear to have been abandoned in favor of a self-imposed single jobs mandate of easing monetary policy even with the economy growing at or close to potential output that is actually a target of growth forecast. The impact on the overall economy and the financial system of errors of policy are magnified by large-scale policy doses of trillions of dollars of quantitative easing and zero interest rates. The US economy has been experiencing financial repression as a result of negative real rates of interest during nearly a decade and programmed in monetary policy statements until 2015 or, for practical purposes, forever. The essential calculus of risk/return in capital budgeting and financial allocations has been distorted. If economic perspectives are doomed until 2015 such as to warrant zero interest rates and open-ended bond-buying by “printing” digital bank reserves (http://cmpassocregulationblog.blogspot.com/2010/12/is-fed-printing-money-what-are.html; see Shultz et al 2012), rational investors and consumers will not invest and consume until just before interest rates are likely to increase. Monetary policy statements on intentions of zero interest rates for another three years or now virtually forever discourage investment and consumption or aggregate demand that can increase economic growth and generate more hiring and opportunities to increase wages and salaries. The doom scenario used to justify monetary policy accentuates adverse expectations on discounted future cash flows of potential economic projects that can revive the economy and create jobs. If it were possible to project the future with the central tendency of the monetary policy scenario and monetary policy tools do exist to reverse this adversity, why the tools have not worked before and even prevented the financial crisis? If there is such thing as “monetary policy science”, why it has such poor record and current inability to reverse production and employment adversity? There is no excuse of arguing that additional fiscal measures are needed because they were deployed simultaneously with similar ineffectiveness.
Table IV-2 provides economic projections of governors of the Board of Governors of the Federal Reserve and regional presidents of Federal Reserve Banks released at the meeting of Dec 12, 2012. The Fed releases the data with careful explanations (http://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20121212.pdf). Columns “∆% GDP,” “∆% PCE Inflation” and “∆% Core PCE Inflation” are changes “from the fourth quarter of the previous year to the fourth quarter of the year indicated.” The GDP report for IVQ2012 is analyzed in Section I (http://cmpassocregulationblog.blogspot.com/2013/03/mediocre-gdp-growth-at-16-to-20-percent.html and earlier at http://cmpassocregulationblog.blogspot.com/2013/02/thirty-one-million-unemployed-or.html http://cmpassocregulationblog.blogspot.com/2012/12/mediocre-and-decelerating-united-states_24.html) and the PCE inflation data from the report on personal income and outlays in Section IV (http://cmpassocregulationblog.blogspot.com/2013/03/mediocre-gdp-growth-at-16-to-20-percent.html and earlier at (http://cmpassocregulationblog.blogspot.com/2013/02/thirty-one-million-unemployed-or.html). The Bureau of Economic Analysis (BEA) provides the second estimate of IVQ2012 GDP and annual for 2012 with the third estimate be released on Mar 28 (http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm See Section I http://cmpassocregulationblog.blogspot.com/2013/03/mediocre-gdp-growth-at-16-to-20-percent.html and earlier at http://cmpassocregulationblog.blogspot.com/2013/02/thirty-one-million-unemployed-or.html). PCE inflation is the index of personal consumption expenditures (PCE) of the report of the Bureau of Economic Analysis (BEA) on “Personal Income and Outlays” (http://www.bea.gov/newsreleases/national/pi/pinewsrelease.htm), which is analyzed in Section IV http://cmpassocregulationblog.blogspot.com/2013/03/mediocre-gdp-growth-at-16-to-20-percent.html and earlier at http://cmpassocregulationblog.blogspot.com/2013/02/thirty-one-million-unemployed-or.html and the report for Nov 2012 at http://cmpassocregulationblog.blogspot.com/2012/12/mediocre-and-decelerating-united-states_24.html and earlier at http://cmpassocregulationblog.blogspot.com/2012/12/mediocre-and-decelerating-united-states.html. The next report on “Personal Income and Outlays” for Feb will be released at 8:30 AM on Mar 29, 2013 (http://www.bea.gov/newsreleases/national/pi/pinewsrelease.htm). PCE core inflation consists of PCE inflation excluding food and energy. Column “UNEMP %” is the rate of unemployment measured as the average civilian unemployment rate in the fourth quarter of the year. The Bureau of Labor Statistics (BLS) provides the Employment Situation Report with the civilian unemployment rate in the first Friday of every month, which is analyzed in this blog. The report for Jan 2013 was released on Feb 1, 2013 and analyzed in this blog (http://cmpassocregulationblog.blogspot.com/2013/02/thirty-one-million-unemployed-or.html). The report for Feb 2013 will be released on Mar 8, 2013 (http://www.bls.gov/ces/) and analyzed in this blog on Mar 10, 2013 (Section I). “Longer term projections represent each participant’s assessment of the rate to which each variable would be expected to converge under appropriate monetary policy and in the absence of further shocks to the economy” (http://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20121212.pdf).
It is instructive to focus on 2012 and 2013 as 2014, 2015 and longer term are too far away, and there is not much information even on what will happen in 2013 and beyond. The central tendency should provide reasonable approximation of the view of the majority of members of the FOMC but the second block of numbers provides the range of projections by FOMC participants. The first row for each year shows the projection introduced after the meeting of Dec 12, 2012 and the second row “PR” the projection of the Sep 13, 2012 meeting. There are three major changes in the view.
1. Growth “∆% GDP.” The FOMC has reduced the forecast of GDP growth in 2012 from 3.3 to 3.7 percent in Jun 2011 to 2.5 to 2.9 percent in Nov 2011 and 2.2 to 2.7 percent at the Jan 25 meeting but increased it to 2.4 to 2.9 percent at the Apr 25, 2012 meeting, reducing it to 1.9 to 2.4 percent at the Jun 20, 2012 meeting and further to 1.7 to 2.0 percent at the Sep 13, 2012 meeting and 1.7 to 1.8 percent at the Dec 12, 2012 meeting. GDP growth in 2013 has been increased to 2.5 to 3.0 percent at the meeting on Sep 13
2012 from 2.2 to 2.8 percent at the meeting on Jun 20, 2012 but reduced to 2.3 to 3.0 percent at the Dec 12, 2012 meeting.
2. Rate of Unemployment “UNEM%.” The FOMC increased the rate of unemployment from 7.8 to 8.2 percent in Jun 2011 to 8.5 to 8.7 percent in Nov 2011 but has reduced it to 8.2 to 8.5 percent at the Jan 25 meeting and further down to 7.8 to 8.0 percent at the Apr 25, 2012 meeting but increased it to 8.0 to 8.2 percent at the Jun 20, 2012 meeting and did not change it at 8.0 to 8.2 at the meeting on Sep 13, 2012, lowering the projection to 7.8 to 7.9 percent at the Dec 12, 2012 meeting. The rate of unemployment for 2013 has been changed to 7.6 to 7.9 percent at the Sep 13 meeting compared with 7.5 to 8.0 percent at the Jun 20 meeting and reduced to 7.4 to 7.7 percent at the Dec 12 meeting.
3. Inflation “∆% PCE Inflation.” The FOMC changed the forecast of personal consumption expenditures (PCE) inflation from 1.5 to 2.0 percent in Jun 2011 to virtually the same of 1.4 to 2.0 percent in Nov 2011 but has reduced it to 1.4 to 1.8 percent at the Jan 25 meeting but increased it to 1.9 to 2.0 percent at the Apr 25, 2012 meeting, reducing it to 1.2 to 1.7 percent at the Jun 20, 2012 meeting. The interval was increased to 1.7 to 1.8 percent at the Sep 13, 2012 meeting and 1.6 to 1.7 percent at the Dec 12, 2012 meeting.
4. Core Inflation “∆% Core PCE Inflation.” Core inflation is PCE inflation excluding food and energy. There is again not much of a difference of the projection for 2012 in Jun 2011 of 1.4 to 2.0 percent and the Nov 2011 projection of 1.5 to 2.0 percent, which has been reduced slightly to 1.5 to 1.8 percent at the Jan 25 meeting but increased to 1.8 to 2.0 percent at the Apr 25, 2012 meeting, reducing it to 1.7 to 2.0 percent at the Jun 20, 2012 meeting. The projection was virtually unchanged at 1.7 to 1.9 percent at the Sep 13 meeting. For 2013, the projection for core inflation was changed from 1.6 to 2.0 percent at the Jun 20, 2012 meeting to 1.7 to 2.0 percent at the Sep 13, 2012 meeting and lowered to 1.7 to 1.9 percent at the Dec 12, 2012 meeting.
Table IV-2, US, Economic Projections of Federal Reserve Board Members and Federal Reserve Bank Presidents in FOMC, June 2012 and Sep 2012
| ∆% GDP | UNEM % | ∆% PCE Inflation | ∆% Core PCE Inflation | |
| Central | ||||
| 2012 Sep PR | 1.7 to 1.8 1.7 to 2.0 | 7.8 to 7.9 8.0 to 8.2 | 1.6 to 1.7 1.7. to 1.8 | 1.6 to 1.7 1.7 to 1.9 |
| 2013 | 2.3 to 3.0 | 7.4 to 7.7 | 1.3 to 2.0 | 1.6 to 1.9 1.7 to 2.0 |
| 2014 | 3.0 to 3.5 | 6.8 to 7.3 | 1.5 to 2.0 | 1.6 to 2.0 |
| 2015 | 3.0 to 3.7 3.0 to 3.8 | 6.0 to 6.6 6.0 to 6.8 | 1.7 to 2.0 1.8 to 2.0 | 1.8 to 2.0 1.9 to 2.0 |
| Longer Run Sep PR | 2.3 to 2.5 2.3 to 2.5 | 5.2 to 6.0 5.2 to 6.0 | 2.0 2.0 | |
| Range | ||||
| 2012 | 1.6 to 2.0 | 7.7 to 8.0 | 1.6 to 1.8 | 1.6 to 1.8 |
| 2013 | 2.0 to 3.2 | 6.9 to 7.8 | 1.3 to 2.0 | 1.5 to 2.0 |
| 2014 | 2.8 to 4.0 | 6.1 to 7.4 | 1.4 to 2.2 | 1.5 to 2.0 |
| 2015 Sep PR | 2.5 to 4.2 2.5 to 4.2 | 5.7 to 6.8 5.7 to 6.9 | 1.5 to 2.2 1.8 to 2.3 | 1.7 to 2.2 1.8 to 2.3 |
| Longer Run Sep PR | 2.2 to 3.0 2.2 to 3.0 | 5.0 to 6.0 5.0 to 6.3 | 2.0 2.0 |
Notes: UEM: unemployment; PR: Projection
Source: http://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20121212.pdf
Another important decision at the FOMC meeting on Jan 25, 2012, is formal specification of the goal of inflation of 2 percent per year but without specific goal for unemployment (http://www.federalreserve.gov/newsevents/press/monetary/20120125c.htm):
“Following careful deliberations at its recent meetings, the Federal Open Market Committee (FOMC) has reached broad agreement on the following principles regarding its longer-run goals and monetary policy strategy. The Committee intends to reaffirm these principles and to make adjustments as appropriate at its annual organizational meeting each January.
The FOMC is firmly committed to fulfilling its statutory mandate from the Congress of promoting maximum employment, stable prices, and moderate long-term interest rates. The Committee seeks to explain its monetary policy decisions to the public as clearly as possible. Such clarity facilitates well-informed decision making by households and businesses, reduces economic and financial uncertainty, increases the effectiveness of monetary policy, and enhances transparency and accountability, which are essential in a democratic society.
Inflation, employment, and long-term interest rates fluctuate over time in response to economic and financial disturbances. Moreover, monetary policy actions tend to influence economic activity and prices with a lag. Therefore, the Committee's policy decisions reflect its longer-run goals, its medium-term outlook, and its assessments of the balance of risks, including risks to the financial system that could impede the attainment of the Committee's goals.
The inflation rate over the longer run is primarily determined by monetary policy, and hence the Committee has the ability to specify a longer-run goal for inflation. The Committee judges that inflation at the rate of 2 percent, as measured by the annual change in the price index for personal consumption expenditures, is most consistent over the longer run with the Federal Reserve's statutory mandate. Communicating this inflation goal clearly to the public helps keep longer-term inflation expectations firmly anchored, thereby fostering price stability and moderate long-term interest rates and enhancing the Committee's ability to promote maximum employment in the face of significant economic disturbances.
The maximum level of employment is largely determined by nonmonetary factors that affect the structure and dynamics of the labor market. These factors may change over time and may not be directly measurable. Consequently, it would not be appropriate to specify a fixed goal for employment; rather, the Committee's policy decisions must be informed by assessments of the maximum level of employment, recognizing that such assessments are necessarily uncertain and subject to revision. The Committee considers a wide range of indicators in making these assessments. Information about Committee participants' estimates of the longer-run normal rates of output growth and unemployment is published four times per year in the FOMC's Summary of Economic Projections. For example, in the most recent projections, FOMC participants' estimates of the longer-run normal rate of unemployment had a central tendency of 5.2 percent to 6.0 percent, roughly unchanged from last January but substantially higher than the corresponding interval several years earlier.
In setting monetary policy, the Committee seeks to mitigate deviations of inflation from its longer-run goal and deviations of employment from the Committee's assessments of its maximum level. These objectives are generally complementary. However, under circumstances in which the Committee judges that the objectives are not complementary, it follows a balanced approach in promoting them, taking into account the magnitude of the deviations and the potentially different time horizons over which employment and inflation are projected to return to levels judged consistent with its mandate. ”
The probable intention of this specific inflation goal is to “anchor” inflationary expectations. Massive doses of monetary policy of promoting growth to reduce unemployment could conflict with inflation control. Economic agents could incorporate inflationary expectations in their decisions. As a result, the rate of unemployment could remain the same but with much higher rate of inflation (see Kydland and Prescott 1977 and Barro and Gordon 1983; 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 See Pelaez and Pelaez, Regulation of Banks and Finance (2009b), 99-116). Strong commitment to maintaining inflation at 2 percent could control expectations of inflation.
The FOMC continues its efforts of increasing transparency that can improve the credibility of its firmness in implementing its dual mandate. Table IV-3 provides the views by participants of the FOMC of the levels at which they expect the fed funds rate in 2012, 2013, 2014 and the in the longer term. Table IV-3 is inferred from a chart provided by the FOMC with the number of participants expecting the target of fed funds rate (http://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20121212.pdf). There are 19 participants expecting the rate to remain at 0 to ¼ percent in 2012 and none to be higher. Not much change is expected in 2013 either with 17 participants anticipating the rate at the current target of 0 to ¼ percent and only two expecting higher rates. The rate would still remain at 0 to ¼ percent in 2014 for 14 participants with three expecting the rate to be in the range of 1.0 to 2.0 percent, one participant expecting rates at 0.5 to 1.0 percent and one participant expecting rates from 2.0 to 3.0. This table is consistent with the guidance statement of the FOMC that rates will remain at low levels until late in 2014. For 2015, nine participants expect rates to be below 1.0 percent while nine expect rates from 1.0 to 4.5 percent. In the long-run, all 19 participants expect rates to be between 3.0 and 4.5 percent.
Table IV-3, US, Views of Target Federal Funds Rate at Year-End of Federal Reserve Board Members and Federal Reserve Bank Presidents Participating in FOMC, June 20, 2012
| 0 to 0.25 | 0.5 to 1.0 | 1.0 to 1.5 | 1.0 to 2.0 | 2.0 to 3.0 | 3.0 to 4.5 | |
| 2012 | 19 | |||||
| 2013 | 17 | 1 | 1 | |||
| 2014 | 14 | 1 | 3 | 1 | ||
| 2015 | 1 | 8 | 6 | 1 | 3 | |
| Longer Run | 19 |
Source: http://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20121212.pdf
Additional information is provided in Table IV-4 with the number of participants expecting increasing interest rates in the years from 2012 to 2015. It is evident from Table IV-4 that the prevailing view of the FOMC is for interest rates to continue at low levels in future years. This view is consistent with the economic projections of low economic growth, relatively high unemployment and subdued inflation provided in Table IV-2.
Table IV-4, US, Views of Appropriate Year of Increasing Target Federal Funds Rate of Federal Reserve Board Members and Federal Reserve Bank Presidents Participating in FOMC, June 20, 2012
| Appropriate Year of Increasing Target Fed Funds Rate | Number of Participants |
| 2012 | 1 |
| 2013 | 2 |
| 2014 | 3 |
| 2015 | 13 |
| 2016 | 1 |
Source: http://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20121212.pdf
The producer price index of the euro zone decreased 0.2 percent in Dec 2012 and decreased 0.2 percent in Nov 2012 but increased 0.6 percent in Jan 2013 as shown in Table IV-5. In Jan-Mar 2012, producer prices increased cumulatively 2.0 percent or at annual equivalent rate of 8.3 percent. Energy inflation has oscillated with the shocks of risk aversion that cause unwinding of carry trade positions from zero interest rates to commodity futures. Energy prices fell 0.8 percent in Dec 2012, 0.8 percent in Nov 2012 and fell 0.3 percent in Oct 2012 after 0.0 percent in Sep 2012, increased 2.4 percent in Aug, and 1.4 percent in Jul 2012 or at the annual equivalent rate of 16.2 percent in the quarter Jul-Sep 2012 and at 25.3 percent in Jul-Aug 2012. Energy prices increased 5.2 percent cumulatively in Jan-Mar 2012 or at the annual equivalent rate of 22.5 percent. During periods of relaxed risk aversion, carry trades from zero interest rates to commodity exposures drive high inflation waves. Prices of capital goods have barely moved. Prices of durable consumer goods accelerated at annual equivalent rate of 3.3 percent in Jan-Mar 2012 but were flat in every month from Apr to Jun 2012, increasing 0.1 percent in both Aug and Jul 2012 but then remained unchanged in Sep 2012, decreasing at 0.1 percent in Oct 2012 and increasing 0.2 percent in Jan 2013. Purchasing managers’ indexes worldwide reflect increasing prices of inputs for business while sales prices are stagnant or declining. Unconventional monetary policy causes uncertainty in business decisions with shocks of declining net revenue margins during worldwide inflation waves (http://cmpassocregulationblog.blogspot.com/2013/02/world-inflation-waves-united-states.html).
Table IV-5, Euro Zone, Industrial Producer Prices Month ∆%
| Jan 2013 | Dec | Nov | Oct 2012 | Sep 2012 | Aug 2012 | Jul 2012 | |
| Industry ex | 0.6 | -0.2 | -0.2 | 0.0 | 0.2 | 0.9 | 0.3 |
| Industry ex | 0.2 | 0.0 | -0.1 | 0.1 | 0.3 | 0.3 | -0.1 |
| Intermediate | 0.1 | 0.0 | -0.2 | 0.0 | 0.4 | 0.5 | -0.3 |
| Energy | 1.6 | -0.8 | -0.7 | -0.3 | 0.0 | 2.4 | 1.4 |
| Capital Goods | 0.2 | 0.0 | 0.0 | -0.1 | 0.0 | 0.0 | 0.0 |
| Durable Consumer Goods | 0.3 | -0.1 | 0.0 | 0.1 | 0.0 | 0.1 | 0.1 |
| Nondurable Consumer Goods | 0.2 | 0.1 | 0.1 | 0.2 | 0.4 | 0.4 | 0.2 |
Source: EUROSTAT http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/
Twelve-month percentage changes of industrial prices in the euro zone have moderated significantly, as shown in Table IV-6. The 12-month percentage change of industrial prices excluding construction fell from 4.2 percent in Dec 2011 to 1.6 percent in Jul 2012 but increased to 2.7 percent in Aug and 2.6 percent in Sep 2012, falling to 2.6 percent in Oct 2012, 2.1 percent in Nov 2012 and Dec 2012 and 1.9 percent in Jan 2013. Energy prices increased 9.7 percent in Dec 2011 and Jan 2011 but the rate fell to 4.5 percent in the 12 months ending in Jul 2012, increasing to 7.5 percent in Aug 2012 and 6.0 percent in Sep 2012 but falling to 5.5 percent in Oct 2012, 3.9 percent in Nov 2012, 3.6 percent in Dec 2012 and 2.8 percent in Jan 2013. There is major vulnerability in producer price inflation that can return together with long positions in commodity futures with carry trades from zero interest during relaxation of risk aversion. Business net revenue or prices of sold goods less costs of inputs suffers wide oscillation preventing sound calculation of risk/returns and capital budgeting.
Table IV-6, Euro Zone, Industrial Producer Prices 12-Month ∆%
| Jan 2013 | Dec 2012 | Nov | Oct 2012 | Sep 2012 | Aug 2012 | Jul | |
| Industry ex | 1.9 | 2.1 | 2.1 | 2.6 | 2.6 | 2.7 | 1.7 |
| Industry ex | 1.4 | 1.6 | 1.5 | 1.6 | 1.3 | 1.1 | 0.7 |
| Intermediate | 1.3 | 1.6 | 1.4 | 1.3 | 0.8 | 0.3 | -0.2 |
| Energy | 2.8 | 3.6 | 3.9 | 5.5 | 6.5 | 7.5 | 4.5 |
| Capital Goods | 0.7 | 0.8 | 0.7 | 0.7 | 0.8 | 0.8 | 1.0 |
| Durable Consumer Goods | 0.9 | 1.0 | 1.1 | 1.3 | 1.3 | 1.6 | 1.8 |
| Nondurable Consumer Goods | 2.4 | 2.4 | 2.4 | 2.6 | 2.5 | 2.3 | 2.0 |
Source: EUROSTAT http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/
Industrial producer prices in the euro area are following similar inflation waves as in the rest of the world (http://cmpassocregulationblog.blogspot.com/2013/02/world-inflation-waves-united-states.html), as shown in Table IV-7. In the first wave in Jan-Apr 2011, annual equivalent producer price inflation was 11.4 percent driven by carry trades from zero interest rates into commodity futures. In the second wave in May-Jun 2011, annual equivalent producer price inflation declined at minus 1.2 percent. In the third wave in Jul-Sep 2011, annual equivalent inflation increased at 2.4 percent. In the third wave in Oct-Dec 2011, risk aversion originating in the European sovereign debt crisis interrupted commodity carry trades, resulting in annual equivalent inflation of only 0.4 percent. In the fifth wave in Jan-Mar 2012, annual equivalent inflation jumped to 8.3 percent with a high annual equivalent rate of 9.4 percent in Jan-Feb 2012. In the sixth wave, risk aversion from the European sovereign debt event caused reversal of commodity carry trades with equivalent annual inflation of minus 3.2 percent in Apr-Jun 2012. In the seventh wave, annual equivalent inflation jumped to 7.4 percent in Jul-Aug 2012 while energy prices driven by carry trades increased at the annual equivalent rate of 25.3 percent. In the eighth wave, annual equivalent inflation retreated to 1.2 percent in Sep-Oct 2012. In the ninth wave, annual equivalent inflation was minus 2.4 percent in Nov-Dec 2012. In the tenth wave, annual equivalent inflation was 7.4 percent in Jan 2013. The bottom part of Table IV-7 provides 12-month percentage changes from 1999 to 2010. The final row of Table IV-7 provides the average annual rate of producer-price inflation in the euro area at 2.5 percent in Dec from 1999 to 2012.
Table IV-7, Euro Area, Industrial Producer Prices Excluding Construction, Month and 12-Month ∆%
| Month ∆% | 12-Month ∆% | |
| Jan 2013 | 0.6 | 1.9 |
| AE ∆% Jan | 7.4 | |
| Dec 2012 | -0.2 | 2.1 |
| Nov | -0.2 | 2.1 |
| AE ∆% Nov-Dec | -2.4 | |
| Oct | 0.0 | 2.6 |
| Sep | 0.2 | 2.6 |
| AE ∆% Sep-Oct | 1.2 | |
| Aug | 0.9 | 2.7 |
| Jul | 0.3 | 1.6 |
| AE ∆% Jul-Aug | 7.4 | |
| Jun | -0.5 | 1.8 |
| May | -0.4 | 2.3 |
| Apr | 0.1 | 2.6 |
| AE ∆% Apr-Jun | -3.2 | |
| Mar | 0.5 | 3.5 |
| Feb | 0.6 | 3.7 |
| Jan | 0.9 | 3.9 |
| AE ∆% Jan-Mar | 8.3 | |
| Dec 2011 | -0.2 | 4.2 |
| Nov | 0.2 | 5.3 |
| Oct | 0.1 | 5.5 |
| AE ∆% Oct-Dec | 0.4 | |
| Sep | 0.3 | 5.7 |
| Aug | -0.2 | 5.8 |
| Jul | 0.5 | 6.1 |
| AE ∆% Jul-Sep | 2.4 | |
| Jun | 0.0 | 5.8 |
| May | -0.2 | 6.2 |
| AE ∆% May-Jun | -1.2 | |
| Apr | 0.9 | 6.8 |
| Mar | 0.7 | 6.8 |
| Feb | 0.8 | 6.7 |
| Jan | 1.2 | 6.0 |
| AE ∆% Jan-Apr | 11.4 | |
| Dec 2012 | 2.1 | |
| Dec 2011 | 4.2 | |
| Dec 2010 | 5.5 | |
| Dec 2009 | -3.0 | |
| Dec 2008 | 1.3 | |
| Dec 2007 | 4.6 | |
| Dec 2006 | 3.8 | |
| Dec 2005 | 4.5 | |
| Dec 2004 | 3.7 | |
| Dec 2003 | 0.9 | |
| Dec 2002 | 1.4 | |
| Dec 2001 | -0.5 | |
| Dec 2000 | 4.6 | |
| Dec 1999 | 2.5 | |
| Average ∆% 1999-2012 | 2.5 |
Source: EUROSTAT
http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/
Italy’s producer price inflation in Table IV-8 also has the same waves in 2011 and into 2012 observed for many countries (http://cmpassocregulationblog.blogspot.com/2013/02/world-inflation-waves-united-states.html). The annual equivalent producer price inflation in the first wave Jan-Apr 2011 was 10.4 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 0.1 percent in May 2011 and 0.2 percent in Jun 2011 for annual equivalent inflation rate in May-Jun 2011 of 1.8 percent. In the third wave, annual equivalent inflation was 4.5 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 1.2 percent in Oct-Dec 2011. Inflation accelerated in the fifth wave in Jan and Feb 2012 to annual equivalent 8.1 percent and annual equivalent of 7.0 percent in Jan-Mar. In the sixth wave, annual equivalent inflation in Mar-Apr was at 6.2 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 0.6 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 3.7 percent in Jul-Sep 2012 and 7.4 percent in Jul-Aug 2012. In the ninth wave, risk aversion caused unwinding carry trades with annual equivalent inflation of minus 4.2 percent in Sep 2012 to Jan 2013.
Table IV-8, Italy, Industrial Prices, Total Internal and External Market
| Month ∆% | 12-Month ∆% | |
| Jan 2013 | -0.4 | 0.7 |
| Dec 2012 | -0.2 | 2.1 |
| Nov | -0.3 | 2.4 |
| Oct | -0.6 | 2.9 |
| Sep | -0.3 | 3.5 |
| AE ∆% Sep-Jan | -4.2 | |
| Aug | 0.9 | 3.9 |
| Jul | 0.3 | 3.2 |
| AE ∆% Jul-Aug | 7.4 | |
| Jun | 0.0 | 3.6 |
| May | -0.1 | 2.3 |
| AE ∆% May-Jun | -0.6 | |
| Apr | 0.6 | 4.0 |
| Mar | 0.4 | 4.2 |
| AE ∆% Mar-Apr | 6.2 | |
| Feb | 0.5 | 4.8 |
| Jan | 0.8 | 4.7 |
| AE ∆% Jan-Feb | 8.1 | |
| Dec 2011 | 0.1 | 4.9 |
| Nov | 0.3 | 5.4 |
| Oct | -0.1 | 5.5 |
| AE ∆% Oct-Dec | 1.2 | |
| Sep | 0.1 | 5.0 |
| Aug | 0.3 | 5.0 |
| Jul | 0.7 | 4.9 |
| AE ∆% Jul-Sep | 4.5 | |
| Jun | 0.2 | 4.3 |
| May | 0.1 | 4.3 |
| AE ∆% May-Jun | 1.8 | |
| Apr | 0.8 | 4.8 |
| Mar | 0.9 | 4.8 |
| Feb | 0.4 | 4.3 |
| Jan | 1.2 | 4.0 |
| AE ∆% Jan-Apr | 10.4 | |
| Dec 2010 | 0.7 | 4.7 |
| Year | ||
| 2012 | 3.6 | |
| 2011 | 4.7 | |
| 2010 | 3.0 | |
| 2009 | -4.7 | |
| 2008 | 5.1 | |
| 2007 | 3.1 | |
| 2006 | 4.4 | |
| 2005 | 3.6 | |
| 2004 | 2.2 | |
| 2003 | 0.9 | |
| 2002 | -0.1 | |
| 2001 | 1.7 | |
| Average ∆% 2000-2012 | 2.3 |
Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/84272
Chart IV-1 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 4.7 percent in Jan 2012 with increases of 0.8 percent in the month of Jan 2012 and 0.5 percent in Feb. Inflation was 0.4 percent in Mar 2012 and 4.2 percent in 12 months. The decline of annual equivalent inflation from 8.1 percent in Jan-Feb 2012 to 6.2 percent in Mar-Apr pulled down 12-month inflation to 4.2 percent in Mar and 4.0 percent in Apr. Percentage decline of inflation of 0.3 percent in May and 0.0 percent in Jun pulled down the 12-month rate of inflation to 3.6 percent in Jun 2012. Renewed inflation of 0.3 percent in Jul 2012 and 0.9 percent in Aug 2012 pulled up the 12-month rate to 3.9 percent in Jul 2012. Declines of producer prices in five consecutive months from Sep 2012 to Jan 2013 pulled down the 12-month rate of inflation to 0.7 percent in Jan 2013.
Chart IV-1, 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-9. Energy prices decreased 2.2 percent in Jan 2013 and rose 0.0 percent in 12 months. Producer-price inflation is positive for most components in the month of Jan 2013 with the exception no change for consumer nondurable goods and minus 2.2 percent for energy. There is highest inflation in 12 months is 2.1 percent for nondurable goods.
Table IV-9, Italy, Industrial Prices, Internal Market, ∆%
| Jan 2013/ | Jan 2013/ | |
| Total | -0.5 | 0.8 |
| Consumer Goods | 0.0 | 1.8 |
| Durable Goods | 0.1 | 0.5 |
| Nondurable | 0.0 | 2.1 |
| Capital Goods | 0.2 | 0.5 |
| Intermediate | 0.2 | 0.7 |
| Energy | -2.2 | 0.0 |
Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/84272
V World Economic Slowdown. Table V-1 is constructed with the database of the IMF (http://www.imf.org/external/datamapper/index.php?db=WEO) and the update of Jan 2013 (http://www.imf.org/external/pubs/ft/weo/2013/update/01/index.htm) 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 3.2 percent in 2012 but accelerating to 3.5 percent in 2013, 4.1 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 3.8 percent for the world as a whole. While the world would grow 16.1 percent in the four years from 2012 to 2015, the G7 as a whole would grow 7.6 percent. The difference in dollars of 2011 is rather high: growing by 16.1 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 7.6 percent would add $5.3 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 24.6 percent or at the average yearly rate of 5.7 percent, contributing $6.3 trillion from 2012 to 2015 or the equivalent of 86.3 percent of $7,298 billion of China in 2011. The final four countries in Table V-1 often referred as BRIC (Brazil, Russia, India, China), are large, rapidly growing emerging economies. Their combined output adds to $13,468 billion, or 19.3 percent of world output, which is equivalent to 39.9 percent of the combined output of the major advanced economies of the G7.
Table V-1, IMF World Economic Outlook Database Projections of Real GDP Growth
| GDP USD 2011 | Real GDP ∆% | Real GDP ∆% | Real GDP ∆% | Real GDP ∆% | |
| World | 69,899 | 3.3 | 3.6 | 4.2 | 4.4 |
| G7 | 33,697 | 1.4 | 1.5 | 2.2 | 2.5 |
| Canada | 1,739 | 1.9 | 2.0 | 2.4 | 2.4 |
| France | 2,778 | 0.1 | 0.4 | 1.1 | 1.5 |
| DE | 3,607 | 0.9 | 0.9 | 1.4 | 1.4 |
| Italy | 2,199 | -2.3 | -0.7 | 0.5 | 1.2 |
| Japan | 5,867 | 2.2 | 1.2 | 1.1 | 1.2 |
| UK | 2,431 | -0.4 | 1.1 | 2.2 | 2.6 |
| US | 15,076 | 2.2 | 2.1 | 2.9 | 3.4 |
| Euro Area | 13,114 | -0.4 | 0.2 | 1.2 | 1.5 |
| DE | 3,607 | 0.9 | 0.9 | 1.4 | 1.4 |
| France | 2,778 | 0.1 | 0.4 | 1.1 | 1.5 |
| Italy | 2,199 | -2.3 | -0.7 | 0.5 | 1.2 |
| POT | 238 | -3.0 | -1.0 | 1.2 | 1.9 |
| Ireland | 221 | 0.4 | 1.4 | 2.5 | 2.9 |
| Greece | 299 | -6.0 | -4.0 | 0.0 | 2.8 |
| Spain | 1,480 | -1.5 | -1.3 | 1.0 | 1.6 |
| EMDE | 25,438 | 5.3 | 5.6 | 5.9 | 6.1 |
| Brazil | 2,493 | 1.5 | 3.9 | 4.2 | 4.2 |
| Russia | 1,850 | 3.7 | 3.8 | 3.9 | 3.9 |
| India | 1,827 | 4.9 | 6.0 | 6.4 | 6.7 |
| China | 7,298 | 7.8 | 8.2 | 8.5 | 8.5 |
Notes; DE: Germany; EMDE: Emerging and Developing Economies (150 countries); POT: Portugal
Source: IMF World Economic Outlook databank http://www.imf.org/external/datamapper/index.php?db=WEO
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 IVQ2012 available now for all countries. Growth is weak throughout most of the world. Japan’s GDP increased 1.5 percent in IQ2012 and 3.4 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 fell 0.2 percent in IIQ2012 at the seasonally adjusted annual rate (SAAR) of minus 0.9 percent, which is much lower than 6.1 percent in IQ2012. Growth of 3.9 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 3.7 percent and increased 0.4 percent relative to a year earlier. Japan’s GDP grew 0.0 percent in IVQ2012 at the SAAR of 0.2 percent and increased 0.5 percent relative to a year earlier. China grew at 1.8 percent in IIQ2012, which annualizes to 7.4 percent relative to a year earlier. China grew at 2.2 percent in IIIQ2012, which annualizes at 9.1 percent and 7.4 percent relative to a year earlier. In IVQ2012, China grew at 2.0 percent, which annualizes at 8.2 percent, and 7.9 percent in IVQ2012 relative to IVQ2011. 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 7.9 percent in IVQ2012 relative to IVQ2011. 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, 7.4 percent in IIIQ2012 relative to IIIQ2011 and 7.9 percent in IVQ2012 relative to year earlier. GDP fell 0.1 percent in the euro area in IQ2012 and increased 0.3 in IQ2012 relative to a year earlier. Euro area GDP contracted 0.2 percent IIQ2012 and fell 0.8 percent relative to a year earlier. In IIIQ2012, euro area GDP fell 0.1 percent and declined 0.8 percent relative to a year earlier. In IVQ2012, euro area GDP fell 0.6 percent relative to the prior quarter and fell 0.9 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. Germany’s GDP contracted 0.6 percent in IVQ2012 and increased 0.1 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 0.5 percent in IQ2012 at the SAAR of 2.0 percent and grew 5.4 percent relative to a year earlier. 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 0.8 percent, 3.1 percent at SAAR and 2.6 percent relative to IIIQ2011. In IVQ2012, GDP grew 0.0 percent,
0.1 percent at SAAR and 1.6 percent relative to IVQ2011 (Section I at http://cmpassocregulationblog.blogspot.com/2013/03/mediocre-gdp-growth-at-16-to-20-percent.html and earlier http://cmpassocregulationblog.blogspot.com/2013/02/thirty-one-million-unemployed-or.html) and weak hiring (http://cmpassocregulationblog.blogspot.com/2013/02/recovery-without-hiring-united-states.html). In IQ2012, UK GDP fell 0.1 percent, increasing 0.3 percent relative to a year earlier. UK GDP fell 0.4 percent in IIQ2012 and decreased 0.2 percent relative to a year earlier. UK GDP increased 1.0 percent in IIIQ2012 and increased 0.2 percent relative to a year earlier. UK GDP fell 0.3 percent in IVQ2012 relative to IIIQ2012 and increased 0.3 percent relative to a year earlier. Italy has experienced decline of GDP in six consecutive quarters from IIIQ2011 to IVQ2012. Italy’s GDP fell 0.8 percent in IQ2012 and declined 1.3 percent relative to IQ2011. Italy’s GDP fell 0.7 percent in IIQ2012 and declined 2.3 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. The GDP of Italy contracted 0.9 percent in IVQ2012 and fell 2.7 percent relative to a year earlier. France’s GDP stagnated in IQ2012 and increased 0.2 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 0.1 percent and increased 0.0 percent relative to a year earlier. France’s GDP fell 0.3 percent in IVQ2012 and declined 0.3 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: 1.5 SAAR: 6.1 | 3.4 |
| China | 1.8 | 8.1 |
| Euro Area | -0.1 | 0.3 |
| Germany | 0.5 | 1.7 |
| France | 0.0 | 0.2 |
| Italy | -0.8 | -1.3 |
| United Kingdom | -0.1 | 0.3 |
| IIQ2012/IQ2012 | IIQ2012/IIQ2011 | |
| United States | QOQ: 0.3 SAAR: 1.3 | 2.1 |
| Japan | QOQ: -0.2 | 3.9 |
| China | 1.8 | 7.6 |
| Euro Area | -0.2 | -0.8 |
| Germany | 0.3 | 0.5 1.0 CA |
| France | -0.1 | 0.1 |
| Italy | -0.7 | -2.3 |
| United Kingdom | -0.4 | -0.2 |
| IIIQ2012/ IIQ2012 | IIIQ2012/ IIIQ2011 | |
| United States | QOQ: 0.8 | 2.6 |
| Japan | QOQ: –0.9 | 0.4 |
| China | 2.2 | 7.4 |
| Euro Area | -0.1 | -0.8 |
| Germany | 0.2 | 0.4 |
| France | 0.1 | 0.0 |
| Italy | -0.2 | -2.4 |
| United Kingdom | 1.0 | 0.2 |
| IVQ2012/IIIQ2012 | IVQ2012/IVQ2011 | |
| United States | QOQ: 0.0 | 1.6 |
| Japan | QOQ: 0.0 SAAR: 0.2 | 0.5 |
| China | 2.0 | 7.9 |
| Euro Area | -0.6 | -0.9 |
| Germany | -0.6 | 0.1 |
| France | -0.3 | -0.3 |
| Italy | -0.9 | -2.7 |
| United Kingdom | -0.3 | 0.3 |
QOQ: Quarter relative to prior quarter; SAAR: seasonally adjusted annual rate
Source: Country Statistical Agencies http://www.bea.gov/national/index.htm#gdp
There is evidence of deceleration of growth of world trade and even contraction in more recent data. Table V-4 provides two types of data: growth of exports and imports in the latest available months and in the past 12 months; and contributions of net trade (exports less imports) to growth of real GDP. Japan provides the most worrisome data (Section VB at http://cmpassocregulationblog.blogspot.com/2013/02/world-inflation-waves-united-states.html and earlier at http://cmpassocregulationblog.blogspot.com/2013/02/thirty-one-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2012/12/mediocre-and-decelerating-united-states_24.html and earlier http://cmpassocregulationblog.blogspot.com/2012/11/contraction-of-united-states-real_25.html and for GDP Section VB http://cmpassocregulationblog.blogspot.com/2013/02/recovery-without-hiring-united-states.html and earlier at http://cmpassocregulationblog.blogspot.com/2012/12/recovery-without-hiring-forecast-growth.html). In Jan 2013, Japan’s exports increased 6.4 percent in 12 months and imports 7.3 percent. Japan’s exports decreased 5.8 percent in the 12 months ending in Dec, 4.1 percent in the 12 months ending in Nov, 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 increased 1.9 percent in the 12 months ending in Dec, 0.8 percent in the 12 months ending in Nov, 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 1.1 percentage points from Japan’s growth of GDP in IIQ2012, deducted 2.8 percentage points from GDP growth in IIIQ2012 and deducted 0.6 percentage points from GDP growth in IVQ2012. 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. In Nov 2012, China’s exports increased 2.9 percent in 12 months and 7.3 percent in Jan-Nov 2012 while imports were unchanged in Nov 2012 and increased 4.1 percent in Jan-Nov 2012. In the 12 months ending in Dec 2012, China’s exports increased 14.1 percent and imports 6.0 while in Jan-Dec 2012 exports increased 7.9 percent and imports increased 4.3 percent. In Jan 2013, China exports increased 17.3 percent relative to a year earlier and imports 19.6 percent. Germany’s exports increased 0.3 percent in the month of Dec 2012 and decreased 6.9 percent in the 12 months ending in Dec 2012 while imports decreased 1.3 percent in the month of Dec and decreased 7.3 percent in the 12 months ending in Dec. Net trade contributed 0.4 percentage points to growth of GDP in IQ2012, contributed 1.4 percentage points in IIQ2012, contributed 1.6 percentage points in IIIQ2012, contributed 0.8 percentage points in IVQ2012 and contributed 1.0 percentage points in 2012. Net trade deducted 0.5 percentage points from UK value added in IQ2012, deducted 0.8 percentage points in IIQ2012, added 0.4 percentage points in IIIQ2012 and subtracted 0.1 percentage points in IVQ2012. France’s exports increased 3.1 percent in Dec while imports increased 5.4 percent and net trade deducted 0.3 percentage points from GDP growth in IIQ2012, adding 0.3 percentage points in IIIQ2012 and 0.1 percentage points in IVQ2012. US exports decreased 1.2 percent in Jan 2013 and goods exports increased 4.3 percent in Jan relative to a year earlier but net trade added 0.38 percentage points to GDP growth in IIIQ2012 and deducted 0.25 percentage points in IVQ2012. US imports increased 1.8 percent in Jan 2013 and goods imports increased 0.9 percent in Jan 2013 relative to a year earlier. In the six months ending in Jan 2013, United States national industrial production accumulated increase of 0.7 percent at the annual equivalent rate of 1.4 percent, which is lower than 2.1 percent growth in 12 months. Business equipment fell 0.7 percent in Aug 2012, decreased 0.2 percent in Sep, decreased 1.2 percent in Oct, increased 3.1 percent in Nov, increased 1.3 percent in Dec and 0.1 percent in Jan 2013, growing 6.9 percent in the 12 months ending in Jan 2013 and at the annual equivalent rate of 2.7 percent in the six months ending in Jan 2013. Capacity utilization of total industry is analyzed by the Fed in its report (http://www.federalreserve.gov/releases/g17/current/): “The capacity utilization rate for total industry decreased in January to 79.1 percent, a rate that is 1.1 percentage points below its long-run (1972--2012) average.” United States industry is apparently decelerating. Manufacturing decreased 0.4 percent in Jan 2013 seasonally adjusted, increasing 2.0 percent not seasonally adjusted in 12 months, and increased 0.9 percent in the six months ending in Jan 2013 or at the annual equivalent rate of 1.8 percent. Trade values incorporate both price and quantity effects that are difficult to separate. Data do suggest that world trade slowdown is accompanying world economic slowdown.
Table V-4, Growth of Trade and Contributions of Net Trade to GDP Growth, ∆% and % Points
| Exports | Exports 12 M ∆% | Imports | Imports 12 M ∆% | |
| USA | -1.2 Jan | 4.3 Jan | 1.8 Jan | 0.9 Jan |
| Japan | Jan 2013 6.4 Dec -5.8 Nov -4.1 Oct -6.5 Sep -10.3 Aug -5.8 Jul -8.1 | Jan 2013 7.3 Dec 1.9 Nov 0.8 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 2.2 Nov 11.1 Dec -11.7 Jan 13 -25.6 Feb | 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 2.9 Nov 7.3 Jan-Nov 14.1 Dec 17.3 Jan 13 7.9 Jan-Dec 23.6 Jan-Feb | 2.2 Jul -0.3 Aug 4.9 Sep -9.4 Oct 11.3 Oct 4.9 Dec -12.5 Jan 13 -21.6 Feb | 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 0.0 Nov 4.1 Jan-Nov 6.0 Dec 19.6 Jan 13 4.3 Jan-Dec 5.1 Jan-Feb |
| Euro Area | -3.1 12-M Dec | 7.4 Jan-Dec | -5.9 12-M Dec | 1.7 Jan-Dec |
| Germany | 0.3 Dec CSA | -6.9 Dec | -1.3 Dec CSA | -7.3 Dec |
| France Dec | 3.1 | 4.7 | 5.4 | 3.8 |
| Italy Dec | -0.5 | -3.7 | 1.3 | -6.4 |
| UK | 1.9 Dec | -3.9 Oct-Dec 12/Oct-Dec 11 | 0.9 Dec | -0.4 Oct-Dec 12/Oct-Dec 11 |
| Net Trade % Points GDP Growth | % Points | |||
| USA | IVQ2012 -0.25 IIIQ2012 +0.38 | |||
| Japan | -1.1 IIQ2012 -2.8 IIIQ2012 -0.6 IVQ2012 | |||
| Germany | 0.4 IQ2012 1.4 IIQ2012 1.6 IIIQ2012 0.8 IVQ2012 1.0 2012 | |||
| France | -0.3 IIQ2012 0.3 IIIQ2012 0.1 IVQ2012 | |||
| UK | -0.5 IQ2012 -0.8 IIQ2012 0.4 IIIQ2012 -0.1 IVQ2012 |
Sources: http://www.census.gov/foreign-trade/ http://www.bea.gov/iTable/index_nipa.cfm
http://www.customs.go.jp/toukei/latest/index_e.htm http://www.esri.cao.go.jp/en/sna/sokuhou/sokuhou_top.html
http://english.customs.gov.cn/publish/portal191/ http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home
https://www.destatis.de/EN/PressServices/Press/pr/2012/08/PE12_287_811.html;jsessionid=A761BC574543A771416A9CF81034F7BA.cae1 http://lekiosque.finances.gouv.fr/AppChiffre/Portail_default.asp
http://www.statistics.gov.uk/hub/index.html
The geographical breakdown of exports and imports of Japan with selected regions and countries is provided in Table VB-5 for Dec 2012. The share of Asia in Japan’s trade is more than one half, 53.2 percent of exports and 44.8 percent of imports. Within Asia, exports to China are 15.9 percent of total exports and imports from China 22.1 percent of total imports. The second largest export market for Japan in Oct 2012 is the US with share of 17.5 percent of total exports and share of imports from the US of 8.1 percent in total imports. Western Europe has share of 10.9 percent in Japan’s exports and of 9.6 percent in imports. Rates of growth of exports of Japan in Jan 2013 are not sharply negative for all countries and regions as in Dec 2012 with the exception of minus 5.9 percent for exports to Western Europe, minus 15.8 percent for France and minus 1.8 percent for the UK. Comparisons relative to 2011 may have some bias because of the effects of the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Deceleration of growth in China and the US and threat of recession in Europe can reduce world trade and economic activity, which could be part of the explanation for the decline of Japan’s exports by 5.8 percent in Dec 2012 while imports increased 1.9 percent but higher levels after the earthquake and declining prices may be another factor. Growth rates of imports in the 12 months ending in Dec are positive for all trading partners with exception of decline of 3.5 percent for Australia. Imports from Asia increased 6.1 percent in the 12 months ending in Jan 2013 while imports from China increased 6.5 percent. Data are in millions of yen, which has effects of recent depreciation of the yen relative to the United States dollar (USD).
Table V-5, Japan, Value and 12-Month Percentage Changes of Exports and Imports by Regions and Countries, ∆% and Millions of Yens
| Jan 2013 | Exports | 12 months ∆% | Imports Millions Yen | 12 months ∆% |
| Total | 4,799,161 | 6.4 | 6,428,601 | 7.3 |
| Asia | 2,554,209 | 8.4 | 2,881,218 | 6.1 |
| China | 762,899 | 3.0 | 1,417,516 | 6.5 |
| USA | 839,836 | 10.9 | 521,102 | 5.8 |
| Canada | 62,477 | 0.3 | 88,641 | 2.9 |
| Brazil | 35,726 | 1.5 | 92,697 | 3.9 |
| Mexico | 63,340 | 21.0 | 32,732 | 18.8 |
| Western Europe | 523,863 | -5.9 | 616,973 | 6.3 |
| Germany | 121,942 | 0.2 | 167,753 | 2.1 |
| France | 38,170 | -15.8 | 88,718 | 11.8 |
| UK | 95,788 | -1.8 | 50,961 | 15.7 |
| Middle East | 163,562 | 3.1 | 1,259,288 | 9.8 |
| Australia | 95,765 | -10.6 | 391,186 | -3.5 |
Source: Japan, Ministry of Finance http://www.customs.go.jp/toukei/info/index_e.htm
World trade projections of the IMF are in Table V-6. There is significantly slower growth of the volume of world trade of goods and services from 5.9 percent in 2011 to 2.8 percent in 2012 and 3.8 percent in 2013, increasing to 5.5 percent in 2014. World trade would slow sharply for advanced economies while emerging and developing economies (EMDE) experience slower growth. World economic slowdown is more challenging with lower growth of world trade.
Table V-6, IMF, Projections of World Trade, ∆%
| 2011 | 2012 | 2013 | 2014 | |
| World Trade Volume (Goods and Services) | 5.9 | 2.8 | 3.8 | 5.5 |
| Imports | ||||
| AE | 4.6 | 1.2 | 2.2 | 4.1 |
| EMDE | 8.4 | 6.1 | 6.5 | 7.8 |
| Exports | ||||
| AE | 5.6 | 2.1 | 2.8 | 4.5 |
| EMDE | 6.6 | 3.6 | 5.5 | 6.9 |
Source: International Monetary Fund World Economic Outlook databank update http://www.imf.org/external/pubs/ft/weo/2012/02/weodata/index.aspx http://www.imf.org/external/pubs/ft/survey/so/2013/NEW012313A.htm http://www.imf.org/external/pubs/ft/weo/2013/update/01/index.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 53.0 in Feb from 53.2 in Jan, indicating expansion at a moderate rate (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10838).This index has remained above the contraction territory of 50.0 during 43 consecutive months and the average for IQ2013 in the first two months is slightly higher than 52.9 in IVQ2012. The employment index was unchanged at 52.3 in Feb relative to 52.3 in Jan with input prices rising at a faster rate (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10838) David Hensley, Director of Global Economic Coordination at JP Morgan, finds finds that increasing new business could signal improvement in the index (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10838). The JP Morgan Global Manufacturing PMI™, produced by JP Morgan and Markit in association with ISM and IFPSM, decreased to 50.8 in Feb from 51.4 in Dec, which is the fourth consecutive reading above 50 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10802). New export business declined for the eleventh consecutive month in Jan, but at a marginal rate of contraction. The HSBC Brazil Composite Output Index, compiled by Markit, decreased from 54.9 in Jan to 52.9 in Feb, indicating solid expansion but at a four-month low (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10833). The HSBC Brazil Services Business Activity index, compiled by Markit, decreased from 54.5 in Jan to 52.1 in Feb (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10833). Andre Loes, Chief Economist, Brazil, at HSBC, finds recovering economy but within a modest forecast for 2013 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10833). The HSBC Brazil Purchasing Managers’ IndexTM (PMI™) decreased from a 22-month high in Jan 2012 at 53.2 to 52.5 in Feb 2013 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10766). Andre Loes, Chief Economist, Brazil at HSBC, finds continuing expansion in Brazil’s manufacturing with greater strength in IQ2013 than in IVQ2012 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10766).
VA United States. The Markit Flash US Manufacturing Purchasing Managers’ Index™ (PMI™) seasonally adjusted decreased to 55.2 in Feb from 55.8 in Jan, continuing to suggest strengthening US manufacturing activity (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10722).
New export orders registered 48.7 in Feb from 51.5 in Jan, indicating contraction at a moderate rate while output was at the highest reading in about two years. Chris Williams, Chief Economist at Markit, finds that the survey data with highest rate of output expansion in about two years are consistent with impulse to US economic growth but weakness in foreign orders that slowed new overall orders (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10722). The Markit US Manufacturing Purchasing Managers’ Index™ (PMI™) decreased to 54.3 in Feb from 55.8 in Jan (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10792). The index of new exports orders decreased from 51.5 in Jan 2013 to 48.5 in Feb 2013 while total new orders decreased from 57.4 in Jan to 55.4 in Feb. Chris Williamson, Chief Economist at Markit, finds that manufacturing in the US is moving to growth of 2 percent in IQ2013 and could support growth of the US economy (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10792). The purchasing managers’ index (PMI) of the Institute for Supply Management (ISM) Report on Business® increased 1.1 percentage points from 53.1 in Jan to 54.2 in Feb (http://www.ism.ws/ISMReport/MfgROB.cfm?navItemNumber=12942). The index of new orders increased 4.5 percentage points from 53.3 in Jan to 57.8 in Feb. The index of exports increased 3.0 percentage points from 50.5 in Jan to 53.5 in Feb, remaining in expansion territory. The Non-Manufacturing ISM Report on Business® PMI increased 0.8 percentage points from 55.2 in Jan to 56.0 in Feb, indicating production growth during 43 consecutive months, while the index of new orders increased 3.8 percentage points from 54.4 in Jan to 58.2 in Feb (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 | Jan 12 months NSA ∆%: 1.6; ex food and energy ∆%: 1.9 Jan month SA ∆%: 0.0; ex food and energy ∆%: 0.3 |
| Producer Price Index | Jan 12-month NSA ∆%: 1.3; ex food and energy ∆% 1.8 |
| PCE Inflation | Jan 12-month NSA ∆%: headline 1.2; ex food and energy ∆% 1.3 |
| Employment Situation | Household Survey: Feb Unemployment Rate SA 7.7% |
| Nonfarm Hiring | Nonfarm Hiring fell from 63.8 million in 2006 to 50.1 million in 2011 or by 13.7 million |
| GDP Growth | BEA Revised National Income Accounts IIQ2012/IIQ2011 2.1 IIIQ2012/IIIQ2011 2.6 IVQ2012/IVQ2011 1.6 IQ2012 SAAR 2.0 IIQ2012 SAAR 1.3 IIIQ2012 SAAR 3.1 IVQ2012 SAAR 0.1 |
| Real Private Fixed Investment | SAAR IVQ2012 9.7 ∆% IVQ2007 to IIIQ2012: minus 11.2% Blog 3/3/13 |
| Personal Income and Consumption | Jan month ∆% SA Real Disposable Personal Income (RDPI) SA ∆% -4.0 |
| Quarterly Services Report | IVQ12/IVQ11 SA ∆%: Financial & Insurance 6.2 |
| Employment Cost Index | Compensation Private IVQ2012 SA ∆%: 0.5 |
| Industrial Production | Jan month SA ∆%: -0.1 Manufacturing Dec SA ∆% -0.4 Dec 12 months SA ∆% 1.7, NSA 2.0 |
| Productivity and Costs | Nonfarm Business Productivity IVQ2012∆% SAAE -1.9; IVQ2012/IVQ2011 ∆% 0.5; Unit Labor Costs SAAE IVQ2012 ∆% 4.6; IVQ2012/IVQ2011 ∆%: 2.1 Blog 3/10/2013 |
| New York Fed Manufacturing Index | General Business Conditions From Jan -7.78 to Feb +10.04 |
| Philadelphia Fed Business Outlook Index | General Index from Jan -5.8 to Feb -12.5 |
| Manufacturing Shipments and Orders | New Orders SA Jan ∆% -2.0 Ex Transport 1.3 Jan NSA New Orders 1.2 Ex transport 3.0 |
| Durable Goods | Jan New Orders SA ∆%: -5.2; ex transport ∆%: 1.9 |
| Sales of New Motor Vehicles | Jan-Feb 2013 2,235,352; Jan-Feb 2012 2,062,722. Jan 13 SAAR 15.29 million, Feb 13 SAAR 15.38 million, Feb 2012 SAAR 14.50 million Blog 3/10/13 |
| Sales of Merchant Wholesalers | Jan 2013/Jan 2012 NSA ∆%: Total 5.9; Durable Goods: 5.4; Nondurable |
| Sales and Inventories of Manufacturers, Retailers and Merchant Wholesalers | Dec 12/Dec 11 NSA ∆%: Sales Total Business 1.6; Manufacturers 1.9 |
| Sales for Retail and Food Services | Jan 2013/Jan 2012 ∆%: Retail and Food Services 6.2; Retail ∆% 6.2 |
| Value of Construction Put in Place | Jan SAAR month SA ∆%: -2.1 Jan 12-month NSA: 7.6 Jan-Dec 2012 ∆% 9.2 |
| Case-Shiller Home Prices | Dec 2012/Dec 2011 ∆% NSA: 10 Cities 5.9; 20 Cities: 6.8 |
| FHFA House Price Index Purchases Only | Dec SA ∆% 0.6; |
| New House Sales | Jan 2013 month SAAR ∆%: 15.6 |
| Housing Starts and Permits | Jan Starts month SA ∆%: -8.5 ; Permits ∆%: 1.8 |
| Trade Balance | Balance Jan SA -$44,448 million versus Dec -$18144 million |
| Export and Import Prices | Jan 12-month NSA ∆%: Imports -1.3; Exports 1.1 |
| Consumer Credit | Jan ∆% annual rate: 7.0 |
| Net Foreign Purchases of Long-term Treasury Securities | Dec Net Foreign Purchases of Long-term Treasury Securities: $64.2 billion |
| Treasury Budget | Fiscal Year 2013/2012 ∆% Jan: Receipts 12.4; Outlays 3.5; Individual Income Taxes 16.0 Deficit Fiscal Year 2012 $1,089,353 million Blog 2/17/2013 |
| CBO Budget and Economic Outlook | 2012 Deficit $1089 B 7.0% GDP Debt 11,280 B 72.5% GDP 2013 Deficit $845 B, Debt 12,229 B 76.3% GDP Blog 8/26/12 11/18/12 2/10/13 |
| Commercial Banks Assets and Liabilities | Jan 2013 SAAR ∆%: Securities -2.5 Loans 5.9 Cash Assets 47.9 Deposits 2.8 Blog 2/24/13 |
| Flow of Funds | IIIQ2012 ∆ since 2007 Assets -$2059B Real estate -$4035B Financial +$1529 MM Net Worth -$1232B Blog 12/9/12 |
| Current Account Balance of Payments | IIIQ2012 -$128 B %GDP 3.3 Blog 12/23-24/12 |
Links to blog comments in Table USA: 3/3/13 http://cmpassocregulationblog.blogspot.com/2013/03/mediocre-gdp-growth-at-16-to-20-percent.html
2/24/13 http://cmpassocregulationblog.blogspot.com/2013/02/world-inflation-waves-united-states.html
2/17/13 http://cmpassocregulationblog.blogspot.com/2013/02/recovery-without-hiring-united-states.html
2/10/13 http://cmpassocregulationblog.blogspot.com/2013/02/united-states-unsustainable-fiscal.html
12/23-24/12 http://cmpassocregulationblog.blogspot.com/2012/12/mediocre-and-decelerating-united-states_24.html
12/9/12 http://cmpassocregulationblog.blogspot.com/2012/12/twenty-eight-million-unemployed-or.html
11/18/12 http://cmpassocregulationblog.blogspot.com/2012/11/united-states-unsustainable-fiscal.html
8/26/12 http://cmpassocregulationblog.blogspot.com/2012/08/expanding-bank-cash-and-deposits-with_26.html
The Bureau of Labor Statistics (BLS) of the Department of Labor provides the quarterly report on productivity and costs. The operational definition of productivity used by the BLS is (http://www.bls.gov/news.release/pdf/prod2.pdf 1): “Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours worked of all persons, including employees, proprietors, and unpaid family workers.” The BLS has revised the estimates for productivity and unit costs. Table VA-1 provides revised data for nonfarm business sector productivity and unit labor costs for the final three quarters of 2012 in seasonally adjusted annual equivalent (SAAE) rate and the percentage change from the same quarter a year earlier. Reflecting increases in output of 0.5 percent and of 2.5 percent in hours worked, nonfarm business sector labor productivity increased at a SAAE rate of minus 1.9 percent in IVQ2012, as shown in column 2 “IVQ2012 SAEE.” The increase of labor productivity from IVQ2011 to IVQ2012 was 0.5 percent, reflecting increases in output of 2.5 percent and of hours worked of 1.9 percent, as shown in column 3 “IVQ2012 YoY.” Hours worked increased from 0.4 percent in IIQ2012 in SAAE to 1.6 percent in IIIQ2012 and 1.9 percent in IVQ2012 while output rose from 2.1 percent in IIQ2011 to 4.7 percent in IIIQ2012 and 0.5 percent in IVQ2012. The BLS defines unit labor costs as (http://www.bls.gov/news.release/pdf/prod2.pdf 1): “BLS defines unit labor costs as the ratio of hourly compensation to labor productivity; increases in hourly compensation tend to increase unit labor costs and increases in output per hour tend to reduce them.” Unit labor costs increased at the SAAE rate of 4.6 percent in IVQ2012 and rose 2.1 percent in IVQ2012 relative to IVQ2011. Hourly compensation increased at the SAAE rate of 2.6 percent in IVQ2012, which deflating by the estimated consumer price increase SAAE rate in IVQ2012 results in increase of real hourly compensation by 0.4 percent. Real hourly compensation increased 0.8 percent in IVQ2012 relative to IVQ2011.
Table VA-1, US, Nonfarm Business Sector Productivity and Costs %
| IVQ 2012 SAAE | IVQ 2012 YoY | IIIQ | IIIQ | IIQ 2012 SAAE | IIQ 2012 YoY | |
| Productivity | -1.9 | 0.5 | 3.1 | 1.6 | 1.7 | 0.8 |
| Output | 0.5 | 2.5 | 4.7 | 3.7 | 2.1 | 2.9 |
| Hours | 2.5 | 1.9 | 1.6 | 2.1 | 0.4 | 2.1 |
| Hourly | 2.6 | 2.6 | 1.2 | 1.7 | 1.2 | 1.2 |
| Real Hourly Comp. | 0.4 | 0.8 | -0.9 | 0.0 | 0.2 | -0.7 |
| Unit Labor Costs | 4.6 | 2.1 | -1.9 | 0.1 | -0.5 | 0.4 |
| Unit Nonlabor Payments | -5.9 | 0.8 | 9.3 | 3.6 | 4.7 | 3.7 |
| Implicit Price Deflator | 0.0 | 1.6 | 2.7 | 1.6 | 1.6 | 1.8 |
Notes: SAAE: seasonally adjusted annual equivalent; Comp.: compensation; YoY: Quarter on Same Quarter Year Earlier
Source: US Bureau of Labor Statistics http://www.bls.gov/lpc/
In 2012, productivity increased 0.7 percent in the annual average, as shown in Table VA-2. Increases in productivity were 0.6 percent in 2011, 3.1 percent in 2010 and 2.9 percent in 2008. The contraction period and the recovery period have been characterized by savings of labor inputs. Real hourly compensation fell 0.6 percent in 2012 and 0.6 percent in 2011, interrupting increases of 0.4 percent in 2010 and 1.8 percent in 2009. Unit labor costs fell 1.5 percent in 2009 and 1.0 percent in 2010 but increased 2.0 percent in 2011 and 0.7 percent in 2012.
Table VA-2, US, Revised Nonfarm Business Sector Productivity and Costs Annual Average, ∆% Annual Average
| 2012 ∆% | 2011 ∆% | 2010 ∆% | 2009 ∆% | 2008 ∆% | 2007 ∆% | |
| Productivity | 0.7 | 0.6 | 3.1 | 2.9 | 0.6 | 1.5 |
| Real Hourly Compensation | -0.6 | -0.6 | 0.4 | 1.8 | -0.4 | 1.1 |
| Unit Labor Costs | 0.7 | 2.0 | -1.0 | -1.5 | 2.8 | 2.4 |
Source: US Bureau of Labor Statistics http://www.bls.gov/lpc/
Productivity jumped in the recovery after the recession from Mar IQ2001 to Nov IVQ2001 (http://www.nber.org/cycles.html). Table VA-3 provides quarter on quarter and annual percentage changes in nonfarm business output per hour, or productivity, from 1999 to 2012. The annual average jumped from 3.0 percent in 2001 to 4.5 percent in 2002. Nonfarm business productivity increased at the SAAE rate of 8.9 percent in the first quarter after the recession in IQ2002. Productivity increases decline later in the expansion period. Productivity increases were mediocre during the recession from Dec IVQ2007 to Sep IIIQ2009 (http://www.nber.org/cycles.html) and increased during the first phase of expansion from IIQ2009 to IQ2010, trended lower and collapsed in 2011 and 2012 with sporadic jumps and declines in five out of eight quarters.
Table VA-3, US, Nonfarm Business Output per Hour, Percent Change from Prior Quarter at Annual Rate, 1999-2012
| Year | Qtr1 | Qtr2 | Qtr3 | Qtr4 | Annual |
| 1999 | 4.0 | 0.3 | 3.4 | 7.0 | 3.3 |
| 2000 | -1.4 | 9.1 | 0.1 | 4.2 | 3.4 |
| 2001 | -1.1 | 7.4 | 2.2 | 5.8 | 3.0 |
| 2002 | 8.9 | 0.2 | 3.9 | -0.1 | 4.5 |
| 2003 | 3.5 | 5.6 | 9.6 | 1.4 | 3.7 |
| 2004 | 0.7 | 3.4 | 0.3 | 1.0 | 2.7 |
| 2005 | 4.3 | -0.9 | 3.0 | -0.1 | 1.7 |
| 2006 | 2.9 | 0.2 | -2.4 | 2.8 | 0.9 |
| 2007 | -0.2 | 3.3 | 4.7 | 2.0 | 1.5 |
| 2008 | -2.5 | 2.4 | -1.0 | -3.4 | 0.6 |
| 2009 | 5.8 | 6.5 | 5.2 | 4.8 | 2.9 |
| 2010 | 3.1 | -0.5 | 3.2 | 1.7 | 3.1 |
| 2011 | -1.3 | 0.6 | -0.1 | 2.3 | 0.6 |
| 2012 | -0.7 | 1.7 | 3.1 | -1.9 | 0.7 |
Source: US Bureau of Labor Statistics http://www.bls.gov/lpc/
Chart VA-1 of the Bureau of Labor Statistics (BLS) provides SAAE rates of nonfarm business productivity from 1999 to 2012. There is a clear pattern in both episodes of economic cycles in 2001 and 2007 of rapid expansion of productivity in the transition from contraction to expansion followed by more subdued productivity expansion. Part of the explanation is the reduction in labor utilization resulting from adjustment of business to the sudden shock of collapse of revenue. Productivity rose briefly in the expansion after 2009 but then collapsed and moved to negative change with some positive changes recently at lower rates.
Chart VA-1, US, Nonfarm Business Output per Hour, Percent Change from Prior Quarter at Annual Rate, 1999-2012
Source: US Bureau of Labor Statistics http://www.bls.gov/lpc/
Percentage changes from prior quarter at SAAE rates and annual average percentage changes of nonfarm business unit labor costs are provided in Table VA-4. Unit labor costs fell during the contractions with continuing negative percentage changes in the early phases of the recovery. Weak labor markets partly explain the decline in unit labor costs. As the economy moves toward full employment, labor markets tighten with increase in unit labor costs. The expansion beginning in IIIQ2009 has been characterized by high unemployment and underemployment. Table VA-4 shows continuing subdued increases in unit labor costs in 2011 but with increase of 6.4 percent in IQ2012 followed by decrease of 0.5 percent in IIQ2012, decline of 1.9 percent in IIIQ2012 and increase of 4.6 percent in IVQ2012.
Table VA-4, US, Nonfarm Business Unit Labor Costs, Percent Change from Prior Quarter at Annual Rate 1999-2012
| Year | Qtr1 | Qtr2 | Qtr3 | Qtr4 | Annual |
| 1999 | 3.0 | 0.5 | 0.1 | 1.6 | 0.9 |
| 2000 | 17.4 | -7.4 | 8.6 | -1.5 | 3.9 |
| 2001 | 10.9 | -5.8 | -1.1 | -1.7 | 1.5 |
| 2002 | -4.1 | 3.3 | -1.6 | 2.2 | -1.3 |
| 2003 | 2.7 | 1.4 | -3.5 | 1.8 | 1.0 |
| 2004 | -2.5 | 2.4 | 5.8 | 2.7 | 0.7 |
| 2005 | -1.0 | 3.5 | 2.6 | 2.6 | 2.3 |
| 2006 | 2.9 | 1.2 | 3.5 | 6.9 | 2.9 |
| 2007 | 4.0 | -1.9 | -1.9 | 4.3 | 2.4 |
| 2008 | 8.7 | -3.4 | 4.2 | 5.7 | 2.8 |
| 2009 | -8.1 | -0.2 | -3.1 | -3.9 | -1.5 |
| 2010 | -1.2 | 3.3 | -1.5 | -1.4 | -1.0 |
| 2011 | 11.4 | -1.4 | -0.6 | -3.4 | 2.0 |
| 2012 | 6.4 | -0.5 | -1.9 | 4.6 | 0.7 |
Source: US Bureau of Labor Statistics http://www.bls.gov/lpc/
Chart VA-2 provides percentage changes quarter on quarter at SAAE rates of nonfarm business unit labor costs. With the exception of 3.3 percent in IIQ2010, a jump of 11.4 percent in IQ2011, 6.4 percent in IQ2012 and 4.6 percent in IVQ2012, changes in nonfarm business unit labor costs have been negative.
Chart VA-2, US, Nonfarm Business Unit Labor Costs, Percent Change from Prior Quarter at Annual Rate 1999-2012
Source: US Bureau of Labor Statistics http://www.bls.gov/lpc/
Table VA-5 provides percentage change from prior quarter at annual rates for nonfarm business real hourly worker compensation. The expansion after the contraction of 2001 was followed by strong recovery of real hourly compensation. Real hourly compensation increased at the rate of 5.2 percent in IQ2011 but fell at annual rates of 5.0 percent in IIQ2011, 3.8 percent in IIIQ2011 and 2.4 percent in IVQ2011. Real hourly compensation increased at 3.4 percent in IQ2012 and at 0.2 percent in IIQ2012, declining at 0.9 percent in IIIQ2012 and increasing at 0.4 percent in IVQ2012. Real hourly compensation fell 0.6 percent in 2011 and declined 0.6 percent in 2012.
Table VA-5, Nonfarm Business Real Hourly Compensation, Percent Change from Prior Quarter at Annual Rate 1999-2012
| Year | Qtr1 | Qtr2 | Qtr3 | Qtr4 | Annual |
| 1999 | 5.5 | -2.0 | 0.3 | 5.5 | 2.2 |
| 2000 | 11.4 | -2.0 | 4.7 | -0.2 | 3.9 |
| 2001 | 5.6 | -1.6 | 0.0 | 4.5 | 1.7 |
| 2002 | 2.9 | 0.3 | 0.1 | -0.4 | 1.5 |
| 2003 | 2.2 | 7.7 | 2.7 | 1.7 | 2.4 |
| 2004 | -5.1 | 2.7 | 3.3 | -0.6 | 0.6 |
| 2005 | 1.5 | -0.2 | -0.4 | -1.3 | 0.6 |
| 2006 | 3.6 | -2.0 | -2.8 | 11.7 | 0.5 |
| 2007 | -0.2 | -3.1 | 0.2 | 1.3 | 1.1 |
| 2008 | 1.5 | -6.1 | -3.0 | 12.2 | -0.4 |
| 2009 | -0.4 | 4.4 | -1.6 | -2.2 | 1.8 |
| 2010 | 0.9 | 3.1 | 0.2 | -2.6 | 0.4 |
| 2011 | 5.2 | -5.0 | -3.8 | -2.4 | -0.6 |
| 2012 | 3.4 | 0.2 | -0.9 | 0.4 | -0.6 |
Source: US Bureau of Labor Statistics http://www.bls.gov/lpc/
Chart VA-3 provides percentage change from prior quarter at annual rate of nonfarm business real hourly compensation from 1999 to 2012. There are significant fluctuations in quarterly percentage changes oscillating between positive and negative. There is no clear pattern in the two contractions in the 2000s.
Chart VA-3, US, Nonfarm Business Real Hourly Compensation, Percent Change from Prior Quarter at Annual Rate 1999-2012
Source: US Bureau of Labor Statistics http://www.bls.gov/lpc/
Chart VA-4 provides percentage change of nonfarm business output per hour in a quarter relative to the same quarter a year earlier. As in most series of real output, productivity increased sharply in 2010 but the momentum was lost after 2011 as with the rest of the real economy.
Chart VA-4, US, Nonfarm Business Output per Hour, Percent Change from Same Quarter a Year Earlier 1999-2012
Source: US Bureau of Labor Statistics http://www.bls.gov/lpc/
Chart VA-5 provides percentage changes of nonfarm business unit labor costs relative to the same quarter a year earlier. Softening of labor markets caused relatively high yearly percentage changes in the recession of 2001 repeated in the recession in 2009. Recovery was strong in 2010 but then weakened.
Chart VA-5, US, Nonfarm Business Unit Labor Costs, Percent Change from Same Quarter a Year Earlier 1999-2012
Source: US Bureau of Labor Statistics http://www.bls.gov/lpc/
Chart VA-6 provides percentage changes in a quarter relative to the same quarter a year earlier for nonfarm business real hourly compensation. Labor compensation eroded sharply during the recession with brief recovery in 2010 and another fall until recently.
Chart VA-6, US, Nonfarm Business Real Hourly Compensation, Percent Change Same Quarter a Year Earlier 1999-2012
Source: US Bureau of Labor Statistics http://www.bls.gov/lpc/
Rapid increase of US labor productivity in the 1990s is shown in Chart VA-7 with the index of nonfarm business labor productivity from 1947 to 2012. The rate of productivity increase continued in the early part of the 2000s but then softened and fell during the global recession.
Chart VA-7, US, Nonfarm Business Labor Productivity, Output per Hour, 1947-2012, Index 2005=100
Source: US Bureau of Labor Statistics http://www.bls.gov/lpc/
Unit labor costs increased sharply during the Great Inflation from the late 1960s to 1981 as shown by sharper slope in Chart VA-8. Unit labor costs continued to increase but at a lower rate.
Chart VA-8, US, Nonfarm Business, Unit Labor Costs, 1947-2012, Index 2005=100
Source: US Bureau of Labor Statistics http://www.bls.gov/lpc/
Real hourly compensation increased at relatively high rates after 1947 to the early 1970s but reached a plateau that lasted until the early 1990s, as shown in Chart VA-9. There were rapid increases until the global recession.
Chart VA-9, US, Nonfarm Business, Real Hourly Compensation, 1947-2012, Index 2005=100
Source: US Bureau of Labor Statistics http://www.bls.gov/lpc/
Chart VA-10 of the US Census Bureau of the Department of Commerce provides the quarterly service report SA from IIIQ2003 to IIIQ2012. Services revenue contracted during the recession from IVQ2007 (December) to IIQ2009 (June) (http://wwwdev.nber.org/cycles/cyclesmain.html) but there appears to be continuing growth especially for professional, scientific and technical services with steeper slope from IVQ2010 through IVQ2012.
Chart VA-10, US, Quarterly Revenue for Selected Services, SA $ Billions
Source: US Census Bureau
http://www2.census.gov/services/qss/qss.gif
Total revenues of information services not seasonally adjusted in millions of current dollars are shown in Table VA-6 from IVQ2003, when they become available, to IVQ2012. The row below current values provides percentage change in the quarter from the quarter a year earlier. Growth rates were robust before the global recession in the range from 3.9 percent in IVQ2005 to 5.5 percent in IQ2005. Percentage changes were negative in all quarters in 2009 with the largest losses in the first three quarters. Growth was milder in the expansion phase than before the global recession. As with most indicators of the US, growth was robust in the final three quarters of 2010 and initial quarters of 2011. Growth rates fell with the lowest of 2.5 percent in IIIQ2012 relative to IIIQ2011 and recovered to 5.4 percent in IVQ2012.
Table VA-6, US, Information Services Revenue Not Seasonally Adjusted, Millions of Dollars, 2003-2012
| Year | 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter |
| 2003 | NA | NA | NA | 237,399 |
| 2004 | 223,675 | 233,241 | 232,983 | 246,201 |
| ∆% | NA | NA | NA | 3.7 |
| 2005 | 236,033 | 244,136 | 244,711 | 255,856 |
| ∆% | 5.5 | 4.7 | 5.0 | 3.9 |
| 2006 | 245,182 | 254,735 | 255,745 | 271,401 |
| ∆% | 3.9 | 4.3 | 4.5 | 6.1 |
| 2007 | 257,973 | 265,739 | 267,325 | 281,304 |
| ∆% | 5.2 | 4.3 | 4.5 | 3.6 |
| 2008 | 270,217 | 277,643 | 277,604 | 282,885 |
| ∆% | 4.7 | 4.5 | 3.8 | 0.6 |
| 2009 | 261,948 | 266,881 | 265,508 | 280,622 |
| ∆% | -3.1 | -3.9 | -4.4 | -0.8 |
| 2010 | 267,483 | 274,697 | 276,055 | 291,990 |
| ∆% | 2.1 | 2.9 | 4.0 | 4.1 |
| 2011 | 277,885 | 289,552 | 288,862 | 304,550 |
| ∆% | 3.9 | 5.4 | 4.6 | 4.3 |
| 2012 | 290,131 | 297,462 | 296,119 | 321,112 |
| ∆% | 4.4 | 2.7 | 2.5 | 5.4 |
Source: US Census Bureau http://www.census.gov/services/index.html
Chart VA-11 provides total revenue of information services not seasonally adjusted from IVQ2013 to IVQ2012 in current millions of dollars not seasonally adjusted. Oscillating growth was strong before the drop of the global recession. Growth has been moderate in more recent quarters with strong increase in IVQ2012.
Chart VA-11, Quarterly Revenue for Information Services Not Seasonally Adjusted, Millions of Dollars 2003-2012
Source: US Census Bureau http://www.census.gov/services/index.html
A similar pattern is provided by Chart VA-12 with quarterly total revenue of information services in current millions of dollars adjusted for seasonality. There is the same hump of the global recession followed by resumption of growth.
Chart VA-12, Quarterly Revenue for Information Services Seasonally Adjusted, Millions of Dollars 2003-2012
Source: US Census Bureau http://www.census.gov/services/index.html
Table VA-7 provides total revenue of financial services and insurance in current million dollars not seasonally adjusted from IIIQ2009, when data first become available, to IVQ2012. The row below values provides percentage changes in a quarter relative to the same quarter a year earlier. Percentage changes were negative until 2012 with 3.5 percent in IQ2012, 2.1 percent in IIQ2012, 6.6 percent in IIIQ2012 and 6.2 percent in IVQ2012.
Table VA-7, US, Financial Services and Insurance Total Revenue Not Seasonally Adjusted, Millions of Dollars, 2003-2012
| Year | 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter |
| 2009 | NA | NA | 844,608 | 843,302 |
| 2010 | 831,558 | 832,016 | 830,991 | 831,420 |
| ∆% | NA | NA | -1.6 | -1.4 |
| 2011 | 828,643 | 827,048 | 813,659 | 821,366 |
| ∆% | -0.4 | -0.6 | -2.1 | -1.2 |
| 2012 | 858,053 | 844,148 | 867,281 | 871,912 |
| ∆% | 3.5 | 2.1 | 6.6 | 6.2 |
Source: US Census Bureau http://www.census.gov/services/index.html
Chart VA-13 provides total quarterly revenue of financial services and insurance from IIIQ2009, when data first become available, to IVQ2012. Total revenue of financial services and insurance contracted 2.3 percent between IVQ2009 and IVQ2011 and grew 6.2 percent between IVQ2011 and IVQ2012.
Chart VA-13, Total Quarterly Revenue for Financial Services and Insurance Not Seasonally Adjusted, Millions of Dollars 2003-2012
Source: US Census Bureau http://www.census.gov/services/index.html
Motor vehicle sales and production in the US have been in long-term structural change. Table VA-8 provides the data on new motor vehicle sales and domestic car production in the US from 1990 to 2010. New motor vehicle sales grew from 14,137 thousand in 1990 to the peak of 17,806 thousand in 2000 or 29.5 percent. In that same period, domestic car production fell from 6,231 thousand in 1990 to 5,542 thousand in 2000 or -11.1 percent. New motor vehicle sales fell from 17,445 thousand in 2005 to 11,772 in 2010 or 32.5 percent while domestic car production fell from 4,321 thousand in 2005 to 2,840 thousand in 2010 or 34.3 percent. In Jan-Feb 2013, light vehicle sales accumulated to 2,235,352, which is higher by 8.4 percent relative to 2,062,722 a year earlier (http://motorintelligence.com/m_frameset.html). The seasonally-adjusted annual rate of light vehicle sales in the US reached 15.38 million in Feb 2013, higher than 15.29 million in Jan 2013 and lower than 14.50 million in Feb 2012 (http://motorintelligence.com/m_frameset.html).
Table VA-8, US, New Motor Vehicle Sales and Car Production, Thousand Units
| New Motor Vehicle Sales | New Car Sales and Leases | New Truck Sales and Leases | Domestic Car Production | |
| 1990 | 14,137 | 9,300 | 4,837 | 6,231 |
| 1991 | 12,725 | 8,589 | 4,136 | 5,454 |
| 1992 | 13,093 | 8,215 | 4,878 | 5,979 |
| 1993 | 14,172 | 8,518 | 5,654 | 5,979 |
| 1994 | 15,397 | 8,990 | 6,407 | 6,614 |
| 1995 | 15,106 | 8,536 | 6,470 | 6,340 |
| 1996 | 15,449 | 8,527 | 6,922 | 6,081 |
| 1997 | 15,490 | 8,273 | 7,218 | 5,934 |
| 1998 | 15,958 | 8,142 | 7,816 | 5,554 |
| 1999 | 17,401 | 8,697 | 8,704 | 5,638 |
| 2000 | 17,806 | 8,852 | 8,954 | 5,542 |
| 2001 | 17,468 | 8,422 | 9,046 | 4,878 |
| 2002 | 17,144 | 8,109 | 9,036 | 5,019 |
| 2003 | 16,968 | 7,611 | 9,357 | 4,510 |
| 2004 | 17,298 | 7,545 | 9,753 | 4,230 |
| 2005 | 17,445 | 7,720 | 9,725 | 4,321 |
| 2006 | 17,049 | 7,821 | 9,228 | 4,367 |
| 2007 | 16,460 | 7,618 | 8,683 | 3,924 |
| 2008 | 13,494 | 6,814 | 6.680 | 3,777 |
| 2009 | 10,601 | 5,456 | 5,154 | 2,247 |
| 2010 | 11,772 | 5,729 | 6,044 | 2,840 |
Source: US Census Bureau http://www.census.gov/compendia/statab/cats/wholesale_retail_trade/motor_vehicle_sales.html
Chart VA-9 of the Board of Governors of the Federal Reserve provides output of motor vehicles and parts in the United States from 1972 to 2012. Output has stagnated since the late 1990s.
Chart VA-9, US, Motor Vehicles and Parts Output, 1972-2012
Source: Board of Governors of the Federal Reserve System
http://www.federalreserve.gov/releases/g17/current/
Manufacturing jobs increased 14,000 in Feb 2013 relative to Jan 2013, seasonally adjusted and increased 12,000 in Feb 2013 relative to Jan 2013, not seasonally adjusted. There are effects of the weaker economy and international trade together with the yearly adjustment of labor statistics. In the six months ending in Jan 2013, United States national industrial production accumulated increase of 0.7 percent at the annual equivalent rate of 1.4 percent, which is lower than 2.1 percent growth in 12 months. Capacity utilization for total industry in the United States decreased 0.2 percentage points in Jan 2013 to 79.1 percent from 79.3 percent in Dec, which is 1.1 percentage points lower than the long-run average from 1972 to 2012. Manufacturing decreased 0.4 percent in Jan 2013 seasonally adjusted, increasing 2.0 percent not seasonally adjusted in 12 months, and increased 0.9 percent in the six months ending in Jan 2013 or at the annual equivalent rate of 1.8 percent. (Section VA at http://cmpassocregulationblog.blogspot.com/2013/01/recovery-without-hiring-world-inflation.html and earlier http://cmpassocregulationblog.blogspot.com/2012/12/united-states-commercial-banks-assets.html). Table VA-10 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 Feb 2013, there were 133.603 million nonfarm jobs NSA in the US, according to estimates of the establishment survey of the Bureau of Labor Statistics (BLS) (http://www.bls.gov/news.release/empsit.nr0.htm Table B-1). Total private jobs of 111.432 million NSA in Feb 2013 accounted for 83.4 percent of total nonfarm jobs of 133.603 million, of which 11.866 million, or 10.7 percent of total private jobs and 8.9 percent of total nonfarm jobs, were in manufacturing. Private service-producing jobs were 93.345 million NSA in Feb 2013, or 70.0 percent of total nonfarm jobs and 83.8 percent of total private-sector jobs. Manufacturing has share of 11.2 percent in US national income in IIQ2011 and 11.1 percent in IIIQ2012, as shown in Table VA-10. 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-10, US, National Income without Capital Consumption Adjustment by Industry, Seasonally Adjusted Annual Rates, Billions of Dollars, % of Total
| SAAR | % Total | SAAR IIIQ2012 | % Total | |
| National Income WCCA | 13,833.6 | 100.0 | 13,976.7 | 100.0 |
| Domestic Industries | 13,586.3 | 98.2 | 13,733.6 | 98.3 |
| Private Industries | 11,933.2 | 86.3 | 12,075.0 | 86.4 |
| Agriculture | 131.7 | 0.9 | 138.6 | 1.0 |
| Mining | 208.3 | 1.5 | 205.3 | 1.5 |
| Utilities | 214.6 | 1.6 | 216.6 | 1.6 |
| Construction | 583.7 | 4.2 | 589.3 | 4.2 |
| Manufacturing | 1548.1 | 11.2 | 1548.9 | 11.1 |
| Durable Goods | 894.3 | 6.5 | 892.8 | 6.4 |
| Nondurable Goods | 653.8 | 4.7 | 656.1 | 4.7 |
| Wholesale Trade | 853.5 | 6.2 | 837.8 | 6.0 |
| Retail Trade | 951.9 | 6.9 | 957.4 | 6.9 |
| Transportation & WH | 414.5 | 3.0 | 415.5 | 3.0 |
| Information | 499.1 | 3.6 | 504.4 | 3.6 |
| Finance, Insurance, RE | 2237.5 | 16.2 | 2330.6 | 16.7 |
| Professional, BS | 1971.7 | 14.3 | 2003.4 | 14.3 |
| Education, Health Care | 1378.1 | 10.0 | 1385.6 | 9.9 |
| Arts, Entertainment | 540.4 | 3.9 | 539.4 | 3.9 |
| Other Services | 400.0 | 2.9 | 402.3 | 2.9 |
| Government | 1653.0 | 11.9 | 1658.6 | 11.9 |
| Rest of the World | 247.3 | 1.8 | 243.1 | 1.7 |
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
Manufacturers’ shipments decreased 0.2 percent in Jan 2013 after increasing 0.0 percent in Dec 2012 and increasing 0.3 percent in Nov 2012. New orders decreased 2.0 percent in Jan 2013 following increase by 1.3 percent in Dec 2012 and decrease by 0.3 percent in Nov, as shown in Table VA-11. These data are very volatile. Volatility is illustrated by increase of 2642.2 percent of new orders of nondefense aircraft in Sep 2012 following decline by 97.2 percent in Aug. New orders excluding transportation equipment increased 1.3 percent in Jan 2013. Capital goods new orders, indicating investment, decreased 12.3 percent in Jan 2013 after increasing 11.5 percent in Dec and decreasing 1.7 percent in Nov. New orders of nondefense capital goods increased 0.6 percent in Jan 2013 and 1.0 percent in Dec after decreasing 2.2 percent in Nov. Excluding more volatile aircraft, capital goods orders increased 7.2 percent in Jan 2013 after decreasing 0.8 percent in Dec and increasing 3.3 percent in Nov.
Table VA-11, US, Value of Manufacturers’ Shipments and New Orders, SA, Month ∆%
| Jan 2013 | Dec 2012 | Nov 2012 ∆% | |
| Total | |||
| S | -0.2 | 0.0 | 0.3 |
| NO | -2.0 | 1.3 | -0.3 |
| Excluding | |||
| S | 0.1 | -0.2 | 0.0 |
| NO | 1.3 | -0.1 | -0.2 |
| Excluding | |||
| S | 0.0 | -0.1 | 0.2 |
| NO | 0.3 | -0.2 | -0.3 |
| Durable Goods | |||
| S | -1.2 | 0.6 | 1.8 |
| NO | -4.9 | 3.6 | 0.6 |
| Machinery | |||
| S | -0.2 | -1.1 | 3.2 |
| NO | 15.6 | -3.0 | 2.3 |
| Computers & Electronic Products | |||
| S | -3.3 | 1.3 | -0.5 |
| NO | -4.6 | 2.7 | 0.8 |
| Computers | |||
| S | -23.0 | 23.4 | 11.9 |
| NO | -23.8 | 5.4 | 19.9 |
| Transport | |||
| S | -2.2 | 0.8 | 2.4 |
| NO | -19.8 | 9.9 | -0.7 |
| Automobiles | |||
| S | 0.5 | 2.2 | 8.9 |
| Motor Vehicles | |||
| S | -2.6 | -1.5 | 2.3 |
| NO | -1.8 | -1.5 | 1.6 |
| Nondefense | |||
| S | -5.5 | 1.3 | 0.5 |
| NO | -34.0 | -3.2 | -12.8 |
| Capital Goods | |||
| S | -2.9 | 1.1 | 1.7 |
| NO | -12.3 | 11.5 | -1.7 |
| Nondefense Capital Goods | |||
| S | -1.8 | 0.5 | 1.6 |
| NO | 0.6 | 1.0 | -2.2 |
| Capital Goods ex Aircraft | |||
| S | -1.1 | 0.1 | 2.2 |
| NO | 7.2 | -0.8 | 3.3 |
| Nondurable Goods | |||
| S | 0.6 | -0.6 | -1.0 |
| NO | 0.6 | -0.6 | -1.0 |
Note :Mfg: manufacturing; S: shipments; NO: new orders; Transport: transportation
Source: US Census Bureau http://www.census.gov/manufacturing/m3/
Chart VA-14 of the US Census Bureau provides new orders of manufacturers from Jan 2012 to Jan 2013. There is significant volatility that prevents discerning clear trends.
Chart VA-14, US, Manufacturers’ New Orders 2010-2011 Seasonally Adjusted, Month ∆%
Source: US Census Bureau
http://www.census.gov/briefrm/esbr/www/esbr022.html
Chart VA-15 of the US Census Bureau provides total value of manufacturers’ new orders, seasonally adjusted, from 1992 to 2013. Seasonal adjustment reduces sharp oscillations. The series dropped nearly vertically during the global recession but rose along a path even steeper than in the high-growth period before the recession. The final segment suggests deceleration but similar segments are found in earlier periods followed with continuing growth and stability currently.
Chart VA-15, US, Value of Total Manufacturers’ New Orders, Seasonally Adjusted, 1992-2012
Source: US Census Bureau
http://www.census.gov/manufacturing/m3/
Additional perspective on manufacturers’ shipments and new orders is provided by Table VA-12. Values are cumulative millions of dollars in Jan 2013 not seasonally adjusted (NSA). Shipments of all manufacturing industries in Jan 2013 total $449.7 billion and new orders total $447.8 billion, growing respectively by 3.1 percent and 1.2 percent relative to the same period in 2012. Excluding transportation equipment, shipments grew 2.7 percent and new orders increased 3.0 percent. Excluding defense, shipments grew 3.3 percent and new orders grew 1.6 percent. Durable goods shipments reached $206.5 billion in Jan 2013, or 45.9 percent of the total, growing by 3.8 percent, and new orders $204.7 billion, or 45.7 percent of the total, growing by minus 0.3 percent. Important information in Table VA-12 is the large share of nondurable goods with shipments of $243.2 billion or 54.1 percent of the total, growing by 2.5 percent. Capital goods have relatively high value of $967.8 billion for shipments, growing 1.7 percent, and new orders $71.1 billion, declining 10.3 percent, which could be an indicator of future investment. Excluding aircraft, capital goods shipments reached $56.9 billion, growing 2.7 percent, and new orders $64.5 billion, increasing 5.5 percent. There is no suggestion in these data that the US economy is close to recession but manufacturing accounts for 11.1 percent of US national income in IIIQ2012.
Table VA-12, US, Value of Manufacturers’ Shipments and New Orders, NSA, Millions of Dollars
| Jan 2013 | Shipments | ∆% 2013/ | New Orders | ∆% 2013/ |
| Total | 449,650 | 3.1 | 447,840 | 1.2 |
| Excluding Transport | 392,434 | 2.7 | 393,818 | 3.0 |
| Excluding Defense | 441,245 | 3.3 | 440,178 | 1.6 |
| Durable Goods | 206,465 | 3.8 | 204,655 | -0.3 |
| Machinery | 29,590 | 10.2 | 34,218 | 10.8 |
| Computers & Electronic Products | 24,774 | -4.4 | 17,899 | -7.5 |
| Computers | 746 | -40.1 | 711 | -40.9 |
| Transport Equipment | 57,216 | 6.0 | 54,022 | -10.5 |
| Automobiles | 9,820 | 34.0 | ||
| Motor Vehicles | 17,527 | 1.0 | 17,596 | 1.5 |
| Nondefense Aircraft | 7,268 | 1.6 | 5,045 | -62.3 |
| Capital Goods | 67,768 | 1.7 | 71,139 | -10.3 |
| Nondefense Capital Goods | 61,182 | 2.5 | 65,867 | -8.5 |
| Capital Goods ex Aircraft | 56,946 | 2.7 | 64,516 | 5.5 |
| Nondurable Goods | 243,185 | 2.5 | 243,185 | 2.5 |
| Food Products | 60,755 | 3.8 | ||
| Petroleum Refineries | 65,714 | 3.6 | ||
| Chemical Products | 59,933 | -0.2 |
Note: Transport: transportation Source: US Census Bureau http://www.census.gov/manufacturing/m3/
Chart VA-16 of the US Census Bureau provides value of manufacturer’s new orders not seasonally adjusted from Jan 1992 to Jan 2013. Fluctuations are evident, which are smoothed by seasonal adjustment in the earlier Chart VA-15. The series drops nearly vertically during the global contraction and then resumes growth in a steep upward trend, flattening recently.
Chart VA-16, US, Value of Total Manufacturers’ New Orders, Not Seasonally Adjusted, 1992-2012
Source: US Census Bureau
http://www.census.gov/manufacturing/m3/
Sales and inventories of merchant wholesalers except manufacturers’ sales branches and offices are shown in Table VA-13 for Jan 2013 and percentage changes from the prior month and for Jan 2013 relative to Jan 2012. These data are volatile aggregating diverse categories of durable and nondurable goods without adjustment for price changes. Total sales for the US rose 5.9 percent in Jan 2013 relative to Jan 2012 and decreased 0.8 percent in Jan 2013 relative to Dec 2012. The value of total sales is quite high at $404.3 billion, approaching five trillion dollars in a year. Value in the breakdown is useful in identifying relative importance of individual categories. Sales of durable goods in Jan 2013 reached $178.9 billion, over two trillion dollars for a year, increasing 0.7 percent in Jan 2013 relative to Dec 2012 and increasing 5.4 percent in Jan 2013 relative to Jan 2012. Sales of automotive products reached $31.7 billion in Jan 2013, increasing 0.7 percent in the month and increasing 5.3 percent relative to a year earlier. There is strong performance of 9.2 percent in machinery but lower of 5.2 percent in electrical products. Sales of nondurable goods rose 6.2 percent over a year earlier. The influence of commodity prices returned as suggested by decrease of 7.2 percent in Jan and increase of 12.0 percent in Jan 2013 relative to a year earlier in farm products but decrease of 4.5 percent in petroleum products in Jan with increase of 1.2 percent relative to a year earlier. The final three columns in Table VA-13 provide the value of inventories and percentage changes from the prior month and relative to the same month a year earlier. US total inventories of wholesalers increased 1.2 percent in Jan and increased 6.5 percent relative to a year earlier. Inventories of durable goods of $297.2 billion are 58.5 percent of total inventories of $508.3 billion and rose 8.2 percent relative to a year earlier. Automotive inventories decreased 2.6 percent relative to a year earlier. Machinery inventories of $82.7 billion rose 18.4 percent relative to a year earlier. Inventories of nondurable goods of $211.1 billion are 41.5 percent of the total and increased 4.1 percent relative to a year earlier. Inventories of farm products decreased 1.5 percent in Jan relative to Dec and increased 8.0 percent relative to a year earlier. Inventories of petroleum products increased 1.9 percent in Jan and increased 1.9 percent relative to a year earlier.
Table VA-13, US, Sales and Inventories of Merchant Wholesalers except Manufacturers’ Sales Branches and Offices, Month ∆%
| 2013 | Sales $ Billions Jan 2013 | Sales Jan ∆% SA | Sales∆% Jan 2013 from Jan 2012 NSA | INV $ Billions Jan 2013 NSA | INV Jan ∆% SA | INV ∆% Jan 2013 from Jan 2012 NSA |
| US Total | 404.3 | -0.8 | 5.9 | 508.3 | 1.2 | 6.5 |
| Durable | 178.9 | 0.7 | 5.4 | 297.2 | 1.1 | 8.2 |
| Automotive | 31.7 | 0.7 | 5.3 | 44.3 | 0.4 | -2.6 |
| Prof. Equip. | 30.0 | -2.3 | 0.3 | 34.4 | 1.9 | 9.5 |
| Computer Equipment | 14.6 | 0.4 | 2.0 | 13.2 | 3.2 | 13.4 |
| Electrical | 30.7 | -0.7 | 5.2 | 42.7 | 0.1 | 5.5 |
| Machinery | 31.9 | 4.2 | 9.2 | 82.7 | 1.7 | 18.4 |
| Not Durable | 225.4 | -2.1 | 6.2 | 211.1 | 1.2 | 4.1 |
| Drugs | 38.2 | -2.0 | 5.7 | 35.9 | 6.2 | 8.0 |
| Apparel | 11.4 | -0.4 | 9.6 | 21.9 | -0.8 | -1.9 |
| Groceries | 48.8 | 1.0 | 7.0 | 36.6 | 2.1 | 7.9 |
| Farm Products | 21.0 | -7.2 | 12.0 | 27.2 | -1.5 | 8.0 |
| Petroleum | 61.6 | -4.5 | 1.2 | 28.1 | 1.9 | 1.9 |
Note: INV: inventories
Source: US Census Bureau http://www.census.gov/wholesale/index.html
Chart VA-17 of the US Census Bureau provides wholesale trade sales without adjustment for seasonality or price changes from Jan 1992 to Jan 2013. The jagged curve of wholesale trade sales without adjustment shows strong seasonal variations. There is a strong long-term trend interrupted by sharp drop during the global recession. Growth resumed along a stronger upward trend and the level in Dec 2012 surpasses the peak before the global recession.
Chart VA-17, US, Wholesale Trade Sales, Monthly, NSA, Jan 1992-Jan 2013, Millions of Dollars
Source: US Census Bureau
http://www.census.gov/wholesale/index.html
Chart VA-18 of the US Census Bureau provides US wholesale trade sales with seasonal adjustment from Jan 1992 to Jan 2013. The elimination of seasonality permits enhanced comparison of adjacent sales. The final segment identifies another drop followed by increase to a higher level.
Chart VA-18, US, Wholesale Trade Sales, Monthly, SA, Jan 1992-Jan 2013, Millions of Dollars
Source: US Census Bureau
http://www.census.gov/wholesale/index.html
Inventory/sales ratios of merchant wholesalers except manufacturers’ sales branches and offices are shown in Table VA-14. The total for the US has remained almost without change at 1.21 in Jan 2013, 1.19 in Dec 2012 and 1.17 in Jan 2012. Inventory/sales ratios are higher in durable goods industries but still remain relatively stable with 1.59 in Jan 2013, 1.59 in Dec 2012 and 1.51 in Jan 2012. Computer equipment operates with low inventory/sales ratios of 0.83 in Jan 2013, 0.81 in Dec 2012 and 0.73 in Jan 2012 because of the capacity to fill orders on demand. As expected because of perishable nature, nondurable inventory/sales ratios are quite low with 0.90 in Jan 2013 and 0.87 in Dec 2012 which are almost equal to 0.90 in Jan 2012. There are exceptions such as 1.76 in Jan 2013 in apparel that is almost equal to 1.77 in Dec 2012 and lower than 1.88 in Jan 2012.
Table VA-14, Inventory/Sales Ratios of Merchant Wholesalers except Manufacturers’ Sales Branches and Offices, % SA
| Jan 2013 | Dec 2012 | Jan 2012 | |
| US Total | 1.21 | 1.19 | 1.17 |
| Durable | 1.59 | 1.59 | 1.51 |
| Automotive | 1.30 | 1.30 | 1.38 |
| Prof. Equip. | 1.08 | 1.06 | 1.00 |
| Comp. Equip. | 0.83 | 0.81 | 0.73 |
| Electrical | 1.33 | 1.32 | 1.29 |
| Machinery | 2.50 | 2.57 | 2.24 |
| Not Durable | 0.90 | 0.87 | 0.90 |
| Drugs | 1.00 | 0.92 | 0.94 |
| Apparel | 1.76 | 1.77 | 1.88 |
| Groceries | 0.74 | 0.73 | 0.72 |
| Farm Products | 1.20 | 1.13 | 1.19 |
| Petroleum | 0.45 | 0.42 | 0.44 |
Source: US Census Bureau
http://www.census.gov/wholesale/index.html
Inventories of merchant wholesalers except manufacturers’ sales branches in millions of dollars NSA are provided in Chart VA-19 of the US Census Bureau. Inventories resumed growth at a sharper rate after the global recession and are substantially higher than the peak before the contraction.
Chart VA-19, US, Inventories of Merchant Wholesalers, Millions of Dollars, NSA, Jan 1992-Jan 2013
http://www.census.gov/wholesale/index.html
Inventories of merchant wholesalers except manufacturers’ sales branches in millions of dollars SA are provided in Chart VA-20 of the US Census Bureau. There is evident acceleration in inventory building in the final segment at a much sharper slope than before the global recession.
Chart VA-20, US, Inventories of Merchant Wholesalers, Millions of Dollars, SA, Jan 1992-Jan 2013
Source: US Census Bureau
http://www.census.gov/wholesale/index.html
Chart VA-21 provides the chart of the US Census Bureau with inventories/sales ratios of merchant wholesalers from 2002 to 2013 seasonally adjusted. Inventory/sales ratios rise during contractions as merchants are caught with increasing inventories because of weak sales and fall during expansions as merchants attempt to fill sales with existing stocks. There is an increase in the inventory/sales ratio in 2012 but not yet significantly higher with declining trend in the final segment followed by an increase.
Chart VA-21, US, Monthly Inventories/Sales Ratios of Merchant Wholesalers, SA, 2003-2012
Source: US Census Bureau
http://www2.census.gov/wholesale/img/mwtsbrf.jpg
The report of consumer credit outstanding of the Board of Governors of the Federal Reserve System is provided in Table VA-15. The data are in seasonally-adjusted annual rates both percentage changes and billions of dollars. The estimate of consumer credit “covers most short- and intermediate-term credit extended to individuals, excluding loans secured by real estate (http://www.federalreserve.gov/releases/g19/current/default.htm). Consumer credit is divided into two categories. (1) Revolving consumer credit (REV in Table VA-15) consists mainly of unsecured credit cards. (2) Non-revolving consumer credit (NREV in Table VA-15) “includes automobile loans and all other loans not included in revolving credit, such as loans for mobile homes, education, boats, trailers or vacations” (http://www.federalreserve.gov/releases/g19/current/default.htm). In Jan 2013, revolving credit was $851 billion, or 30.5 percent of total consumer credit of $2795 billion, and non-revolving credit was $1944 billion, or 69.5 percent of total consumer credit outstanding. Consumer credit grew at relatively high rates before the recession beginning in IVQ2007 (Dec) and extending to IIQ2009 (Jun) as dated by the National Bureau of Economic Research or NBER (http://www.nber.org/cycles/cyclesmain.html). Percentage changes of consumer credit outstanding fell already in 2009. Rates were still negative in 2010 with decline of 1.3 percent in annual data and sharp decline of 7.4 percent in revolving credit. Consumer credit rebounded in Nov 2012 with increase of total consumer credit at 7.0 percent, revolving credit at 1.2 percent and non-revolving credit at 9.7 percent. In Dec 2012, total consumer credit grew at 6.6 percent with decrease of revolving credit at 4.4 percent and increase of non-revolving credit at 11.5 percent. Growth continued in Jan 2013 with total credit at 7.0 percent, revolving at 0.1 percent and non-revolving at 10.0 percent.
Table VA-15, US, Consumer Credit Outstanding, SA, Annual Rate and Billions of Dollars
| Total ∆% | REV ∆% | NRV ∆% | Total $B | REV $B | NREV $B | |
| 2013 | ||||||
| Jan | 7.0 | 0.1 | 10.0 | 2795 | 851 | 1944 |
| 2012 | ||||||
| Dec | 6.6 | -4.4 | 11.5 | 2779 | 851 | 1928 |
| Nov | 7.0 | 1.2 | 9.7 | 2764 | 854 | 1910 |
| IVQ | 6.6 | 0.6 | 9.4 | 2779 | 851 | 1928 |
| IIIQ | 4.2 | -1.0 | 6.6 | 2734 | 850 | 1884 |
| IIQ | 6.4 | 1.3 | 8.7 | 2705 | 852 | 1854 |
| IQ | 5.7 | 0.8 | 8.1 | 2665 | 849 | 1816 |
| 2011 | ||||||
| IVQ | 5.8 | 1.5 | 7.8 | 2627 | 847 | 1780 |
| 2012 | 5.9 | 0.4 | 8.4 | 2779 | 851 | 1928 |
| 2011 | 3.4 | 0.1 | 5.0 | 2627 | 847 | 1780 |
| 2010 | -1.3 | -7.4 | 2.5 | 2542 | 847 | 1695 |
| 2009 | -4.5 | -8.8 | -1.8 | 2439 | 922 | 1517 |
| 2008 | 0.8 | 0.2 | 1.2 | 2549 | 1010 | 1539 |
| 2007 | 5.9 | 8.5 | 4.3 | 2529 | 1008 | 1521 |
Note: REV: Revolving; NREV: Non-revolving; ∆%: simple annual rate from unrounded data; Total may not add exactly because of rounding
Source: Board of Governors of the Federal Reserve System http://www.federalreserve.gov/releases/g19/current/default.htm
Chart VA-22 of the Board of Governors of the Federal Reserve System total consumer credit outstanding in millions of dollars measured in the right axis and the finance rate on 24-month personal loans at commercial banks, not seasonally adjusted. There was sharp decline of total consumer loans outstanding during the global recession followed by strong recovery. There is long-term decline of the financing rate.
Chart VA-22, US, Total Consumer Credit Owned and Securitized NSA and Financing Rate on 24-month Personal Loans at Commercial Banks NSA, Millions of Dollars and Percent, Feb 1972-Nov 2012
Source: Board of Governors of the Federal Reserve System
http://www.federalreserve.gov/releases/g19/current/default.htm
Chart VA-23 of the Board of Governors of the Federal Reserve System provides percentage changes of total consumer credit outstanding in the US and the financing rate on 24-month personal consumer loans at commercial banks, since 1972. The shaded bars are the cyclical contraction dates of the National Bureau of Economic Research (http://www.nber.org/cycles/cyclesmain.html). Consumer credit is cyclical, declining during contractions as shown by negative percentage changes during economic contractions. There is clear upward trend in 2012 but with significant fluctuations.
Chart VA-23, US, Percent Change of Total Consumer Credit, Seasonally Adjusted at an Annual Rate and Finance Rate on 24-month Personal Loans at Commercial Banks NSA, Feb 1972-Nov 2012
Source: Board of Governors of the Federal Reserve System
http://www.federalreserve.gov/releases/g19/current/default.htm
VB Japan. Table VB-BOJF provides the forecasts of economic activity and inflation in Japan by the majority of members of the Policy Board of the Bank of Japan, which is part of their Outlook for Economic Activity and Prices (http://www.boj.or.jp/en/mopo/outlook/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. The Cabinet Office, Ministry of Finance and Bank of Japan released on Jan 22, 2013, a “Joint Statement of the Government and the Bank of Japan on Overcoming Deflation and Achieving Sustainable Economic Growth” (http://www.boj.or.jp/en/announcements/release_2013/k130122c.pdf) with the important change of increasing the inflation target of monetary policy from 1 percent to 2 percent:
“The Bank of Japan conducts monetary policy based on the principle that the policy shall be aimed at achieving price stability, thereby contributing to the sound development of the national economy, and is responsible for maintaining financial system stability. The Bank aims to achieve price stability on a sustainable basis, given that there are various factors that affect prices in the short run.
The Bank recognizes that the inflation rate consistent with price stability on a sustainable basis will rise as efforts by a wide range of entities toward strengthening competitiveness and growth potential of Japan's economy make progress. Based on this recognition, the Bank sets the price stability target at 2 percent in terms of the year-on-year rate of change in the consumer price index.
Under the price stability target specified above, the Bank will pursue monetary easing and aim to achieve this target at the earliest possible time. Taking into consideration that it will take considerable time before the effects of monetary policy permeate the economy, the Bank will ascertain whether there is any significant risk to the sustainability of economic growth, including from the accumulation of financial imbalances.”
The Bank of Japan also provided explicit analysis of its view on price stability in a “Background note regarding the Bank’s thinking on price stability” (http://www.boj.or.jp/en/announcements/release_2013/data/rel130123a1.pdf http://www.boj.or.jp/en/announcements/release_2013/rel130123a.htm/). The Bank of Japan also amended “Principal terms and conditions for the Asset Purchase Program” (http://www.boj.or.jp/en/announcements/release_2013/rel130122a.pdf): “Asset purchases and loan provision shall be conducted up to the maximum outstanding amounts by the end of 2013. From January 2014, the Bank shall purchase financial assets and provide loans every month, the amount of which shall be determined pursuant to the relevant rules of the Bank.”
Table VB-BOJF, Bank of Japan, Forecasts of the Majority of Members of the Policy Board, % Year on Year
| Fiscal Year | Real GDP | Domestic CGPI | CPI All Items Less Fresh Food |
| 2011 | |||
| Apr 2012 | -0.2 to –0.2 | +1.7 | 0.0 |
| Jan 2012 | -0.4 to –0.3 | +1.8 to +1.9 | -0.1 to 0.0 |
| 2012 | |||
| 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 | +0.4 to +0.7 | +0.1 to +0.4 |
| Jan 2012 | +1.8 to +2.1 | -0.1 to +0.2 | 0.0 to +0.2 |
| 2013 | |||
| 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 | +0.7 to +0.9 | +0.5 to +0.7 |
| Jan 2012 | +1.4 to +1.7 | +0.6 to 1.0 | +0.4 to +0.5 |
| 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 expanded at a marginal rate with the Markit Composite Output PMI™ Index decreasing marginally from 50.4 in Jan to 50.2 in Feb, which is the second consecutive reading above the no-change 50.0 since May 2012 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10824). Paul Smith, economist at Markit and author of the report, finds that growth in services but with weakness in manufacturing could provide some support for marginal growth in the first quarter of 2013 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10824). The Markit Business Activity Index of Services decreased marginally from 51.5 in Jan to 51.1 in Feb, indicating moderate growth of the private services (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10824). Paul Smith, Senior Economist at Markit and author of the report, finds signs of growth in the beginning of 2013 with confidence in demand for services (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10632). Markit/JMMA Purchasing Managers’ Index™ (PMI™), seasonally adjusted, increased from 47.7 in Jan to 48.5 in Feb for the ninth consecutive month of contraction below 50.0 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10739). Foreign orders fell for the eleventh consecutive. Paul Smith, economist at Markit and author of the report, finds probable decline of manufacturing of 1 percent in IQ2013 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10739).Table JPY provides the country data table for Japan.
Table JPY, Japan, Economic Indicators
| Historical GDP and CPI | 1981-2010 Real GDP Growth and CPI Inflation 1981-2010 |
| Corporate Goods Prices | Jan ∆% +0.4 |
| Consumer Price Index | Jan NSA ∆% 0.0; Jan 12 months NSA ∆% -0.3 |
| Real GDP Growth | IVQ2012 ∆%: 0.0 on IIIQ2012; IVQ2012 SAAR 0.2; |
| Employment Report | Jan Unemployed 2.73 million Change in unemployed since last year: minus 100 thousand |
| All Industry Indices | Dec month SA ∆% 1.8 Blog 2/24/13 |
| Industrial Production | Jan SA month ∆%: 1.0 |
| Machine Orders | Total Dec ∆% -1.6 Private ∆%: -9.8 Dec ∆% Excluding Volatile Orders 2.8 |
| Tertiary Index | Dec month SA ∆% 1.4 |
| Wholesale and Retail Sales | Jan 12 months: |
| Family Income and Expenditure Survey | Jan 12-month ∆% total nominal consumption 2.1, real 2.4 Blog 3/3/13 |
| Trade Balance | Exports Jan 12 months ∆%: 6.4 Imports Jan 12 months ∆% 7.3 Blog 2/24/13 |
Links to blog comments in Table JPY: 3/3/13 http://cmpassocregulationblog.blogspot.com/2013/03/mediocre-gdp-growth-at-16-to-20-percent.html
2/24/13 http://cmpassocregulationblog.blogspot.com/2013/02/world-inflation-waves-united-states.html
2/17/13 http://cmpassocregulationblog.blogspot.com/2013/02/recovery-without-hiring-united-states.html
2/10/13 http://cmpassocregulationblog.blogspot.com/2013/02/united-states-unsustainable-fiscal.html
8/9/11 http://cmpassocregulationblog.blogspot.com/2011/08/turbulence-in-world-financial-markets.html
Japan’s GDP changed 0.0 percent in IVQ2012 relative to IIIQ2012, seasonally adjusted, as shown in Table VB-1 that incorporates the latest estimates and revisions. IQ2012 GDP growth was revised to 1.5 percent; IIQGDP growth was revised to -0.2 percent; and IIIQ2012 growth was revised to -0.9 percent. The economy of Japan had already weakened in IVQ2010 when GDP fell revised 0.4 percent. As in other advanced economies, Japan’s recovery from the global recession has not been robust. GDP fell 1.8 percent in IQ2011 and fell again 0.9 percent in IIQ2011 as a result of the disruption of the tragic Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Recovery was robust in the first two quarters of 2010 but GDP grew at 1.4 percent in IIIQ2010 and fell 0.4 percent in IVQ2010. The deepest quarterly contractions in the recession were 3.2 percent in IVQ2008 and 4.0 percent in IQ2009.
Table VB-1, Japan, Real GDP ∆% Changes from the Previous Quarter Seasonally Adjusted ∆%
| IQ | IIQ | IIIQ | IVQ | |
| 2012 | 1.5 | -0.2 | -0.9 | 0.0 |
| 2011 | -1.8 | -0.9 | 2.5 | 0.1 |
| 2010 | 1.5 | 1.0 | 1.4 | -0.4 |
| 2009 | -4.0 | 1.7 | 0.0 | 1.8 |
| 2008 | 0.7 | -1.2 | -1.0 | -3.2 |
| 2007 | 1.0 | 0.1 | -0.4 | 0.9 |
| 2006 | 0.4 | 0.4 | 0.0 | 1.3 |
| 2005 | 0.2 | 1.3 | 0.4 | 0.2 |
| 2004 | 1.1 | -0.1 | 0.2 | -0.2 |
| 2003 | -0.5 | 1.2 | 0.4 | 1.1 |
| 2002 | -0.2 | 1.0 | 0.6 | 0.4 |
| 2001 | 0.7 | -0.2 | -1.1 | -0.1 |
| 2000 | 1.7 | 0.2 | -0.3 | 0.7 |
| 1999 | -0.9 | 0.4 | -0.1 | 0.4 |
Source: http://www.esri.cao.go.jp/en/sna/sokuhou/sokuhou_top.html
Table VB-2 provides contributions to real GDP at seasonally-adjusted annual rates (SAAR). The SAAR of GDP in IVQ2012 was 0.2 percent: 1.2 percentage points from growth of personal consumption expenditures (PC) less 0.6 percentage points of net trade (exports less imports) less 0.9 percentage points of private inventory investment (PINV) plus 0.5 percentage points of government consumption. The SAAR of GDP in IIIQ2011 was revised to a high 10.6 percent. Net trade deducted from GDP growth in three quarters of 2011 and provided the growth impulse of 3.3 percentage points in IIIQ2011. Growth in 2011 and IQ2012 was driven by personal consumption expenditures that deducted 1.1 percentage points from GDP growth in IIIQ2012 but added 1.2 percentage points to GDP growth in IVQ2012.
Table VB-2, Japan, Contributions to Changes in Real GDP, Seasonally Adjusted Annual Rates (SAAR), %
| GDP | PC | GFCF | Trade | PINV | GOVC | |
| 2012 | ||||||
| I | 6.1 | 3.0 | -0.2 | 0.7 | 1.4 | 1.3 |
| II | -0.9 | 0.0 | 1.3 | -1.1 | -1.5 | 0.3 |
| III | -3.7 | -1.1 | -1.1 | -2.8 | 1.0 | 0.3 |
| IV | 0.2 | 1.2 | 0.0 | -0.6 | -0.9 | 0.5 |
| 2011 | ||||||
| I | -7.0 | -3.1 | -0.4 | -0.9 | -2.7 | 0.1 |
| II | -3.4 | 1.9 | -0.3 | -4.1 | -1.3 | 0.2 |
| III | 10.6 | 3.4 | 1.4 | 3.3 | 2.2 | 0.2 |
| IV | 0.4 | 1.2 | 3.5 | -2.9 | -1.6 | 0.2 |
| 2010 | ||||||
| I | 5.9 | 1.7 | 0.2 | 2.3 | 2.2 | -0.4 |
| II | 4.1 | -0.1 | 0.9 | 0.2 | 2.1 | 1.1 |
| III | 5.5 | 3.2 | 0.9 | 0.1 | 1.1 | 0.3 |
| IV | -1.5 | -0.7 | -0.8 | -0.4 | 0.1 | 0.4 |
| 2009 | ||||||
| I | -15.1 | -2.0 | -1.9 | -4.4 | -7.6 | 0.8 |
| II | 6.9 | 4.0 | -3.2 | 7.4 | -2.0 | 0.6 |
| III | 0.1 | 0.1 | -1.4 | 2.0 | -1.6 | 1.0 |
| IV | 7.6 | 3.5 | 0.2 | 2.7 | 0.8 | 0.3 |
| 2008 | ||||||
| I | 2.7 | 1.5 | 0.4 | 1.2 | -0.4 | 0.0 |
| II | -4.8 | -3.3 | -2.3 | 0.5 | 1.2 | -0.8 |
| III | -4.1 | -0.4 | -1.0 | -0.1 | -2.7 | 0.0 |
| IV | -12.4 | -2.8 | -4.5 | -11.4 | 5.8 | 0.3 |
| 2007 | ||||||
| I | 4.1 | 0.9 | 0.5 | 1.2 | 1.2 | 0.4 |
| II | 0.5 | 0.5 | -1.6 | 0.7 | 0.1 | 0.5 |
| III | -1.4 | -0.9 | -1.7 | 2.0 | -0.6 | -0.2 |
| IV | 3.5 | 0.3 | 0.2 | 1.4 | 1.0 | 0.6 |
Note: PC: Private Consumption; GFCF: Gross Fixed Capital Formation; PINV: Private Inventory; Trade: Net Exports; GOVC: Government Consumption
Source: http://www.esri.cao.go.jp/en/sna/sokuhou/sokuhou_top.html
Long-term economic growth in Japan was significantly improved by increasing competitiveness in world markets. Net trade of exports and imports is an important component of the GDP accounts of Japan. Table VB-3 provides quarterly data for net trade, exports and imports of Japan. Net trade had strong positive contributions to GDP growth in Japan in all quarters from IQ2007 to IIQ2009 with exception of IVQ2008, IIIQ2008 and IQ2009. The US recession is dated by the National Bureau of Economic Research (NBER) as beginning in IVQ2007 (Dec) and ending in IIQ2009 (Jun) (http://www.nber.org/cycles/cyclesmain.html). Net trade contributions helped to cushion the economy of Japan from the global recession. Net trade has deducted from GDP growth in seven of the nine quarters from IVQ2010 IVQ2012. The only strong contribution of net trade was 3.3 percent in IIIQ2011. Private consumption assumed the role of driver of Japan’s economic growth but should moderate as in most mature economies.
Table VB-3, Japan, Contributions to Changes in Real GDP, Seasonally Adjusted Annual Rates (SAAR), %
| Net Trade | Exports | Imports | |
| 2012 | |||
| I | 0.7 | 2.0 | -1.4 |
| II | -1.1 | 0.0 | -1.1 |
| III | -2.8 | -3.1 | 0.3 |
| IV | -0.6 | -2.2 | 1.6 |
| 2011 | |||
| I | -0.9 | -0.2 | -0.8 |
| II | -4.1 | -4.4 | 0.3 |
| III | 3.3 | 5.2 | -1.9 |
| IV | -2.9 | -1.9 | -1.0 |
| 2010 | |||
| I | 2.3 | 3.6 | -1.4 |
| II | 0.2 | 2.8 | -2.6 |
| III | 0.1 | 1.1 | -0.9 |
| IV | -0.4 | 0.0 | -0.4 |
| 2009 | |||
| I | -4.4 | -16.3 | 12.0 |
| II | 7.4 | 4.7 | 2.7 |
| III | 2.0 | 5.1 | -3.1 |
| IV | 2.7 | 4.1 | -1.4 |
| 2008 | |||
| I | 1.2 | 2.2 | -1.0 |
| II | 0.5 | -1.6 | 2.1 |
| III | -0.1 | 0.1 | -0.2 |
| IV | -11.4 | -10.2 | -1.2 |
| 2007 | |||
| I | 1.2 | 1.7 | -0.5 |
| II | 0.7 | 1.6 | -0.8 |
| III | 2.0 | 1.4 | 0.6 |
| IV | 1.4 | 2.1 | -0.7 |
Source: http://www.esri.cao.go.jp/en/sna/sokuhou/sokuhou_top.html
Japan’s percentage growth of GDP not seasonally-adjusted in a quarter relative to the same quarter a year earlier is shown in Table VB-4. Contraction of GDP in a quarter relative to the same quarter a year earlier extended over seven quarters from IIQ2008 through IVQ2009. Contraction was sharpest in IQ2009 with output declining 9.4 percent relative to a year earlier. Yearly quarterly rates of growth of Japan were relatively high for a mature economy through the decade with the exception of the contractions from IVQ2001 to IIQ2002 and after 2007. The Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011 caused flat GDP in IQ2011 relative to the same quarter a year earlier and decline of 1.6 percent in IIQ2011. GDP fell 0.5 percent in IIIQ2011 relative to a year earlier and fell 0.3 percent in IVQ2011 relative to a year earlier. Growth resumed with 3.4 percent in IQ2012 relative to a year earlier. Growth of 3.9 percent in IIQ2012 is largely caused by the low level in IIQ2011 resulting from the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. GDP increased 0.4 percent in IIIQ2012 relative to a year earlier and 0.5 percent in IVQ2012 relative to a year earlier. Japan faces the challenge of recovery from the devastation of the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011 in an environment of declining world trade and bouts of risk aversion that cause appreciation of the Japanese yen that erode the country’s competitiveness in world markets.
Table VB-4, Japan, Real GDP ∆% Changes from Same Quarter Year Earlier, NSA ∆%
| IQ | IIQ | IIIQ | IVQ | |
| 2012 | 3.4 | 3.9 | 0.4 | 0.5 |
| 2011 | 0.0 | -1.6 | -0.5 | -0.3 |
| 2010 | 4.9 | 4.4 | 6.0 | 3.3 |
| 2009 | -9.4 | -6.6 | -5.6 | -0.5 |
| 2008 | 1.4 | -0.1 | -0.6 | -4.7 |
| 2007 | 2.8 | 2.3 | 2.0 | 1.6 |
| 2006 | 2.6 | 1.3 | 0.9 | 2.0 |
| 2005 | 0.4 | 1.4 | 1.5 | 1.9 |
| 2004 | 4.0 | 2.6 | 2.2 | 0.7 |
| 2003 | 1.7 | 1.8 | 1.5 | 1.8 |
| 2002 | -1.6 | -0.2 | 1.4 | 1.6 |
| 2001 | 1.6 | 0.9 | 0.0 | -1.0 |
| 2000 | 2.7 | 2.4 | 2.2 | 1.8 |
| 1999 | -0.3 | 0.1 | -0.1 | -0.5 |
Source: http://www.esri.cao.go.jp/en/sna/sokuhou/sokuhou_top.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 No 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 55.5 in Oct and 55.6 in Nov 2012. Improvement continued with 56.1 in Dec 2012 and 56.2 in Jan 2013.
Table CIPMNM, China, Nonmanufacturing Index of Purchasing Managers, %, Seasonally Adjusted
| Total Index | New Orders | Interm. | Subs Prices | Exp | |
| Jan 2013 | 56.2 | 53.7 | 58.2 | 50.9 | 61.4 |
| Dec 2012 | 56.1 | 54.3 | 53.8 | 50.0 | 64.6 |
| Nov | 55.6 | 53.2 | 52.5 | 48.4 | 64.6 |
| 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
http://www.stats.gov.cn/english/
Chart CIPMNM provides China’s nonmanufacturing purchasing managers’ index from Nov 2011 to Nov 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, 55.6 in Nov 2012, 56.1 in Dec 2012 and 56.2 in Jan 2013.
Chart CIPMNM, China, Nonmanufacturing Index of Purchasing Managers, Seasonally Adjusted
Source: National Bureau of Statistics of China
http://www.stats.gov.cn/english/
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 and 49.8 in Sep, climbing above 50.0 to 50.2 in Oct, 50.6 in Nov-Dec 2012 and 50.4 in Jan 2013. The index of new orders (NOI) fell from 54.5 in Apr 2012 to 49.0 in Jul and 48.7 in Aug, climbing above 50.0, 51.2 in Nov 2012-Dec 2012 and 51.6 in Jan 2013. The index of employment also fell from 51.0 in Apr to 49.1 in Aug and further down to 48.7 in Nov 2012, 49.9 in Dec 2012 and 47.8 in Jan 2013.
Table CIPMMFG, China, Manufacturing Index of Purchasing Managers, %, Seasonally Adjusted
| IPM | PI | NOI | INV | EMP | SDEL | |
| Jan 2013 | 50.4 | 51.3 | 51.6 | 50.1 | 47.8 | 50.0 |
| Dec 2012 | 50.6 | 52.0 | 51.2 | 47.3 | 49.9 | 48.8 |
| Nov | 50.6 | 52.5 | 51.2 | 47.9 | 48.7 | 49.9 |
| 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
http://www.stats.gov.cn/english/
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 manufacturing index of purchasing managers from Nov 2011 to Nov 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, 50.6 in Nov 2012 and 50.4 in Jan 2013 above the neutral zone of 50.0.
Chart CIPMMFG, China, Manufacturing Index of Purchasing Managers, Seasonally Adjusted
Source: National Bureau of Statistics of China
http://www.stats.gov.cn/english/
Cumulative growth of China’s GDP in the four quarters of 2012 relative to the same period in 2011 was 7.8 percent, as shown in Table VC-GDP. Secondary industry accounts for 45.3 percent of GDP of which industry alone for 40.1 percent in the first three quarters of 2012 and construction with the remaining 6.7 percent in the first three quarters of 2012. Tertiary industry accounts for 43.8 percent of GDP in the first three quarters of 2012 and primary industry for 9.4 percent in the first three quarters of 2012. 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, 9.1 percent in IIIQ2012 and 8.2 percent in IVQ2012.
Table VC-GDP, China, Cumulative and Quarterly Growth of GDP, Current CNY 100 Million and Inflation Adjusted ∆%
| Cumulative GDP 2012 | Value Current CNY Billion | 2012 Year-on-Year ∆% |
| GDP | 51,932.2 | 7.8 |
| Primary Industry | 5,237.7 | 4.5 |
| Farming IIIQ | 33,088.0 | 4.2 |
| Secondary Industry | 23,531.9 | 8.1 |
| Industry IIIQ | 141,641.5 | 7.9 |
| Construction IIIQ | 23,787.0 | 9.2 |
| Tertiary Industry | 23,162.6 | 8.1 |
| Transport, Storage, Post IIIQ | 18,941.0 | 6.7 |
| Wholesale, Retail Trades IIIQ | 31,651.2 | 11.8 |
| Hotel & Catering Services IIIQ | 7,015.6 | 7.6 |
| Financial Intermediation IIIQ | 22,465.2 | 9.5 |
| Real Estate IIIQ | 20,789.6 | 2.7 |
| Other IIIQ | 54,101.0 | 7.7 |
| Growth in Quarter Relative to Prior Quarter | ∆% on Prior Quarter | ∆% Annual Equivalent |
| 2012 | ||
| IVQ2012 | 2.0 | 8.2 |
| 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/
Chart VC-GDP of the National Bureau of Statistics of China provides annual value and growth rates of GDP. China’s GDP growth in 2012 is still high at 7.8 percent but at the lowest rhythm in five years.
Chart VC-GDP, China, Gross Domestic Product, Million Yuan and ∆%, 2008-2012
Source: National Bureau of Statistics of China http://www.stats.gov.cn/english/
Table VC-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 and 7.9 percent in IVQ2012. Growth of secondary industry decelerated from 14.5 percent in IQ2010 to 7.4 percent in IIIQ2012 and 7.9 percent in IVQ2012.
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 | IVQ 2012 | |
| GDP | 9.7 | 9.5 | 9.1 | 8.9 | 8.1 | 7.6 | 7.4 | 7.9 |
| Primary Industry | 3.5 | 3.2 | 3.8 | 4.5 | 3.8 | 4.3 | 4.2 | 4.5 |
| Secondary Industry | 11.1 | 11.0 | 10.8 | 10.6 | 9.1 | 8.3 | 8.1 | 8.1 |
| Tertiary Industry | 9.1 | 9.2 | 9.0 | 8.9 | 7.5 | 7.7 | 7.9 | 8.1 |
| GDP ∆% Relative to a Prior Quarter | 2.2 | 2.3 | 2.4 | 1.9 | 1.8 | 1.8 | 2.2 | 2.0 |
| IQ 2010 | IIQ 2010 | IIIQ 2010 | IVQ 2010 | |||||
| GDP | 12.1 | 11.2 | 10.7 | 12.1 | ||||
| Primary Industry | 3.8 | 3.6 | 4.0 | 3.8 | ||||
| Secondary Industry | 14.5 | 13.3 | 12.6 | 14.5 | ||||
| Tertiary Industry | 10.5 | 9.9 | 9.7 | 10.5 |
Source: National Bureau of Statistics of China http://www.stats.gov.cn/english/
Table VC-IND provides values and growth rates of important segments of economic activity in China. Value added by industry decelerated from 12.1 percent in 2010 to 7.9 percent in 2012. Construction growth also decelerated from 18.6 percent in 2009 during high stimulus to 9.3 percent in 2012. There is also deceleration of investment in fixed assets from growth of 30.0 percent in 2009 and 23.8 percent in 2011 to 20.2 percent in 2012. Growth of retail sales of consumer goods fell from 18.3 percent in 2010 to 14.3 percent in 2012.
Table VC-IND, China, Value Added by Industry, Construction, Investment in Fixed Assets and Retail Sales of Consumer Goods, Billions of Yuan and ∆%, 2008-2012
| IND VA BY | ∆% | CON BY | ∆% | IFA BY | ∆% | RSCG BY | ∆% | |
| 2012 | 1999 | 7.9 | 355 | 9.3 | 3747 | 20.3 | 2103 | 14.3 |
| 2011 | 1885 | 10.4 | 319 | 9.7 | 3115 | 23.8 | 1839 | 17.1 |
| 2010 | 1607 | 12.1 | 267 | 13.5 | 2781 | 23.8 | 1570 | 18.3 |
| 2009 | 1352 | 8.7 | 224 | 18.6 | 2246 | 30.0 | 1327 | 15.5 |
| 2008 | 1303 | 9.9 | 187 | 9.5 | 1788 | 25.9 | 1148 | 22.7 |
Notes: IND VA: Value Added by Industry; CON: Construction; IFA: Investment in Fixed Assets; RSCG: Retail Sales of Consumer Goods; BY: Billions of Yuan
Source: National Bureau of Statistics of China http://www.stats.gov.cn/english/
Table VC-F provides China FX reserves, exports and imports from 2008 to 2012. Growth of exports and imports fell from high two-digit rates to 7.9 percent for exports and 4.3 percent for imports in 2012. Growth of China’s international reserves also fell from high two-digit rates to 4.1 percent in 2012 with the stock of reserves at a high level of $3.3 trillion.
Table VC-F, China, Foreign Exchange Reserves, Exports and Imports, USD Billions and ∆%
| FX Reserves USD B | ∆% | Exports USD B | ∆% | Imports USD B | ∆% | |
| 2012 | 3311.6 | 4.1 | 2048.9 | 7.9 | 1817.8 | 4.3 |
| 2011 | 3181.1 | 11.7 | 1898.4 | 20.3 | 1743.5 | 24.9 |
| 2010 | 2847.3 | 18.7 | 1577.8 | 31.3 | 1396.2 | 38.8 |
| 2009 | 2399.2 | 23.3 | 1201.6 | 19.5 | 1005.9 | -6.8 |
| 2008 | 1946.0 | 27.3 | 1005.9 | 1132.6 |
Notes: USD B: US Dollar Billions
Source: National Bureau of Statistics of China http://www.stats.gov.cn/english/
The HSBC Flash China Manufacturing Purchasing Managers’ Index™ (PMI™) compiled by Markit (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10724) is improving. The overall Flash China Manufacturing PMI™ decreased marginally from a 24-month high at 52.3 in Jan to 50.4 in Feb while the Flash China Manufacturing Output Index decreased from 53.1 in Jan to 50.9 in Feb, both in expansion territory above 50.0. Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds that the economy of China is improving even with moderating moderating flash indices (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10724).The HSBC China Services PMI™, compiled by Markit, shows relative strength in business activity in China with the HSBC Composite Output, combining manufacturing and services, decreasing from the two-year high in Jan of 53.5 to 51.4 in Feb (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10827). Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds that combined manufacturing and services data suggest continuing growth (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10827). The HSBC Business Activity index decreased from 54.0 in Jan to 52.1 in Feb with continuing growth in services at a slower rate (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10827). Hongbin Ku, Chief Economist, China & Co-Head of Asian Economic Research at HSBC, finds strength in services with sound labor markets and continuing recovery in manufacturing (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10685). The HSBC Purchasing Managers’ Index™ (PMI™), compiled by Markit, decreased to 50.4 in Feb from 52.3 in Jan, indicating moderate activity (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10799). New export orders increased marginally with respondents of the survey finding strengthening demand in Europe, Japan and the US. Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds manufacturing is gaining traction following improving domestic demand and labor markets (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10799). Table CNY provides the country data table for China.
Table CNY, China, Economic Indicators
| Price Indexes for Industry | Jan 12-month ∆%: minus 1.6 Jan month ∆%: 0.2 |
| Consumer Price Index | Jan month ∆%: 1.0 Jan 12 months ∆%: 2.0 |
| Value Added of Industry | Dec month ∆%: 0.87 Jan-Dec 2012/Jan-Dec 2011 ∆%: 10.0 |
| GDP Growth Rate | Year IVQ2012 ∆%: 7.9 |
| Investment in Fixed Assets | Dec month ∆%: 1.24 Total Jan-Dec 2012 ∆%: 20.6 Real estate development: 16.2 |
| Retail Sales | Dec month ∆%: 1.53 Jan-Dec ∆%: 14.3 |
| Trade Balance | Feb balance $15.25 billion Cumulative Feb: $44.40 billion |
Links to blog comments in Table CNY:
2/24/13 http://cmpassocregulationblog.blogspot.com/2013/02/world-inflation-waves-united-states.html
1/20/13 http://cmpassocregulationblog.blogspot.com/2013/01/recovery-without-hiring-world-inflation.html
Table VC-1 provides China’s exports, imports, trade balance and percentage changes from Dec 2010 to Feb 2013. Exports increased 21.8 percent in Feb 2013 relative to a year earlier and imports fell 15.0 percent for trade surplus of $15.25 billion. China’s trade growth was stronger in Jan 2013 with growth of exports of 25.0 percent in 12 months and of imports of 28.8 percent for trade surplus of $29.15 billion. China’s trade growth strengthened in Dec 2012 with growth in 12 months of exports of 14.1 percent and of imports of 6.0 percent. China’s trade growth weakened again in Nov 2012 with growth of exports of 2.9 percent and no change in imports. China’s trade growth rebounded with growth of exports in 12 months of 11.6 percent in Oct 2012 and 9.9 percent in Sep 2012 after 2.7 percent in Aug 2012 and 1.0 percent in Jul 2012 while imports grew 2.4 percent in both Sep and Oct 2012, stagnating in Nov 2012. As a result, the monthly trade surplus increased from $25.2 billion in Jul 2012 to $31.9 billion in Oct 2012, declining to $19.6 billion in Nov 2012 but increasing to $31.67 billion in Dec 2012. China’s trade growth rebounded in Oct 2012 with growth of exports of 11.6 percent in 12 months and 2.4 percent for imports and trade surplus of $31.9 billion. The number that caught attention in financial markets was growth of 1.0 percent in exports in the 12 months ending in Jul 2012. Imports were also weak, growing 4.7 percent in 12 months ending in Jul 2012. Exports increased 11.3 percent in Jun 2012 relative to a year earlier while imports grew 6.3 percent. The rate of growth of exports fell to 4.9 percent in Apr 2012 relative to a year earlier and imports increased 0.3 percent but export growth was 15.3 percent in May and imports increased 12.7 percent. China reversed the large trade deficit of USD 31.48 billion in Feb 2012 with a surplus of $5.35 billion in Mar 2012, $18.42 billion in Apr 2012, $18.7 billion in May 2012, $31.7 billion in Jun 2012, $25.2 billion in Jul 2012, $26.7 billion in Aug 2012, $27.7 billion in Sep 2012, $31.9 billion in Oct 2012 and $19.6 billion in Nov 2012. Exports fell 0.5 percent in the 12 months ending in Jan while imports fell 15.3 percent for a still sizeable trade surplus of $27.3 billion. In Feb, exports increased 18.4 percent while imports jumped 39.6 percent for a sizeable deficit of $31.48 billion. There are distortions from the New Year holidays.
Table VC-1, China, Exports, Imports and Trade Balance USD Billion and ∆%
| Exports | ∆% Relative | Imports USD | ∆% Relative | Balance | |
| Feb 2013 | 139.37 | 21.8 | 124.12 | -15.0 | 15.25 |
| Jan | 187.37 | 25.0 | 158.22 | 28.8 | 29.15 |
| Dec 2012 | 199.23 | 14.1 | 167.61 | 6.0 | 31.62 |
| Nov | 179.38 | 2.9 | 159.75 | 0.0 | 19.63 |
| Oct | 175.57 | 11.6 | 143.58 | 2.4 | 31.99 |
| Sep | 186.35 | 9.9 | 158.68 | 2.4 | 27.67 |
| Aug | 177.97 | 2.7 | 151.31 | -2.6 | 26.66 |
| Jul | 176.94 | 1.0 | 151.79 | 4.7 | 25.15 |
| Jun | 180.20 | 11.3 | 148.48 | 6.3 | 31.72 |
| May | 181.14 | 15.3 | 162.44 | 12.7 | 18.70 |
| Apr | 163.25 | 4.9 | 144.83 | 0.3 | 18.42 |
| Mar | 165.66 | 8.9 | 160.31 | 5.3 | 5.35 |
| Feb | 114.47 | 18.4 | 145.95 | 39.6 | -31.48 |
| Jan | 149.94 | -0.5 | 122.66 | -15.3 | 27.28 |
| Dec 2011 | 174.72 | 13.4 | 158.20 | 11.8 | 16.52 |
| Nov | 174.46 | 13.8 | 159.94 | 22.1 | 14.53 |
| Oct | 157.49 | 15.9 | 140.46 | 28.7 | 17.03 |
| Sep | 169.67 | 17.1 | 155.16 | 20.9 | 14.51 |
| Aug | 173.32 | 24.5 | 155.56 | 30.2 | 17.76 |
| Jul | 175.13 | 20.4 | 143.64 | 22.9 | 31.48 |
| Jun | 161.98 | 17.9 | 139.71 | 19.3 | 22.27 |
| May | 157.16 | 19.4 | 144.11 | 28.4 | 13.05 |
| Apr | 155.69 | 29.9 | 144.26 | 21.8 | 11.42 |
| Mar | 152.20 | 35.8 | 152.06 | 27.3 | 0.14 |
| Feb | 96.74 | 2.4 | 104.04 | 19.4 | -7.31 |
| Jan | 150.73 | 37.7 | 144.27 | 51.0 | 6.46 |
| Dec 2010 | 154.15 | 17.9 | 141.07 | 25.6 | 13.08 |
Source: http://english.mofcom.gov.cn/article/statistic/
Table VC-2 provides cumulative exports, imports and the trade balance of China together with percentage growth of exports and imports. Cumulative exports in Jan-Feb 2013 grew 23.6 percent relative to a year earlier and imports 5.1 percent for trade surplus of $44.40 billion. There is strong beginning of 2013 with trade surplus of $29.15 in Jan 2013 and growth of exports of 17.3 percent and imports of 19.6 percent. The trade balance of $231.1 billion in 2012 is stronger than the trade balance of $155.14 billion in 2011. The trade balance in 2011 of $155.14 billion is lower than those from 2008 to 2010. China’s trade balance reached $231.1 billion in Jan-Dec 2012 with cumulative growth of exports of 7.9 percent and 4.3 percent of imports, which is much lower than 20.3 percent for exports and 24.9 percent for imports in 2011 and 31.3 percent for exports and 38.7 percent for imports in 2010. There is a rare cumulative deficit of $4.2 billion in Feb 2012 reversed to a small surplus in Mar 2012 and a higher surplus of $19.3 billion in Apr 2012, increasing to $37.9 billion in May, $68.9 billion in Jun 2012, $94.1 billion in Jul 2012, $120.8 billion in Aug 2012, $148.3 billion in Sep 2012, $180.24 billion in Oct 2012, $199.54 billion in Nov 2012 and $231.1 billion in Dec 2012. More observations are required to detect trends of Chinese trade but available data suggest deceleration that would be expected from the large share of trade with Europe.
Table VC-2, China, Year to Date Exports, Imports and Trade Balance USD Billion and ∆%
| Exports | ∆% Relative | Imports USD | ∆% Relative | Balance | |
| Feb 2013 | 326.74 | 23.6 | 282.34 | 5.1 | 44.40 |
| Jan | 187.37 | 25.0 | 158.22 | 28.8 | 29.15 |
| Dec 2012 | 2049.93 | 7.9 | 1817.83 | 4.3 | 231.11 |
| Nov | 1849.91 | 7.3 | 1650.37 | 4.1 | 199.54 |
| Oct | 1670.90 | 7.8 | 1490.67 | 4.6 | 180.24 |
| Sep | 1495.39 | 7.4 | 1347.08 | 4.8 | 148.31 |
| Aug | 1309.11 | 7.1 | 1188.51 | 5.1 | 120.61 |
| Jul | 1131.24 | 7.8 | 1037.14 | 6.4 | 94.10 |
| Jun | 954.38 | 9.2 | 885.46 | 6.7 | 68.91 |
| May | 774.40 | 8.7 | 736.49 | 6.7 | 37.92 |
| Apr | 593.24 | 6.9 | 573.94 | 5.1 | 19.3 |
| Mar | 430.02 | 7.6 | 429.36 | 6.6 | 0.66 |
| Feb | 264.40 | 6.9 | 268.64 | 7.7 | -4.24 |
| Jan | 149.94 | -0.5 | 122.66 | -15.3 | 27.28 |
| Dec 2011 | 1,898.60 | 20.3 | 1,743.46 | 24.9 | 155.14 |
| Nov | 1,724.01 | 21.1 | 1585.61 | 26.4 | 138.40 |
| Oct | 1,549.71 | 22.0 | 1,425.68 | 26.9 | 124.03 |
| Sep | 1,392.27 | 22.7 | 1,285.17 | 26.7 | 107.10 |
| Aug | 1,222.63 | 23.6 | 1,129.90 | 27.5 | 92.73 |
| Jul | 1,049.38 | 23.4 | 973.17 | 26.9 | 76.21 |
| Jun | 874.3 | 24.0 | 829.37 | 27.6 | 44.93 |
| May | 712.37 | 25.5 | 689.41 | 29.4 | 22.96 |
| Apr | 555.30 | 27.4 | 545.02 | 29.6 | 10.28 |
| Mar | 399.64 | 26.5 | 400.66 | 32.6 | -1.02 |
| Feb | 247.47 | 21.3 | 248.36 | 36.0 | -0.89 |
| Jan | 150.7 | 37.7 | 144.27 | 51.0 | 6.46 |
| Dec 2010 | 1577.93 | 31.3 | 1394.83 | 38.7 | 183.10 |
Source: http://english.mofcom.gov.cn/article/statistic/
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 0.6 percent in 2012 and minus 0.3 percent in 2013 but 1.4 percent in 2014.
Table VD-EUR, Euro Area, Yearly Percentage Change of Harmonized Index of Consumer Prices, Unemployment and GDP ∆%
| Year | HICP ∆% | Unemployment | GDP ∆% |
| 1999 | 1.2 | 9.6 | 2.9 |
| 2000 | 2.2 | 8.7 | 3.8 |
| 2001 | 2.4 | 8.1 | 2.0 |
| 2002 | 2.3 | 8.5 | 0.9 |
| 2003 | 2.1 | 9.0 | 0.7 |
| 2004 | 2.2 | 9.3 | 2.2 |
| 2005 | 2.2 | 9.2 | 1.7 |
| 2006 | 2.2 | 8.5 | 3.2 |
| 2007 | 2.1 | 7.6 | 3.0 |
| 2008 | 3.3 | 7.6 | 0.4 |
| 2009 | 0.3 | 9.6 | -4.4 |
| 2010 | 1.6 | 10.1 | 2.0 |
| 2011 | 2.7 | 10.1 | 1.4 |
| 2012* | 2.5 | 11.4 | -0.6 |
| 2013* | -0.3 | ||
| 2014* | 1.4 |
*EUROSTAT forecast Source: EUROSTAT http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/
The GDP of the euro area in 2011 in current US dollars in the dataset of the World Economic Outlook (WEO) of the International Monetary Fund (IMF) is $13,114.4 billion (http://www.imf.org/external/pubs/ft/weo/2012/02/weodata/index.aspx). The sum of the GDP of France is $2778.1 billion with the GDP of Germany of $3607.4 billion, Italy of $2198.7 billion and Spain $1479.6 billion is $10,063.8 billion or 76.7 percent of total euro area GDP. The four largest economies account for slightly more than three quarters of economic activity of the euro area. Table VD-EUR1 is constructed with the dataset of EUROSTAT, providing growth rates of the euro area as a whole and of the largest four economies of Germany, France, Italy and Spain annually from 1996 to 2011 with the estimate of 2012 and forecasts for 2013 and 2014 by EUROSTAT. The impact of the global recession on the overall euro area economy and on the four largest economies was quite strong. There was sharp contraction in 2009 and growth rates have not rebounded to earlier growth with exception of Germany in 2010 and 2011.
Table VD-EUR1, Euro Area, Real GDP Growth Rate, ∆%
| Euro Area | Germany | France | Italy | Spain | |
| 2014* | 1.4 | 2.0 | 1.2 | 0.8 | 0.8 |
| 2013* | -0.3 | 0.5 | 0.1 | -1.0 | -1.4 |
| 2012 | -0.6 | 0.7 | 0.0* | -2.2* | -1.4* |
| 2011 | 1.4 | 3.0 | 1.7 | 0.4 | 0.4 |
| 2010 | 2.0 | 4.2 | 1.7 | 1.8 | -0.3 |
| 2009 | -4.4 | -5.1 | -3.1 | -5.5 | -3.7 |
| 2008 | 0.4 | 1.1 | -0.1 | -1.2 | 0.9 |
| 2007 | 3.0 | 3.3 | 2.3 | 1.7 | 3.5 |
| 2006 | 3.2 | 3.7 | 2.5 | 2.2 | 4.1 |
| 2005 | 1.7 | 0.7 | 1.8 | 0.9 | 3.6 |
| 2004 | 2.2 | 1.2 | 2.5 | 1.7 | 3.3 |
| 2003 | 0.7 | -0.4 | 0.9 | 0.0 | 3.1 |
| 2002 | 0.9 | 0.0 | 0.9 | 0.5 | 2.7 |
| 2001 | 2.0 | 1.5 | 1.8 | 1.9 | 3.7 |
| 2000 | 3.8 | 3.1 | 3.7 | 3.7 | 5.0 |
| 1999 | 2.9 | 1.9 | 3.3 | 1.5 | 4.7 |
| 1998 | 2.8 | 1.9 | 3.4 | 1.4 | 4.5 |
| 1997 | 2.6 | 1.7 | 2.2 | 1.9 | 3.9 |
| 1996 | 1.5 | 0.8 | 1.1 | 1.1 | 2.5 |
Source: EUROSTAT http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/
The Flash Eurozone PMI Composite Output Index of the Markit Flash Eurozone PMI®, combining activity in manufacturing and services, decreased from 48.6 in Jan to 47.3 in Feb, for thirteen consecutive declines and sixteen drops in seventeen months but with Oct registering the lowest reading in two months (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10715). Chris Williamson, Chief Economist at Markit, finds that the Markit Flash Eurozone PMI index is consistent with GDP declining in a fourth consecutive quarter but at a rate of 0.2 to 0.3 percent, which would be lower than the decline of 0.6 percent in IVQ2012 in EUROSTAT estimates (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10715). The Markit Eurozone PMI® Composite Output Index, combining services and manufacturing activity with close association with GDP, decreased from 48.6 in Jan to 47.9 in Feb, which is the thirteenth consecutive contraction (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10814). Chris Williamson, Chief Economist at Markit, finds that the data are consistent with milder contraction likely of 0.2 percent decline in GDP in IQ2013 in contrast with fall of 0.6 percent in IVQ2012 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10814). The Markit Eurozone Services Business Activity Index decreased from 48.6 in Jan to 47.9 in Feb (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10814). The Markit Eurozone Manufacturing PMI® was unchanged at 47.9 in Feb from 47.9 in Jan, which indicates contraction in nineteen consecutive months of deterioration of manufacturing business in the euro zone but with the index at a high in eleven months (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10783). Contraction of total new orders was the slowest since Jun 2011 because improving new export orders. Chris Williamson, Chief Economist at Markit, finds moderating decline of manufacturing in 2013 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10783). Table EUR provides the regional data table for the euro area.
Table EUR, Euro Area Economic Indicators
| GDP | IVQ2012 ∆% -0.6; IVQ2012/IVQ2011 ∆% -0.9 Blog 3/10/13 |
| Unemployment | Jan 2013: 11.9% unemployment rate Jan 2013: 18.998 million unemployed Blog 3/3/13 |
| HICP | Jan month ∆%: -1.0 12 months Jan ∆%: 2.0 |
| Producer Prices | Euro Zone industrial producer prices Jan ∆%: -0.6 |
| Industrial Production | Dec month ∆%: 0.7; Dec 12 months ∆%: -2.4 |
| Retail Sales | Jan month ∆%: 1.2 |
| Confidence and Economic Sentiment Indicator | Sentiment 87.8 Jan 2013 Consumer minus 23.9 Jan 2013 Blog 2/3/13 |
| Trade | Jan-Dec 2012/Jan-Dec 2011 Exports ∆%: 7.4 Dec 2012 12-month Exports ∆% -3.1 Imports ∆% -5.9 |
Links to blog comments in Table EUR: 3/3/13 http://cmpassocregulationblog.blogspot.com/2013/03/mediocre-gdp-growth-at-16-to-20-percent.html
2/17/13 http://cmpassocregulationblog.blogspot.com/2013/02/recovery-without-hiring-united-states.html
2/3/13 http://cmpassocregulationblog.blogspot.com/2013/02/thirty-one-million-unemployed-or.html
The GDP of the euro area in 2011 in current US dollars in the dataset of the World Economic Outlook (WEO) of the International Monetary Fund (IMF) is $13,114.4 billion (http://www.imf.org/external/pubs/ft/weo/2012/02/weodata/index.aspx). The sum of the GDP of France is $2778.1 billion with the GDP of Germany of $3607.4 billion, Italy of $2198.7 billion and Spain $1479.6 billion is $10,063.8 billion or 76.7 percent of total euro area GDP. The four largest economies account for slightly more than three quarters of economic activity of the euro area. Table VD-1 is constructed with the dataset of EUROSTAT, providing growth rates of the euro area as a whole and of the largest four economies of Germany, France, Italy and Spain annually from 1996 to 2011 with the estimate of 2012 and forecasts for 2013 and 2014 by EUROSTAT. The impact of the global recession on the overall euro area economy and on the four largest economies was quite strong. There was sharp contraction in 2009 and growth rates have not rebounded to earlier growth with exception of Germany in 2010 and 2011.
Table VD-1, Euro Area, Real GDP Growth Rate, ∆%
| Euro Area | Germany | France | Italy | Spain | |
| 2014* | 1.4 | 2.0 | 1.2 | 0.8 | 0.8 |
| 2013* | -0.3 | 0.5 | 0.1 | -1.0 | -1.4 |
| 2012 | -0.6 | 0.7 | 0.0* | -2.2* | -1.4* |
| 2011 | 1.4 | 3.0 | 1.7 | 0.4 | 0.4 |
| 2010 | 2.0 | 4.2 | 1.7 | 1.8 | -0.3 |
| 2009 | -4.4 | -5.1 | -3.1 | -5.5 | -3.7 |
| 2008 | 0.4 | 1.1 | -0.1 | -1.2 | 0.9 |
| 2007 | 3.0 | 3.3 | 2.3 | 1.7 | 3.5 |
| 2006 | 3.2 | 3.7 | 2.5 | 2.2 | 4.1 |
| 2005 | 1.7 | 0.7 | 1.8 | 0.9 | 3.6 |
| 2004 | 2.2 | 1.2 | 2.5 | 1.7 | 3.3 |
| 2003 | 0.7 | -0.4 | 0.9 | 0.0 | 3.1 |
| 2002 | 0.9 | 0.0 | 0.9 | 0.5 | 2.7 |
| 2001 | 2.0 | 1.5 | 1.8 | 1.9 | 3.7 |
| 2000 | 3.8 | 3.1 | 3.7 | 3.7 | 5.0 |
| 1999 | 2.9 | 1.9 | 3.3 | 1.5 | 4.7 |
| 1998 | 2.8 | 1.9 | 3.4 | 1.4 | 4.5 |
| 1997 | 2.6 | 1.7 | 2.2 | 1.9 | 3.9 |
| 1996 | 1.5 | 0.8 | 1.1 | 1.1 | 2.5 |
Source: EUROSTAT http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/
Table VD-2 provides percentage changes of euro area real GDP in a quarter relative to the prior quarter. Real GDP fell 0.3 percent in IVQ2011, fell 0.1 IQ2012 and fell in the final three quarters of 2012: 0.2 percent in IIQ2012, 0.1 percent in IIIQ2012 and 0.6 percent in IVQ2012. The global recession manifested in the euro area in five consecutive quarterly declines from IIQ2008 to IIQ2009. The strongest impact was contraction of 2.8 percent in IQ2009. Recovery began in IIIQ2009 with cumulative growth of 3.8 percent to IQ2011 or at the annual equivalent rate of 2.1 percent. Growth was much more vigorous from IVQ2003 to IQ2008.
Table VD-2, Euro Area, Real GDP, Percentage Change from Prior Quarter, Calendar and Seasonally Adjusted ∆%
| IQ | IIQ | IIIQ | IVQ | |
| 2012 | -0.1 | -0.2 | -0.1 | -0.6 |
| 2011 | 0.6 | 0.2 | 0.1 | -0.3 |
| 2010 | 0.5 | 1.0 | 0.4 | 0.4 |
| 2009 | -2.8 | -0.3 | 0.4 | 0.4 |
| 2008 | 0.5 | -0.4 | -0.6 | -1.7 |
| 2007 | 0.8 | 0.4 | 0.6 | 0.4 |
| 2006 | 0.9 | 1.1 | 0.7 | 1.0 |
| 2005 | 0.2 | 0.7 | 0.6 | 0.6 |
| 2004 | 0.5 | 0.5 | 0.4 | 0.3 |
| 2003 | 0.0 | 0.1 | 0.5 | 0.7 |
| 2002 | 0.2 | 0.6 | 0.3 | 0.0 |
| 2001 | 0.9 | 0.1 | 0.1 | 0.1 |
| 2000 | 1.3 | 0.8 | 0.4 | 0.7 |
Source: EUROSTAT http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/
Table VD-3 provides percentage change in real GDP in the euro area in a quarter relative to the same quarter a year earlier. Growth rates were quite strong from 2004 to 2007. There were five consecutive quarters of sharp declines in GDP in a quarter relative to the same quarter a year earlier from IVQ2008 to IVQ2009 with sharp contractions of 5.6 percent in IQ2009, 5.8 percent in IIQ2009 and 4.2 percent in IIIQ2009. Growth rates decline in magnitude with 1.3 percent in IIIQ2011, 0.2 percent in IVQ211 and 0.3 percent in IQ2012 followed by contractions of 0.8 percent in IIQ2012, 0.8 percent in IIIQ2012 and 0.9 percent in IVQ2012.
Table VD-3, Euro Area, Real GDP Percentage Change in a Quarter Relative to Same Quarter a Year Earlier, Not Seasonally Adjusted ∆%
| IQ | IIQ | IIIQ | IV | |
| 2012 | 0.3 | -0.8 | -0.8 | -0.9 |
| 2011 | 2.6 | 1.7 | 1.3 | 0.2 |
| 2010 | 1.2 | 2.5 | 2.2 | 2.1 |
| 2009 | -5.6 | -5.8 | -4.2 | -2.0 |
| 2008 | 2.3 | 1.6 | 0.4 | -2.1 |
| 2007 | 3.5 | 3.0 | 3.0 | 2.3 |
| 2006 | 3.5 | 2.6 | 3.7 | 3.5 |
| 2005 | 1.0 | 2.1 | 1.8 | 1.8 |
| 2004 | 2.0 | 2.5 | 2.1 | 2.0 |
| 2003 | 1.0 | 0.1 | 0.5 | 1.2 |
| 2002 | 0.0 | 1.1 | 1.4 | 0.9 |
| 2001 | 2.7 | 2.0 | 1.7 | 1.4 |
| 2000 | 4.9 | 4.3 | 3.3 | 2.7 |
Source: EUROSTAT http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/
Table VD-4 provides GDP growth in IVQ2012 and relative to the same quarter a year earlier for the euro zone, European Union, Japan and the US. The GDP of the euro zone fell 0.6 percent in IVQ2012 and declined 0.9 percent relative to a year earlier while the GDP of the European Union decreased 0.5 percent in IVQ2012 and decreased 0.6 percent relative to a year earlier. Growth in IVQ2012 was weak worldwide with somewhat stronger performance by the US but still insufficient to reduce unemployment and underemployment (Section I and earlier http://cmpassocregulationblog.blogspot.com/2013/02/thirty-one-million-unemployed-or.html) and motivate hiring (http://cmpassocregulationblog.blogspot.com/2013/02/recovery-without-hiring-united-states.html).
Table VD-4, Euro Zone, European Union, Japan and USA, Real GDP Growth
| ∆% IVQ2012/ IIIQ2012 | ∆% IVQ2012/ IVQ2011 | |
| Euro Zone | -0.6 | -0.9 |
| European Union | -0.5 | -0.6 |
| Germany | -0.6 | 0.4 |
| France | -0.3 | -0.3 |
| Netherlands | -0.2 | -0.9 |
| Finland | -0.5 | -1.4 |
| Belgium | -0.1 | -0.4 |
| Portugal | -1.8 | -3.8 |
| Ireland* | 0.2 | 0.8 |
| Italy | -0.9 | -2.7 |
| Greece | NA | -6.0 |
| Spain | -0.8 | -1.9 |
| United Kingdom | -0.3 | 0.3 |
| Japan | 0.0 | 0.2 |
| USA | 0.0 | 1.6 |
*Calendar adjusted IIIQ2012
Source: EUROSTAT http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/
Chart VD-1 of EUROSTAT provides projected growth in 2014 relative to 2013 for a large variety of countries. There have been diverging experiences in growth in the world economy.
Chart VD-1, Euro Zone, European Union, Real GDP Growth 2014 EUROSTAT Forecast ∆% on Previous Year
Source: EUROSTAT http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home
Advanced economies are experiencing weak demand. Table VD-5 provides month and 12-month percentage changes of the volume of retail sales in the euro zone from Jan 2011 to Jan 2013. Retail sales increased 1.2 percent in Jan 2013 and fell 1.3 percent in 12 months. The 12-month rates of growth have become negative since Mar 2011 with exception of 1.1 percent in Apr 2011, stability in Aug 2011 and 0.1 percent in Mar 2012. The lower part of Table VD-5 provides annual percentage changes of inflation-adjusted retail sales in the euro zone since 2001. Retail sales fell 2.4 percent in 2010 after falling 0.3 percent in 2008 and fell again by 1.3 percent in 2011 and 3.0 percent in 2012.
Table VD-5, Euro Zone, Volume of Retail Sales, Deflated ∆%
| Month ∆% | 12-Month CA ∆% | |
| Jan 2013 | 1.2 | -1.3 |
| Dec 2012 | -0.8 | -3.0 |
| Nov | -0.2 | -2.0 |
| Oct | -0.6 | -3.2 |
| Sep | -1.6 | -2.0 |
| Aug | 0.6 | -0.7 |
| Jul | -0.1 | -1.5 |
| Jun | -0.1 | -0.8 |
| May | 1.2 | -0.5 |
| Apr | -1.6 | -3.4 |
| Mar | 0.3 | 0.0 |
| Feb | -0.1 | -2.2 |
| Jan | 0.0 | -1.1 |
| Dec 2011 | -0.1 | -1.3 |
| Nov | -0.7 | -1.1 |
| Oct | 0.3 | -0.2 |
| Sep | -0.5 | -0.8 |
| Aug | 0.0 | 0.2 |
| Jul | 0.3 | -0.1 |
| Jun | 0.7 | -0.4 |
| May | -1.6 | -1.4 |
| Apr | 1.3 | 1.3 |
| Mar | -1.3 | -1.0 |
| Feb | 0.2 | 1.6 |
| Jan | 0.6 | 1.2 |
| Dec ∆% | ||
| 2012 | -3.0 | |
| 2011 | -1.3 | |
| 2010 | -2.4 | |
| 2009 | -0.3 | |
| 2008 | -1.3 | |
| 2007 | -0.6 | |
| 2006 | 2.8 | |
| 2005 | 0.9 | |
| 2004 | 2.5 | |
| 2003 | 0.9 | |
| 2002 | -0.3 | |
| 2001 | 1.9 |
Source: EUROSTAT
http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/
Growth rates of retail sales of the euro zone by major segments are in Table VD-6. Total sales increased 1.2 percent in Jan 2013 and declined 1.3 percent in the 12 months ending in Jan 2013. All 12-month and monthly percentage changes are negative.
Table VD-6, Euro Zone, Volume of Retail Sales by Products, ∆%
| Dec 2012 | Month ∆% | 12-Month ∆% |
| Total | 1.2 | -1.3 |
| Food, Drinks, Tobacco | 0.8 | -1.5 |
| Nonfood Products ex Automotive Fuel | 2.0 | -3.1 |
| Automotive Fuel in Specialized Stores | -0.1 | -1.0 |
Source: EUROSTAT http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/
Month and 12-month percentage rates of change of retail sales by member countries of the euro zone are shown in Table VD-7 for Jan 2013. Retail sales are weak throughout the euro zone. The 12-month percentage changes are negative for some members in Table VD-7 with the exception of 2.4 percent for Germany, 3.2 percent for France, 8.4 percent for Belgium and 1.3 percent for Ireland. The 12-month percentage change for the UK, which is not a member of the euro zone, was 0.7 percent. The European Union’s 12-month percentage change was minus 0.9 percent.
Table VD-7, Euro Zone, Volume of Retail Sales by Member Countries, ∆%
| Jan 2013 | Month ∆% | 12-Month ∆% |
| Euro Zone | 1.2 | -1.3 |
| Germany | 3.1 | 2.4 |
| France | 0.9 | 3.2 |
| Netherlands | NA | NA |
| Finland | -1.2 | -2.7 |
| Belgium | 3.1 | 8.4 |
| Portugal | 4.2 | -3.9 |
| Ireland | -1.0 | 1.3 |
| Italy | NA | NA |
| Greece | NA | NA |
| Spain | NA | NA |
| UK | -0.3 | 0.7 |
| European Union | 0.9 | -0.9 |
Source: EUROSTAT http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/
VE Germany. Table VE-DE provides yearly growth rates of the German economy from 1992 to 2012, 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, 3.0 percent in 2011 and 0.7 percent in 2012. Growth slowed in 2011 from 1.2 percent in IQ2011, 0.5 percent in IIQ2011 and 0.4 percent in IIIQ2011 to decline of 0.1 percent in IVQ2011 and growth of 0.5 percent in IQ2012, 0.3 percent in IIQ2012, 0.2 percent in IIIQ2012 and decline of 0.6 percent in IVQ2012.
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 Year ∆%
| Price Adjusted Chain-Linked | Price- and Calendar-Adjusted Chain Linked | |
| 2012 | 0.7 | 0.9 |
| 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 (Destatis) https://www.destatis.de/EN/PressServices/Press/pr/2013/02/PE13_066_811.html;jsessionid=59DE7E440F9F7393B12C16FDA63BEB66.cae1
The Flash Germany Composite Output Index of the Markit Flash Germany PMI®, combining manufacturing and services, decreased from 54.4 in Jan to 52.7 in Feb, which is above the 50.0 neutral zone and near the long-term average of the survey of 53.0 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10713). New export orders for manufacturing increased at the fastest rate in 22 months, with respondents finding enhanced demand in Asia. Tim Moore, Senior Economist at Markit and author of the report, finds strength in Germany’s private sector with potential to provide impulse to GDP growth in IQ2013 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10713). 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 54.4 in Jan to 53.3 in Feb (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10829). Tim Moore, Senior Economist at Markit and author of the report, finds that the economy of Germany has moved away from contraction to expansion with growth in both manufacturing and services at the fastest rate since the strong first part of 2011 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10829). The Germany Services Business Activity Index decreased from 55.7 in Jan to 54.7 in Feb (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10829). The Markit/BME Germany Purchasing Managers’ Index® (PMI®), showing close association with Germany’s manufacturing conditions, increased from 49.8 in Jan to 50.3 in Feb, breaking the chain of eleven consecutive month in contraction territory below 50.0 but below the long-term average of 51.9 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10780). New export orders increased briskly at the fastest rate in 12 months with broad geographical reach in Asia and outside Europe. Tim Moore, Senior Economist at Markit and author of the report, finds stronger demand from emerging Asian markets in Germany’s return to manufacturing growth propelled by the fastest growth rate of new export orders in almost two years (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10780).Table DE provides the country data table for Germany.
Table DE, Germany, Economic Indicators
| GDP | IVQ2012 -0.6 ∆%; IV/Q2012/IVQ2011 ∆% 0.1 2012/2011: 0.7% GDP ∆% 1992-2012 Blog 8/26/12 5/27/12 11/25/12 2/17/13 2/24/13 |
| Consumer Price Index | Jan month NSA ∆%: -0.5 |
| Producer Price Index | Jan month ∆%: 0.2 CSA, 0.8 NSA |
| Industrial Production | Mfg Jan month CSA ∆%: -0.2 |
| Machine Orders | MFG Jan month ∆%: -1.9 |
| Retail Sales | Jan Month ∆% 3.1 12-Month ∆% 2.4 Blog 3/3/13 |
| Employment Report | Unemployment Rate SA Jan 5.3% |
| Trade Balance | Exports Dec 12-month NSA ∆%: -6.9 Blog 2/10/13 |
Links to blog comments in Table DE: 3/3/13 http://cmpassocregulationblog.blogspot.com/2013/03/mediocre-gdp-growth-at-16-to-20-percent.html
2/24/13 http://cmpassocregulationblog.blogspot.com/2013/02/world-inflation-waves-united-states.html
2/17/13 http://cmpassocregulationblog.blogspot.com/2013/02/recovery-without-hiring-united-states.html
2/10/13 http://cmpassocregulationblog.blogspot.com/2013/02/united-states-unsustainable-fiscal.html
11/25/12 http://cmpassocregulationblog.blogspot.com/2012/11/contraction-of-united-states-real.html
8/26/12 http://cmpassocregulationblog.blogspot.com/2012/08/expanding-bank-cash-and-deposits-with_26.html
The production industries index of Germany in Table VE-1 shows increase of 0.6 percent in Dec 2012 and decrease of 8.9 percent in the 12 months ending in Dec 2012. There was no change in Jan 2013 in the month or in the past 12 months. Germany’s production industries suffered decline of 7.3 percent in Dec 2008 relative to Dec 2007 and decline of 2.3 percent in 2009. Recovery was vigorous with 17.1 percent in the 12 months ending in Dec 2010. The first quarter of 2011 was quite strong when the German economy outperformed the other advanced economies. The performance of Germany’s production industries from 2002 to 2006 was vigorous with average rate of 4.5 percent. Data for the production industries index of Germany fluctuate sharply from month to month and also in 12-month rates.
Table VE-1, Germany, Production Industries, Month and 12-Month ∆%
| 12-Month ∆% NSA | Month ∆% Calendar SA | |
| Jan 2013 | 0.0 | 0.0 |
| Dec 2012 | -8.9 | 0.6 |
| Nov | -2.9 | -0.5 |
| Oct | 4.3 | -1.5 |
| Sep | -6.7 | -0.9 |
| Aug | -1.0 | -0.4 |
| Jul | 2.3 | 0.6 |
| Jun | 4.5 | 0.1 |
| May | -6.6 | 0.9 |
| Apr | -0.7 | -1.9 |
| Mar | -0.3 | 2.2 |
| Feb | 2.2 | -0.5 |
| Jan | 4.9 | 0.7 |
| Dec 2011 | 1.5 | -1.8 |
| Nov | 3.6 | 0.0 |
| Oct | -0.4 | 1.0 |
| Sep | 4.0 | -1.9 |
| Aug | 9.8 | -0.6 |
| Jul | 5.4 | 2.8 |
| Jun | -1.1 | -1.1 |
| May | 17.5 | 0.5 |
| Apr | 4.7 | 0.3 |
| Mar | 9.2 | 0.7 |
| Feb | 15.1 | 1.1 |
| Jan | 14.4 | 0.9 |
| Dec 2010 | 17.1 | |
| Dec 2009 | -2.3 | |
| Dec 2008 | -7.3 | |
| Dec 2007 | -0.1 | |
| Dec 2006 | 2.5 | |
| Dec 2005 | 4.9 | |
| Dec 2004 | 5.3 | |
| Dec 2003 | 5.1 | |
| Dec 2002 | 2.0 | |
| Average ∆% per Year | ||
| Dec 1994 to Dec 2011 | 1.3 | |
| Dec 1994 to Dec 2000 | 0.8 | |
| Dec 1994 to Dec 2006 | 1.3 | |
| Dec 2002 to Dec 2006 | 4.5 | |
| Dec 2007 to Dec 2011 | 1.9 |
Source: Source: Statistisches Bundesamt Deutschland (Destatis) https://www.destatis.de/EN/FactsFigures/Indicators/ShortTermIndicators/ShortTermIndicators.html
Table VE-2 provides monthly percentage changes of the German production industries index by components from Jun 2012 to Jan 2013. The index did not change in Jan 2013 with declines of 0.2 percent in industry, 0.2 percent in manufacturing and 2.3 percent in energy while other segments increased with particular strength in 2.3 percent in durable goods and 1.5 percent in nondurable goods. There was recovery in Dec 2012 with growth of 0.6 percent in production industries, 1.0 percent in manufacturing, 0.9 percent in capital goods, 1.9 percent in durable goods and 4.1 percent in nondurable goods but no change in intermediate goods and decline 0.4 percent of energy. There were four sharp declines in the monthly production industries index of 1.8 percent in Dec 2011, 1.9 percent in Apr 2012, 0.9 percent in Sep 2012 and 1.5 percent in Oct 2012. The declines of investment or capital goods were quite sharp with 1.4 percent in Jun 2012, 2.4 percent in Sep 2012, 3.1 percent in Oct 2012 and 1.5 percent in Jan 2013. Durable goods fell in seven of eleven months from Dec 2011 to Oct 2012 and nondurable goods also fell in multiple months.
Table VE-2, Germany, Production Industries, Industry and Components, Month ∆%
| Jan 2013 | Dec | Nov | Oct | Sep | Aug | Jul | Jun | |
| Production | 0.0 | 0.6 | -0.5 | -1.5 | -0.9 | -0.4 | 0.6 | 0.1 |
| Industry | -0.2 | 1.0 | -0.2 | -1.7 | -1.5 | -0.3 | 0.9 | -0.6 |
| Mfg | -0.2 | 1.0 | -0.2 | -1.7 | -1.4 | -0.3 | 0.9 | -0.5 |
| Intermediate Goods | 0.6 | 0.0 | -0.9 | -0.3 | -1.4 | -0.7 | -0.3 | -0.1 |
| Capital | -1.5 | 0.9 | 1.1 | -3.1 | -2.4 | -0.2 | 2.7 | -1.4 |
| Durable Goods | 2.3 | 1.0 | -1.3 | -3.8 | -1.8 | -1.4 | 1.4 | -0.2 |
| Nondurable Goods | 1.5 | 4.1 | -2.0 | -0.4 | 1.0 | 1.2 | -1.6 | 0.8 |
| Energy | -2.3 | -0.4 | -2.1 | -2.9 | 3.2 | 0.0 | -3.6 | 5.5 |
Seasonally Calendar Adjusted
Source: Statistisches Bundesamt Deutschland (Destatis) https://www.destatis.de/EN/FactsFigures/Indicators/ShortTermIndicators/ShortTermIndicators.html
Table VE-3 provides 12-month unadjusted percentage changes of industry and components in Germany. Because of high monthly growth in some segments in Jan 2013, 12-month rates of decline moderated with growth 7.8 percent in nondurable goods and 0.1 percent in manufacturing with industry growing 0.0 percent. Percentage declines in 12 months are quite sharp in Dec 2012; with exception of growth of 1.8 percent in energy all percentage changes are negative around two-digits. Although there are sharp fluctuations in the data there is suggestion of deceleration that would be expected from much higher earlier rates. The deceleration is quite evident in single-digit percentage changes from Sep 2011 to Dec 2012 relative to high double-digit percentage changes in Jan-Mar 2011. There are multiple negative 12-month percentage changes across many segments. Growth rates in the recovery from the global recession from IVQ2007 to IIQ2009 were initially very vigorous in comparison with the growth rates before the contraction that are shown in the bottom part of Table VE-3.
Table VE-3, Germany, Industry and Components, 12-Month ∆% Unadjusted
| IND | MFG | INTG | CG | DG | NDG | EN | |
| 2013 | |||||||
| Jan | 0.0 | 0.1 | -1.1 | -1.4 | -1.2 | 7.8 | -1.1 |
| 2012 | |||||||
| Dec | -9.6 | -9.5 | -12.0 | -8.4 | -12.6 | -7.4 | 1.8 |
| Nov | -3.2 | -3.2 | -4.1 | -2.6 | -7.9 | -1.3 | 0.6 |
| Oct | 3.8 | 3.7 | 2.7 | 4.1 | 0.5 | 6.4 | 4.0 |
| Sep | -7.6 | -7.5 | -9.1 | -7.0 | -11.0 | -5.0 | 5.3 |
| Aug | -1.1 | -1.1 | -3.3 | 0.4 | 0.6 | 0.2 | 1.3 |
| Jul | 2.0 | 2.0 | 0.3 | 4.8 | -2.3 | -0.9 | 2.4 |
| Jun | 4.0 | 3.9 | 2.1 | 6.4 | 7.3 | 0.9 | 9.4 |
| May | -6.9 | -6.8 | -7.2 | -6.0 | -10.6 | -8.1 | 1.6 |
| Apr | -1.0 | -0.9 | -1.8 | 1.7 | -5.4 | -5.8 | 0.7 |
| Mar | -0.5 | -0.4 | -3.0 | 2.7 | -6.0 | -2.6 | -1.8 |
| Feb | 3.4 | 3.4 | 1.1 | 7.5 | -0.1 | -2.1 | 1.7 |
| Jan | 5.8 | 5.7 | 3.2 | 10.4 | 5.0 | 0.5 | -4.8 |
| 2011 | |||||||
| Dec | 0.9 | 0.8 | 1.0 | 0.9 | 0.1 | 1.0 | -9.3 |
| Nov | 4.0 | 3.9 | 2.2 | 7.5 | 2.1 | -1.4 | -5.8 |
| Oct | 0.1 | 0.2 | -1.0 | 2.7 | -2.5 | -3.8 | -6.1 |
| Sep | 5.2 | 5.2 | 4.1 | 8.8 | 3.2 | -1.6 | -6.3 |
| Aug | 11.6 | 11.5 | 8.6 | 20.0 | 4.6 | 0.7 | -3.2 |
| Jul | 7.3 | 7.3 | 4.4 | 13.1 | 6.6 | -0.7 | -5.9 |
| Jun | -0.1 | -0.2 | -0.6 | 1.9 | -10.3 | -2.5 | -4.8 |
| May | 20.8 | 20.5 | 16.9 | 27.7 | 20.5 | 12.4 | -7.4 |
| Apr | 6.8 | 6.7 | 5.3 | 10.6 | 4.4 | 1.3 | -5.7 |
| Mar | 10.5 | 10.4 | 9.7 | 14.5 | 8.1 | 1.1 | 2.5 |
| Feb | 16.5 | 16.3 | 15.0 | 22.6 | 9.7 | 5.4 | -0.6 |
| Jan | 16.3 | 16.0 | 16.1 | 22.9 | 9.7 | 2.7 | -2.7 |
| 2010 | |||||||
| Dec | 17.6 | 17.6 | 15.0 | 25.8 | 8.3 | 1.5 | 2.5 |
| Nov | 14.0 | 14.0 | 13.0 | 19.3 | 7.7 | 3.7 | 3.5 |
| Oct | 9.9 | 9.9 | 9.8 | 14.1 | 6.3 | 0.6 | 2.4 |
| Sep | 9.8 | 9.5 | 12.1 | 10.1 | 8.3 | 2.8 | 2.1 |
| Aug | 17.0 | 17.0 | 19.3 | 19.9 | 18.3 | 7.1 | 1.3 |
| Jul | 9.0 | 8.7 | 13.1 | 8.7 | 7.4 | 1.0 | 1.9 |
| Jun | 16.3 | 16.2 | 20.7 | 16.1 | 19.6 | 4.9 | -2.8 |
| May | 13.0 | 13.3 | 19.9 | 12.0 | 11.2 | 1.2 | 11.1 |
| Apr | 14.8 | 14.9 | 21.6 | 15.5 | 8.8 | -0.1 | 9.4 |
| Mar | 14.3 | 14.5 | 20.4 | 12.1 | 12.0 | 5.9 | 4.2 |
| Feb | 6.8 | 7.4 | 10.6 | 6.5 | 8.0 | -0.9 | 3.7 |
| Jan | 0.4 | 0.9 | 6.4 | -3.9 | 0.7 | -2.8 | 0.8 |
| Dec 2010 | 17.5 | 17.6 | 15.0 | 25.8 | 8.3 | 1.5 | 2.5 |
| Dec 2009 | -3.2 | -3.1 | 3.3 | -9.9 | -0.1 | 1.1 | 3.7 |
| Dec 2008 | -7.6 | -7.4 | -14.3 | -5.4 | -11.2 | 3.7 | -9.0 |
| Dec 2007 | 0.0 | -0.3 | -0.6 | 2.5 | -10.0 | -2.7 | 1.6 |
| Dec 2006 | 3.2 | 3.1 | 5.2 | 2.3 | 8.6 | -0.9 | -5.3 |
| Dec 2005 | 5.8 | 5.9 | 3.5 | 9.0 | 3.2 | 2.1 | 0.6 |
| Dec 2004 | 5.3 | 5.5 | 7.7 | 3.4 | 0.8 | 5.7 | 9.6 |
| Dec 2003 | 5.5 | 5.3 | 5.5 | 6.4 | 1.7 | 4.4 | 0.3 |
| Dec 2002 | 3.7 | 3.3 | 5.4 | 3.4 | -5.9 | 2.3 | -2.6 |
Note: IND: Industry; MFG: Manufacturing; INTG: Intermediate Goods; CG: Capital Goods; DG: Durable Goods; NDG: Nondurable Goods; EN: Energy
Source: Statistisches Bundesamt Deutschland (Destatis) https://www.destatis.de/EN/FactsFigures/Indicators/ShortTermIndicators/ShortTermIndicators.html
Broader perspective since 2002 is provided by Chart VE-1 of the Statistisches Bundesamt Deutschland, Federal Statistical Agency of Germany. The index of production industries not seasonally adjusted rises by more than one third between 2003 and 2008 with sharp fluctuations and then collapses during the global recession in 2008. Recovery has been in a steep upward trajectory that has recovered at the more recent peaks the losses during the contraction. Recovery was reversed by the drop in Dec 2011 with strong rebound into 2012 and another sharp drop in Apr 2012 with recovery in May 2012 and drops in Jun, Aug, Sep, Oct and Dec 2012.
Chart VE-1, Germany, Production Industries, Not Adjusted, 2005=100
Source: Statistiche Bundesamt Deutschland
https://www.destatis.de/EN/FactsFigures/Indicators/ShortTermIndicators/ShortTermIndicators.html
More detail is provided by Chart VE-2 of the Statistiche Bundesamt Deutschland, or Federal Statistical Agency of Germany, with the unadjusted production industries index and trend from 2009 to 2013. There could be some flattening in recent months probably leading into mild downturn as depicted by trend.
Chart VE-2, Germany, Production Index, Production Industries, Not Adjusted Index and Trend, 2005=100
Source: Statistiche Bundesamt Deutschland
https://www.destatis.de/EN/FactsFigures/Indicators/ShortTermIndicators/ShortTermIndicators.html
Table VE-4 provides month and 12-month rates of growth of manufacturing in Germany from Dec 2010 to Jan 2013. There are fluctuations in both monthly rates and in the past 12 months. Recovery is strong in Jan-Mar 2012 with cumulative growth of 2.0 percent at the high annual equivalent rate of 8.3 percent but the drop in Apr 2012 of 1.8 percent results in increase of 0.2 percent in the first four months of 2012 that pulls down the 12-month rate of Apr 2012 to minus 0.9 percent. Growth of 1.5 percent in May 2012 is insufficient to prevent decline of 6.8 percent in 12 months because production was quite strong in the first part of 2011. Manufacturing decreased 0.6 percent in Jun 2011 but the 12-month change was 3.9 percent. In Jul 2012, manufacturing grew 0.9 percent in the month and 2.0 percent in 12 months. Declining of manufacturing by 0.3 percent in Aug 2012 brought down the 12-month percentage change to minus 1.1 percent. In Sep, manufacturing output fell 1.4 percent, pulling down the 12-month rate to minus 7.5 percent. Manufacturing decreased 1.7 percent in Oct but increased 3.7 percent in 12 months. In Nov 2012, manufacturing decreased 0.2 percent but fell 3.2 percent in 12 months. Manufacturing increased 1.0 percent in Dec 2012 but fell 9.5 percent in 12 months. In Jan 2013, manufacturing fell 0.2 percent and increased 0.1 percent in 12 months.
Table VE-4, Germany, Manufacturing Month and 12-Month ∆%
| 12-Month ∆% NSA | Month ∆% SA and Calendar Adjusted | |
| Jan 2013 | 0.1 | -0.2 |
| Dec 2012 | -9.5 | 1.0 |
| Nov | -3.2 | -0.2 |
| Oct | 3.7 | -1.7 |
| Sep | -7.5 | -1.4 |
| Aug | -1.1 | -0.3 |
| Jul | 2.0 | 0.9 |
| Jun | 3.9 | -0.6 |
| May | -6.8 | 1.5 |
| Apr | -0.9 | -1.8 |
| Mar | -0.4 | 1.0 |
| Feb | 3.4 | 0.5 |
| Jan | 5.7 | 0.5 |
| Dec 2011 | 0.8 | -1.6 |
| Nov | 3.9 | -0.3 |
| Oct | 0.2 | 0.9 |
| Sep | 5.2 | -2.0 |
| Aug | 11.5 | -0.5 |
| Jul | 7.3 | 2.9 |
| Jun | -0.2 | -1.1 |
| May | 20.5 | 0.7 |
| Apr | 6.7 | 0.6 |
| Mar | 10.4 | 0.9 |
| Feb | 16.3 | 1.4 |
| Jan | 16.0 | -0.9 |
| Dec | 17.6 | 1.3 |
Source: Statistisches Bundesamt Deutschland (Destatis) https://www.destatis.de/EN/FactsFigures/Indicators/ShortTermIndicators/ShortTermIndicators.html
Chart VE-3 of the Statistisches Bundesamt Deutschland, or Federal Statistical Office of Germany, provides the manufacturing index of Germany from 2009 to 2013. Manufacturing was already flattening in 2007 and fell sharply in 2008 to the beginning of 2010. Manufacturing grew sharply in the initial phase of recovery but has flattened in recent months as revealed by the trend that may be turning downward.
Chart VE-3, Germany, Production Index, Manufacturing, Not Adjusted Index and Trend, 2005=100
Source: Statistiche Bundesamt Deutschland https://www.destatis.de/EN/FactsFigures/Indicators/ShortTermIndicators/ShortTermIndicators.html
Table VE-4 provides month and 12-month rates of growth of manufacturing in Germany from Dec 2010 to Jan 2013. There are fluctuations in both monthly rates and in the past 12 months. Recovery is strong in Jan-Mar 2012 with cumulative growth of 2.0 percent at the high annual equivalent rate of 8.3 percent but the drop in Apr 2012 of 1.8 percent results in increase of 0.2 percent in the first four months of 2012 that pulls down the 12-month rate of Apr 2012 to minus 0.9 percent. Growth of 1.5 percent in May 2012 is insufficient to prevent decline of 6.8 percent in 12 months because production was quite strong in the first part of 2011. Manufacturing decreased 0.6 percent in Jun 2011 but the 12-month change was 3.9 percent. In Jul 2012, manufacturing grew 0.9 percent in the month and 2.0 percent in 12 months. Declining of manufacturing by 0.3 percent in Aug 2012 brought down the 12-month percentage change to minus 1.1 percent. In Sep, manufacturing output fell 1.4 percent, pulling down the 12-month rate to minus 7.5 percent. Manufacturing decreased 1.7 percent in Oct but increased 3.7 percent in 12 months. In Nov 2012, manufacturing decreased 0.2 percent but fell 3.2 percent in 12 months. Manufacturing increased 1.0 percent in Dec 2012 but fell 9.5 percent in 12 months. In Jan 2013, manufacturing fell 0.2 percent and increased 0.1 percent in 12 months.
Several tables and charts facilitate analysis of machinery orders in Germany. Table VE-5 reveals strong fluctuations in an evident deceleration of total orders for industry of Germany. The same behavior is observed for total, foreign and domestic orders with decline in 12-month rates from two-digit levels to single digits and negative changes. An important aspect of Germany is that the bulk of orders is domestic or from other European countries while foreign orders have been growing rapidly. Total orders decreased 1.9 percent in Jan 2013 with decrease of 0.6 percent in domestic orders and decrease of 3.0 percent of foreign orders. Total orders decreased 1.5 percent in the 12 months ending in Jan 2013 with declines of 3.4 percent in domestic orders and increase of foreign orders of 0.2 percent in Jan 2013. As in other countries, data on orders for manufacturing are highly volatile. Most 12-month percentage changes from Jan 2012 to Sep 2012 in Table VE-5, with exception of foreign orders of 1.0 percent in Jul 2012, are negative largely because of the unusual strength of the Germany economy in the beginning of 2011 but more recently because of slowing world economy in 2012.
Table VE-5, Germany, Volume of Orders Received in Manufacturing, Total, Domestic and Foreign, ∆%
| Total | Total | Foreign 12 M | Foreign M | Home | Home | |
| 2013 | ||||||
| Jan | -1.5 | -1.9 | 0.2 | -3.0 | -3.4 | -0.6 |
| 2012 | ||||||
| Dec | -9.0 | 1.1 | -6.6 | 1.6 | -12.4 | 0.3 |
| Nov | -1.0 | -2.6 | 2.3 | -4.7 | 5.0 | 0.3 |
| Oct | 4.2 | 3.7 | 6.8 | 6.3 | 0.8 | 0.3 |
| Sep | -8.6 | -1.9 | -6.1 | -2.3 | -11.6 | -1.4 |
| Aug | -4.2 | -1.1 | -1.9 | -0.6 | -7.0 | -1.6 |
| Jul | -1.2 | 0.2 | 1.0 | -0.1 | -3.9 | 0.5 |
| Jun | -4.1 | -1.1 | -5.7 | -0.7 | -1.8 | -1.7 |
| May | -10.9 | 0.2 | -3.5 | 1.3 | -18.9 | -1.3 |
| Apr | -3.4 | -1.5 | -3.8 | -3.1 | -2.6 | 0.6 |
| Mar | -2.3 | 2.7 | -0.6 | 4.4 | -4.5 | 0.5 |
| Feb | -4.6 | 0.3 | -5.1 | 1.0 | -4.1 | -0.6 |
| Jan | -2.9 | -1.6 | -4.8 | -2.9 | -0.5 | 0.0 |
| 2011 | ||||||
| Dec | 0.0 | 1.9 | -0.3 | 4.0 | 0.5 | -0.8 |
| Nov | -4.8 | -2.9 | -8.2 | -5.0 | -0.3 | -0.2 |
| Oct | 0.1 | 2.0 | 2.1 | 3.4 | -2.1 | 0.4 |
| Sep | 2.2 | -3.4 | 1.9 | -3.7 | 2.6 | -3.0 |
| Aug | 7.1 | -0.8 | 5.2 | 0.2 | 9.4 | -1.9 |
| Jul | 4.9 | -2.5 | 4.6 | -6.8 | 5.4 | 3.0 |
| Jun | 3.5 | 0.3 | 7.8 | 10.2 | -2.0 | -10.6 |
| May | 23.1 | 2.4 | 16.0 | -4.4 | 31.8 | 11.2 |
| Apr | 6.7 | 1.4 | 9.6 | 1.9 | 3.0 | 0.7 |
| Mar | 9.8 | -3.0 | 12.3 | -3.0 | 6.9 | -3.0 |
| Feb | 21.5 | 0.7 | 24.1 | 0.0 | 18.4 | 1.7 |
| Jan | 22.5 | 4.3 | 26.1 | 4.1 | 18.2 | 4.7 |
| 2010 | ||||||
| Dec | 21.8 | -3.0 | 26.8 | -4.1 | 15.4 | -1.6 |
| Nov | 21.4 | 5.5 | 27.1 | 8.6 | 15.0 | 1.6 |
| Oct | 14.2 | 0.8 | 18.2 | 0.4 | 10.0 | 1.4 |
| Sep | 13.9 | -1.3 | 15.6 | -3.0 | 11.9 | 0.8 |
| Aug | 22.2 | 2.4 | 29.7 | 4.3 | 14.5 | 0.8 |
| Jul | 14.1 | -1.2 | 21.4 | -1.4 | 6.4 | 0.1 |
| Jun | 27.6 | 3.3 | 30.6 | 4.4 | 24.2 | 1.9 |
| May | 24.8 | -0.2 | 29.6 | 0.3 | 19.4 | -0.9 |
| Apr | 29.9 | 2.6 | 34.0 | 2.6 | 25.7 | 2.6 |
| Mar | 29.4 | 5.2 | 32.9 | 5.3 | 25.8 | 4.8 |
| Feb | 24.0 | -0.2 | 28.7 | 0.2 | 18.6 | -0.7 |
| Jan | 17.0 | 4.1 | 23.8 | 4.7 | 9.8 | 3.4 |
| Dec 2009 | 9.1 | -1.7 | 10.5 | -2.6 | 7.3 | -0.5 |
| Dec 2008 | -28.3 | -6.7 | -31.5 | -9.5 | -23.7 | -2.9 |
| Dec 2007 | 7.1 | -0.9 | 9.1 | -2.0 | 4.4 | 0.2 |
| Dec 2006 | 2.8 | 0.8 | 3.4 | 0.5 | 2.2 | 1.1 |
| Dec 2005 | 5.0 | -0.5 | 10.4 | -1.1 | -1.4 | 0.3 |
| Dec 2004 | 12.7 | 6.5 | 13.0 | 8.5 | 12.7 | 4.9 |
| Dec 2003 | 10.7 | 2.4 | 16.4 | 5.4 | 5.1 | -0.8 |
| Dec 2002 | -0.2 | -3.4 | -0.8 | -6.6 | 0.2 | -0.3 |
| Average ∆% 2003-2007 | 7.6 | 10.4 | 4.5 | |||
| Average ∆% 2003-2012 | 2.3 | 3.9 | 0.4 |
Notes: AE: Annual Equivalent; M: Month; M: Calendar and seasonally-adjusted; 12 M: Non-adjusted
Source: Statistisches Bundesamt Deutschland https://www.destatis.de/EN/FactsFigures/Indicators/ShortTermIndicators/ShortTermIndicators.html
Orders for capital goods of Germany are shown in Table VE-6. Total capital goods orders decreased 2.9 percent in Jan 2013 with declines of 2.5 percent of domestic orders and 3.2 percent of foreign orders. The rates of decline in 12 months are: 0.0 percent for total, minus 3.7 percent for domestic and 2.4 percent for foreign. Total capital goods orders increased 4.7 percent in Oct 2012 with foreign orders increasing 6.8 percent and domestic orders increasing 1.0 percent. There has been evident deceleration from 2010 and early 2011 with growth rates falling from two digit levels to single digits and multiple negative changes. An important aspect of Germany’s economy shown in Tables VE-5 and VE-6 is the success in increasing the competitiveness of its economic activities as shown by rapid growth of orders for industry after the recession of 2001 in the period before the global recession beginning in late 2007. Germany adopted fiscal and labor market reforms to increase productivity.
Table VE-6, Germany, Volume of Orders Received of Capital Goods Industries, Total, Foreign and Domestic, ∆%
| Total 12 M | Total M | Foreign 12 M | Foreign M | Domestic 12 M | Domestic M | |
| 2013 | ||||||
| Jan | 0.0 | -2.9 | 2.4 | -3.2 | -3.7 | -2.5 |
| 2012 | ||||||
| Dec | -7.7 | 2.1 | -4.6 | 2.6 | -13.2 | 1.3 |
| Nov | -0.6 | -3.3 | 3.0 | -5.4 | -6.2 | 0.4 |
| Oct | 4.1 | 4.7 | 6.0 | 6.8 | 1.1 | 1.0 |
| Sep | -7.4 | -1.0 | -4.6 | -0.8 | -11.7 | -1.4 |
| Aug | -4.5 | -2.4 | -2.5 | -1.9 | -7.6 | -3.4 |
| Jul | 0.3 | 0.0 | 1.8 | -0.3 | -2.3 | 0.5 |
| Jun | -6.6 | -0.4 | -9.0 | 0.4 | -2.3 | -1.7 |
| May | -11.8 | -0.2 | -2.5 | 0.4 | -24.0 | -1.0 |
| Apr | -2.5 | -2.9 | -3.4 | -5.0 | -1.2 | 0.7 |
| Mar | 1.6 | 5.6 | 4.1 | 9.2 | -2.5 | -0.1 |
| Feb | -6.6 | 0.6 | -7.4 | 0.0 | -4.9 | 1.3 |
| Jan | -3.5 | -3.4 | -5.7 | -3.6 | 0.2 | -3.0 |
| 2011 | ||||||
| Dec | 1.2 | 2.6 | -0.1 | 4.0 | 3.5 | 0.4 |
| Nov | -6.5 | -3.6 | -10.5 | -6.8 | 0.7 | 1.7 |
| Oct | 3.1 | 3.3 | 6.2 | 5.3 | -2.0 | 0.2 |
| Sep | 2.9 | -3.6 | 2.2 | -3.8 | 4.0 | -3.1 |
| Aug | 6.3 | 0.0 | 4.5 | 0.6 | 10.6 | -1.5 |
| Jul | 7.7 | -7.6 | 6.4 | -11.1 | 8.8 | 0.7 |
| Jun | 8.9 | 4.5 | 13.3 | 16.1 | 2.0 | -15.7 |
| May | 26.8 | 3.3 | 17.7 | -5.5 | 43.5 | 20.5 |
| Apr | 11.0 | 3.0 | 14.1 | 4.1 | 6.3 | 1.2 |
| Mar | 12.0 | -5.7 | 14.4 | -5.4 | 8.5 | -6.2 |
| Feb | 29.3 | 2.5 | 32.5 | 0.9 | 24.8 | 5.3 |
| Jan | 26.8 | 4.0 | 32.8 | 4.2 | 17.7 | 3.6 |
| 2010 | ||||||
| Dec | 27.4 | -5.2 | 31.2 | -6.8 | 21.1 | -2.3 |
| Nov | 30.4 | 9.5 | 37.0 | 13.8 | 20.1 | 2.6 |
| Oct | 20.5 | 0.1 | 24.9 | -1.3 | 14.3 | 2.5 |
| Sep | 18.2 | -2.3 | 20.3 | -3.9 | 14.7 | 0.5 |
| Aug | 27.5 | 5.3 | 40.0 | 7.1 | 11.5 | 2.4 |
| Jul | 14.1 | -2.7 | 28.1 | -3.1 | -2.5 | -2.3 |
| Jun | 32.0 | 4.7 | 38.7 | 7.2 | 22.1 | 1.0 |
| May | 26.2 | 1.1 | 36.6 | 0.9 | 12.8 | 1.5 |
| Apr | 31.0 | 2.3 | 41.4 | 2.9 | 18.1 | 1.3 |
| Mar | 25.8 | 6.7 | 33.8 | 7.7 | 15.7 | 5.1 |
| Feb | 21.2 | -1.1 | 31.3 | -0.1 | 8.3 | -2.4 |
| Jan | 17.0 | 4.6 | 29.6 | 3.0 | 2.8 | 7.2 |
| Dec 2009 | 8.1 | -1.2 | 13.6 | -1.5 | 0.3 | -1.0 |
| Dec 2008 | -32.2 | -7.2 | -36.8 | -10.0 | -24.5 | -3.6 |
| Dec 2007 | 9.4 | -0.6 | 11.6 | -2.3 | 6.1 | 2.2 |
| Dec 2006 | 3.5 | 2.2 | 3.9 | 2.9 | 2.9 | 1.2 |
| Dec 2005 | 1.8 | -2.1 | 9.7 | -2.5 | -8.4 | -1.6 |
| Dec 2004 | 19.5 | 11.2 | 18.6 | 12.2 | 20.6 | 9.7 |
| Dec 2003 | 11.7 | 2.1 | 17.2 | 5.0 | 5.4 | -1.6 |
| Dec 2002 | -2.8 | -4.3 | -3.7 | -8.1 | -1.8 | 0.2 |
| Average ∆% 2003-2007 | 9.0 | 12.1 | 4.9 | |||
| Average ∆% 2003-2012 | 3.0 | 5.9 | 0.5 |
Notes: AE: Annual Equivalent; M: Month; M: Calendar and seasonally-adjusted; 12 M: Non-adjusted
Source: Statistisches Bundesamt Deutschland https://www.destatis.de/EN/FactsFigures/Indicators/ShortTermIndicators/ShortTermIndicators.html
Chart VE-4 of the German Statistisches Bundesamt Deutschland shows the sharp upward trend of total orders in manufacturing before the global recession. There is also an obvious upward trend in the recovery from the recession with Germany’s economy being among the most dynamic in the advanced economies until the slowdown beginning in the final months of 2011 and what could be stationary series from late 2011 into 2012 but risk of decline in the final segment.
Chart VE-4, Germany, Volume of Total Orders in Manufacturing, Non-Adjusted, 2005=100
Source: Statistisches Bundesamt Deutschland
https://www.destatis.de/EN/FactsFigures/Indicators/ShortTermIndicators/ShortTermIndicators.html
Chart VE-5 of the German Statistisches Bundesamt Deutschland provides unadjusted volume of total orders in manufacturing and a trend curve. The final segment on the right could be the beginning of declining trend but it may be early to reach conclusions.
Chart VE-5, Germany, Volume of Total Orders in Manufacturing and Trend, Non-Adjusted, 2005=100
Source: Statistisches Bundesamt Deutschland
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 IVQ1949 to IVQ2012 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 1.9 percent in the 1990s and 1.7 percent from 2000 to 2007. The average growth rate from 2000 to 2012, using fourth quarter data, is 1.0 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 | 1.0 |
| 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 |
Source: Institut National de la Statistique et des Études Économiques http://www.insee.fr/en/themes/info-rapide.asp?id=26&date=20130214
The Markit Flash France Composite Output Index fell from 42.7 in Jan to 42.3 in Feb for the lowest reading in 47 months (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10714). Jack Kennedy, Senior Economist at Markit and author of the report, finds that the data suggest the sharpest decline of overall output in about four years since IQ2009 with all indicators at depressed readings (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10714).
The Markit France Composite Output Index, combining services and manufacturing with close association with French GDP, increased marginally from the low in 46 months of 42.7 in Jan to 43.1 in Feb, indicating significant contraction of private sector activity for a twelveth consecutive month at marginally slower rate (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10731). Jack Kennedy, Senior Economist at Markit and author of the France Services PMI®, finds that composite data for manufacturing and services suggest further contraction of GDP in France in IQ2013 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10731). The Markit France Services Activity index increased from the lowest reading in 45 months of 43.6 in Jan to 43.1 in Feb (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10682). The Markit France Manufacturing Purchasing Managers’ Index® increased marginally to to 43.9 in Feb from 42.9 in Jan, remaining deeply below the neutral level of 50.0 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10728). Jack Kennedy, Senior Economist at Markit and author of the France Manufacturing PMI®, finds continuing weakness in manufacturing with weakness in new internal orders because of weak domestic economic views (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10728). Table FR provides the country data table for France.
Table FR, France, Economic Indicators
| CPI | Jan month ∆% -0.5 |
| PPI | Jan month ∆%: 0.5 Blog 3/3/13 |
| GDP Growth | IVQ2012/IIIQ2012 ∆%: -0.3 |
| Industrial Production | Dec ∆%: |
| Consumer Spending | Manufactured Goods |
| Employment | IVQ2012 Unemployed 2.944 million |
| Trade Balance | Dec Exports ∆%: month 3.1, 12 months 4.7 Dec Imports ∆%: month 5.4, 12 months 3.8 Blog 2/10/13 |
| Confidence Indicators | Historical averages 100 Feb Mfg Business Climate 90 Blog 2/24/13 |
Links to blog comments in Table FR: 3/3/13 http://cmpassocregulationblog.blogspot.com/2013/03/mediocre-gdp-growth-at-16-to-20-percent.html
2/24/13 http://cmpassocregulationblog.blogspot.com/2013/02/world-inflation-waves-united-states.html
2/17/13 http://cmpassocregulationblog.blogspot.com/2013/02/recovery-without-hiring-united-states.html
2/10/13 http://cmpassocregulationblog.blogspot.com/2013/02/united-states-unsustainable-fiscal.html
The number of unemployed in France rose from 2.098 million in IV2007, for a rate of unemployment of 7.5 percent, to 2.944 million in IVQ2012, for a rate of unemployment of 10.2 percent, as shown in Table VF-1. At the same time, the rate of employment fell from 64.6 percent in IV2007 to 64.1 percent in IVQ2012.
Table VF-1, France, Metropolitan France, Employment Rate, Unemployed and Unemployment Rate, Millions and %
| Unemployed | Unemployed Percent | Employment Rate | |
| IVQ2012 | 2.944 | 10.2 | 64.1 |
| IIIQ2012 | 2.820 | 9.9 | 63.9 |
| IIQ2012 | 2.791 | 9.8 | 63.9 |
| IQ2012 | 2.732 | 9.6 | 63.8 |
| IVQ2011 | 2.678 | 9.4 | 63.9 |
| IIIQ2011 | 2.608 | 9.2 | 63.9 |
| IIQ2011 | 2.569 | 9.1 | 63.9 |
| IQ2011 | 2.593 | 9.1 | 63.9 |
| IVQ2010 | 2.630 | 9.3 | 63.8 |
| IIIQ2010 | 2.626 | 9.3 | 63.9 |
| IIQ2010 | 2.630 | 9.3 | 63.9 |
| IQ2010 | 2.671 | 9.4 | 63.9 |
| IVQ2009 | 2.713 | 9.6 | 63.7 |
| IIIQ2009 | 2.584 | 9.2 | 63.9 |
| IIQ2009 | 2.593 | 9.2 | 64.1 |
| IQ2009 | 2.414 | 8.6 | 64.4 |
| IVQ2008 | 2.182 | 7.8 | 64.8 |
| IIIQ2008 | 2.063 | 7.4 | 64.8 |
| IIQ2008 | 2.029 | 7.3 | 64.8 |
| IQ2008 | 1.982 | 7.1 | 64.9 |
| IV2007 | 2.098 | 7.5 | 64.6 |
| IIIQ2007 | 2.215 | 8.0 | 64.4 |
| IIQ2007 | 2.250 | 8.1 | 64.1 |
| IQ2007 | 2.338 | 8.4 | 63.9 |
| IVQ2006 | 2.326 | 8.4 | 63.9 |
| IVQ2005 | 2.494 | 9.1 | 63.5 |
| IVQ2004 | 2.434 | 8.9 | 63.7 |
| IVQ2003 | 2.374 | 8.8 | 63.8 |
| IVQ2002 | 2.143 | 8.0 | |
| IVQ2001 | 2.067 | 7.8 | |
| IVQ2000 | 2.115 | 8.0 | |
| IVQ1999 | 2.476 | 9.5 | |
| IVQ1995 | 2.546 | 10.0 | |
| IVQ1990 | 1.958 | 7.9 | |
| IVQ1985 | 2.173 | 8.9 | |
| IVQ1980 | 1.331 | 5.6 | |
| IVQ1975 | 0.847 | 3.7 |
Source: Institut National de la Statistique et des Études Économiques http://www.insee.fr/en/themes/info-rapide.asp?id=14&date=20130307
Chart VF-1 of the Institut National de la Statistique et des Études Économiques provides an excellent view of the unemployment rate in France. The rate of unemployment rose from 2003 to 2006 and then fell sharply in 2007. The global recession caused sharp increase in the French rate of unemployment that has declined from the peak, stabilized at a high level and is climbing again.
Chart VF-1, France, Unemployment Rate International Labor Organization Criterion, Seasonally Adjusted Average over Quarter, Percent
Source: Institut National de la Statistique et des Études Économiques
http://www.insee.fr/en/themes/info-rapide.asp?id=14&date=20130307
VG Italy. Table VG-IT provides percentage changes in a quarter relative to the same quarter a year earlier of Italy’s expenditure components in chained volume measures. GDP has been declining at sharper rates from minus 0.5 percent in IQ2012 to minus 2.7 percent in IIIQ2012. The aggregate demand components of consumption and gross fixed capital formation (GFCF) have been declining at faster rates.
Table VG-IT, Italy, GDP and Expenditure Components, Chained Volume Measures, Quarter ∆% on Same Quarter Year Earlier
| GDP | Imports | Consumption | GFCF | Exports | |
| 2012 | |||||
| IVQ | -2.7 | NA | NA | NA | NA |
| IIIQ | -2.4 | -7.8 | -3.7 | -9.8 | 1.6 |
| IIQ | -2.3 | -7.6 | -3.5 | -9.6 | 2.5 |
| IQ | -1.3 | -9.0 | -2.8 | -7.9 | 1.9 |
| 2011 | |||||
| IVQ | -0.5 | -6.8 | -1.6 | -3.7 | 3.3 |
| IIIQ | 0.4 | 0.3 | -0.5 | -2.2 | 5.9 |
| IIQ | 1.0 | 3.4 | 0.6 | -0.2 | 7.1 |
| IQ | 1.3 | 8.9 | 0.9 | 0.7 | 10.9 |
| 2010 | |||||
| IVQ | 2.2 | 15.4 | 0.8 | 2.3 | 13.3 |
| IIIQ | 1.9 | 13.0 | 1.0 | 4.3 | 12.2 |
| IIQ | 1.8 | 13.2 | 0.5 | 2.3 | 12.0 |
| IQ | 1.1 | 7.3 | 0.5 | -0.8 | 7.3 |
| 2009 | |||||
| IVQ | -3.5 | -6.4 | -0.1 | -7.5 | -9.3 |
| IIIQ | -5.0 | -12.1 | -0.9 | -12.6 | -16.3 |
| IIQ | -6.6 | -17.8 | -1.3 | -13.7 | -21.4 |
| IQ | -6.9 | -17.2 | -1.6 | -12.7 | -22.9 |
| 2008 | |||||
| IVQ | -3.0 | -8.2 | -0.9 | -8.3 | -10.3 |
| IIIQ | -1.9 | -5.0 | -0.8 | -4.5 | -3.9 |
| IIQ | -0.2 | -0.1 | -0.3 | -1.5 | 0.4 |
| IQ | 0.5 | 1.7 | 0.1 | -1.0 | 2.9 |
GFCF: Gross Fixed Capital Formation
Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/82137 http://www.istat.it/it/archivio/77009
The Markit/ADACI Business Activity Index decreased from 43.9 in Jan to 43.6 in Feb, indicating significant contraction of output of Italy’s for 21 consecutive months of decline (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10825). Phil Smith, economist at Markit and author of the Italy Services PMI®, finds that the index suggests continuing contraction of the Italian economy in IQ2013 at a rate similar to the decline of 0.9 percent in IVQ2012 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10825). The Markit/ADACI Purchasing Managers’ Index® (PMI®), decreased from the ten-month high in Jan of 47.8 to 45.8 in Feb for 19 consecutive months of contraction of Italy’s manufacturing below 50.0 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10770). Phil Smith, economist at Markit and author of the Italian Manufacturing PMI®, finds a more encouraging reading with two consecutive months of growth of new export orders but total new orders restrained by weak domestic demand (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10770). Table IT provides the country data table for Italy.
Table IT, Italy, Economic Indicators
| Consumer Price Index | Feb month ∆%: 0.1 |
| Producer Price Index | Jan month ∆%: -0.4 Blog 3/10/13 |
| GDP Growth | IVQ2012/IIIQ2012 SA ∆%: minus 0.9 |
| Labor Report | Nov 2012 Participation rate 63.9% Employment ratio 56.8% Unemployment rate 11.1% Blog 1/13/13 |
| Industrial Production | Dec month ∆%: minus 0.4 |
| Retail Sales | Dec month ∆%: 0.2 Dec 12-month ∆%: -3.8 Blog 2/24/13 |
| Business Confidence | Mfg Feb 88.5, Oct 87.8 Construction Feb 81.6, Oct 81.0 Blog 3/3/13 |
| Trade Balance | Balance Dec SA €1722 million versus Nov €2264 |
Links to blog comments in Table IT: 3/3/13 http://cmpassocregulationblog.blogspot.com/2013/03/mediocre-gdp-growth-at-16-to-20-percent.html
2/24/13 http://cmpassocregulationblog.blogspot.com/2013/02/world-inflation-waves-united-states.html
2/17/13 http://cmpassocregulationblog.blogspot.com/2013/02/recovery-without-hiring-united-states.html
2/10/13 http://cmpassocregulationblog.blogspot.com/2013/02/united-states-unsustainable-fiscal.html
1/13/13 http://cmpassocregulationblog.blogspot.com/2013/01/peaking-valuation-of-risk-financial.html
VH United Kingdom. Annual data in Table VH-UK show the strong impact of the global recession in the UK with decline of GDP of 4.0 percent in 2009 after dropping 1.0 percent in 2008. Recovery of 1.8 percent in 2010 is relatively low compared to annual growth rates in 2007 and earlier years. Growth was only 0.9 percent in 2011 and 0.0 percent in 2012. The bottom part of Table VH-UK provides average growth rates of UK GDP since 1948. The UK economy grew at 2.6 percent on average between 1948 and 2012, which is relatively high for an advanced economy. The growth rate of GDP between 2000 and 2007 is higher at 3.0 percent. Growth in the current cyclical expansion has been only at 0.9 percent as advanced economies struggle with weak internal demand and world trade.
Table VH-UK, UK, Gross Domestic Product, ∆%
| ∆% on Prior Year | |
| 1998 | 3.5 |
| 1999 | 3.2 |
| 2000 | 4.2 |
| 2001 | 2.9 |
| 2002 | 2.4 |
| 2003 | 3.8 |
| 2004 | 2.9 |
| 2005 | 2.8 |
| 2006 | 2.6 |
| 2007 | 3.6 |
| 2008 | -1.0 |
| 2009 | -4.0 |
| 2010 | 1.8 |
| 2011 | 0.9 |
| 2012 | 0.2 |
| Average ∆% per Year | |
| 1948-2012 | 2.6 |
| 1948-1959 | 2.9 |
| 1960-1969 | 3.3 |
| 1970-1979 | 2.5 |
| 1980-1989 | 3.2 |
| 1990-1999 | 2.6 |
| 2000-2012 | 1.6 |
| 2000-2007 | 3.0 |
| 2009-2012 | 1.0 |
Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/naa2/second-estimate-of-gdp/q4-2012/index.html
The Business Activity Index of the Markit/CIPS UK Services PMI® increased from 51.5 in Jan to 51.8 in Feb, indicating moderate increase in activity in a second consecutive month (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10830). Chris Williamson, Chief Economist at Markit, finds that improvement in the PMIs suggests growth of around 0.1 percent in the GDP of the United Kingdom (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10830). The Markit/CIPS UK Manufacturing Purchasing Managers’ Index® (PMI®) decreased from 50.5 in Jan to 47.9 in Feb (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10790). Chris Williamson, Chief Economist at Markit that compiles the Markit/CIPS Manufacturing PMI®, finds that output could decline by 0.5 percent in IQ2013 if there is not offset in Mar (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10790). Table UK provides the economic indicators for the United Kingdom.
Table UK, UK Economic Indicators
| CPI | Jan month ∆%: -0.5 |
| Output/Input Prices | Output Prices: Jan 12-month NSA ∆%: 2.0; excluding food, petroleum ∆%: 1.4 |
| GDP Growth | IVQ2012 prior quarter ∆% -0.3; year earlier same quarter ∆%: 0.3 |
| Industrial Production | Dec 2012/Dec 2011 ∆%: Production Industries minus 1.7; Manufacturing minus 1.5 |
| Retail Sales | Jan month ∆%: -0.6 |
| Labor Market | Oct-Dec Unemployment Rate: 7.8%; Claimant Count 4.7%; Earnings Growth 1.4% |
| Trade Balance | Balance Dec minus ₤3201 million |
Links to blog comments in Table UK: 3/3/13 http://cmpassocregulationblog.blogspot.com/2013/03/mediocre-gdp-growth-at-16-to-20-percent.html
2/24/13 http://cmpassocregulationblog.blogspot.com/2013/02/world-inflation-waves-united-states.html
2/17/13 http://cmpassocregulationblog.blogspot.com/2013/02/recovery-without-hiring-united-states.html
2/10/13 http://cmpassocregulationblog.blogspot.com/2013/02/united-states-unsustainable-fiscal.html
© Carlos M. Pelaez, 2010, 2011, 2012, 2013
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