CMP Associates Regulation Blog

There is similar behavior of year-on-year percentage changes of the US producer price index from 1970 to 2013 in Chart IV-2 of the US Bureau of Labor Statistics as in Chart IV-1 with the domestic goods CGPI. The behavior of the CGPI of Japan in the 1970s is quite similar to that of the US PPI. The US producer price index increased together with the CGPI driven by the period of one percent fed funds rates from 2003 to 2004 inducing carry trades into commodity futures and other risk financial assets and the slow adjustment in increments of 25 basis points at every FOMC meeting from Jun 2004 to Jun 2006. There is also the same increase in inflation in 2008 during the global recession followed by collapse because of unwinding positions during risk aversion and new rise of inflation during risk appetite.

Chart IV-2, US, Producer Price Index Finished Goods, Year-on-Year Percentage Change, 1970-2013

Source: US Bureau of Labor Statistics

http://www.bls.gov/ppi/

Finer detail is provided by Chart IV-3 of the domestic CGPI from 2008 to 2013. The CGPI rose almost vertically in 2008 as the collapse of fed funds rates toward zero drove exposures in commodities and other risk financial assets because of risk appetite originating in the belief that the financial crisis was restricted to structured financial products and not to contracts negotiated in commodities and other exchanges. The panic with toxic assets in banks to be removed by TARP (Cochrane and Zingales 2009) caused unwinding carry trades in flight to US government obligations that drove down commodity prices and price indexes worldwide. Apparent resolution of the European debt crisis of 2010 drove risk appetite in 2011 with new carry trades from zero fed funds rates into commodity futures and other risk financial assets. Domestic CGPI inflation returned in waves with upward slopes during risk appetite and downward slopes during risk aversion.

Chart IV-3, Japan, Domestic Corporate Goods Price Index, Monthly, 2008-2013

Source: Bank of Japan

There is similar behavior of the US producer price index from 2008 to 2013 in Chart IV-4 as in the domestic CGPI in Chart IV-3. A major difference is the strong long-term trend in the US producer price index with oscillations originating mostly in bouts of risk aversion such as the downward slope in the final segment in Chart IV-4 followed by increasing slope during periods of risk appetite. Carry trades from zero interest rates to commodity futures and other risk financial assets drive the upward trend of the US producer price index while oscillations originate in alternating episodes of risk aversion and risk appetite.

Chart IV-4, US, Producer Price Index Finished Goods, Monthly, 2008-2013

Source: US Bureau of Labor Statistics

http://www.bls.gov/ppi/

There was milder increase in Japan’s export corporate goods price index during the global recession in 2008 but similar sharp decline during the bank balance sheets effect in late 2008, as shown in Chart IV-5 of the Bank of Japan. Japan exports industrial goods whose prices have been less dynamic than those of commodities and raw materials. As a result, the export CGPI on the yen basis in Chart IV-5 trends down with oscillations after a brief rise in the final part of the recession in 2009. The export corporate goods price index fell from 104.8 in Jun 2009 to 94 in Feb 2012 or minus 10.3 percent and increased to 105.9 in Feb 2013 for a gain of 12.7 percent relative to Feb 2012 and 1.0 percent relative to Jun 2009. The choice of Jun 2009 is designed to capture the reversal of risk aversion beginning in Sep 2008 with the announcement of toxic assets in banks that would be withdrawn with the Troubled Asset Relief Program (TARP) (Cochrane and Zingales 2009). Reversal of risk aversion in the form of flight to the USD and obligations of the US government opened the way to renewed carry trades from zero interest rates to exposures in risk financial assets such as commodities. Japan exports industrial products and imports commodities and raw materials.

Chart IV-5, Japan, Export Corporate Goods Price Index, Monthly, Yen Basis, 2008-2013

Source: Bank of Japan

Chart IV-5A provides the export corporate goods price index on the basis of the contract currency. The export corporate goods price index on the basis of the contract currency increased from 97.9 in Jun 2009 to 102.3 in Feb 2012 or 4.5 percent but dropped to 101.5 in Feb 2013 or minus 0.8 percent relative to Feb 2012 and gained 3.7 percent relative to Jun 2009.

Chart IV-5A, Japan, Export Corporate Goods Price Index, Monthly, Contract Currency Basis, 2008-2013

Source: Bank of Japan

Japan imports primary commodities and raw materials. As a result, the import corporate goods price index on the yen basis in Chart IV-6 shows an upward trend after the rise during the global recession in 2008 driven by carry trades from fed funds rates collapsing to zero into commodity futures and decline during risk aversion from late 2008 into beginning of 2008 originating in doubts about soundness of US bank balance sheets. More careful measurement should show that the terms of trade of Japan, export prices relative to import prices, declined during the commodity shocks originating in unconventional monetary policy. The decline of the terms of trade restricted potential growth of income in Japan. The import corporate goods price index on the yen basis increased from 93.5 in Jun 2009 to 106.4 in Feb 2012 or 13.8 percent and to 120.4 in Feb 2013 or gain of 13.2 percent relative to Feb 2012 and 28.8 percent relative to Jun 2009. Recent depreciation of the yen relative to the dollar explains the increase in imports in domestic yen prices.

Chart IV-6, Japan, Import Corporate Goods Price Index, Monthly, Yen Basis, 2008-2013

Source: Bank of Japan

Chart IV-6A provides the import corporate goods price index on the contract currency basis. The import corporate goods price index on the basis of the contract currency increased from 86.2 in Jun 2009 to 115.8 in Feb 2012 or 34.3 percent and to 114.9 in Feb 2013 or minus 0.8 percent relative to Feb 2012 and gain of 33.3 percent relative to Jun 2009. There is evident deterioration of the terms of trade of Japan: the export corporate goods price index on the basis of the contract currency increased 3.7 percent from Jun 2009 to Feb 2012 while the import corporate goods price index increased 33.3 percent. Prices of Japan’s exports of corporate goods, mostly industrial products, increased only 3.7 percent from Jun 2009 to Feb 2012, while imports of corporate goods, mostly commodities and raw materials increased 33.3 percent. Unconventional monetary policy induces carry trades from zero interest rates to exposures in commodities that squeeze economic activity of industrial countries by increases in prices of imported commodities and raw materials during periods without risk aversion. Reversals of carry trades during periods of risk aversion decrease prices of exported commodities and raw materials that squeeze economic activity in economies exporting commodities and raw materials. Devaluation of the dollar by unconventional monetary policy could increase US competitiveness in world markets but economic activity is squeezed by increases in prices of imported commodities and raw materials. Unconventional monetary policy causes instability worldwide instead of the mission of central banks of promoting financial and economic stability.

Chart IV-6A, Japan, Import Corporate Goods Price Index, Monthly, Contract Currency Basis, 2008-2013

Source: Bank of Japan

Chart IV-7 provides the monthly corporate goods price index (CGPI) of Japan from 1970 to 2013. Japan also experienced sharp increase in inflation during the 1970s as in the episode of the Great Inflation in the US. Monetary policy focused on accommodating higher inflation, with emphasis solely on the mandate of promoting employment, has been blamed as deliberate or because of model error or imperfect measurement for creating the Great Inflation (http://cmpassocregulationblog.blogspot.com/2011/05/slowing-growth-global-inflation-great.html http://cmpassocregulationblog.blogspot.com/2011/04/new-economics-of-rose-garden-turned.html http://cmpassocregulationblog.blogspot.com/2011/03/is-there-second-act-of-us-great.html and Appendix I The Great Inflation; see Taylor 1993, 1997, 1998LB, 1999, 2012FP, 2012Mar27, 2012Mar28, 2012JMCB and http://cmpassocregulationblog.blogspot.com/2012/06/rules-versus-discretionary-authorities.html). A remarkable similarity with US experience is the sharp rise of the CGPI of Japan in 2008 driven by carry trades from interest rapidly falling to zero to exposures in commodity futures during a global recession. Japan had the same sharp waves of consumer price inflation during the 1970s as in the US (see Table IV-7 at http://cmpassocregulationblog.blogspot.com/2012/07/recovery-without-jobs-stagnating-real_09.html).

Chart IV-7, Japan, Domestic Corporate Goods Price Index, Monthly, 1970-2013

Source: Bank of Japan

http://www.boj.or.jp/en/statistics/pi/cgpi_release/cgpi1303.pdf

The producer price index of the US from 1970 to 2013 in Chart IV-8 shows various periods of more rapid or less rapid inflation but no bumps. The major event is the decline in 2008 when risk aversion because of the global recession caused the collapse of oil prices from $148/barrel to less than $80/barrel with most other commodity prices also collapsing. The event had nothing in common with explanations of deflation but rather with the concentration of risk exposures in commodities after the decline of stock market indexes. Eventually, there was a flight to government securities because of the fears of insolvency of banks caused by statements supporting proposals for withdrawal of toxic assets from bank balance sheets in the Troubled Asset Relief Program (TARP), as explained by Cochrane and Zingales (2009). The bump in 2008 with decline in 2009 is consistent with the view that zero interest rates with subdued risk aversion induce carry trades into commodity futures.

Chart IV-8, US, Producer Price Index Finished Goods, Monthly, 1970-2013

Source: US Bureau of Labor Statistics

http://www.bls.gov/ppi/

Further insight into inflation of the corporate goods price index (CGPI) of Japan is provided in Table IV-6. Petroleum and coal with weight of 5.7 percent increased 0.6 percent in Mar 2013 and increased 1.6 percent in 12 months. Japan exports manufactured products and imports raw materials and commodities such that the country’s terms of trade, or export prices relative to import prices, deteriorate during commodity price increases. In contrast, prices of production machinery, with weight of 3.1 percent, increased 0.4 percent in Mar 2013 and increased 0.2 percent in 12 months. In general, most manufactured products have been experiencing negative or low increases in prices while inflation rates have been high in 12 months for products originating in raw materials and commodities. Ironically, unconventional monetary policy of zero interest rates and quantitative easing that intended to increase aggregate demand and GDP growth deteriorated the terms of trade of advanced economies with adverse effects on real income.

Table IV-6, Japan, Corporate Goods Prices and Selected Components, % Weights, Month and 12 Months ∆%

Mar 2013	Weight	Month ∆%	12 Month ∆%
Total	1000.0	0.1	-0.5
Food, Beverages, Tobacco, Feedstuffs	137.5	-0.1	0.4
Petroleum & Coal	57.4	0.6	1.6
Production Machinery	30.8	0.4	0.2
Electronic Components	31.0	-0.3	-1.9
Electric Power, Gas & Water	52.7	0.4	4.2
Iron & Steel	56.6	0.3	-7.5
Chemicals	92.1	0.3	0.9
Transport Equipment	136.4	0.0	-2.2

Source: Bank of Japan http://www.boj.or.jp/en/statistics/pi/cgpi_release/cgpi1303.pdf

Percentage point contributions to change of the corporate goods price index (CGPI) in Mar 2013 are provided in Table IV-7 divided into domestic, export and import segments. In the domestic CGPI, increasing 0.1 percent in Mar 2013, the energy shock resulting from carry trades is evident in the contribution of 0.04 percentage points by petroleum and coal products in new carry trades of exposures in commodity futures. The exports CGPI decreased 0.2 percent on the basis of the contract currency with deduction of 0.08 percentage points by general purpose, production & business oriented machinery. The imports CGPI increased 0.3 percent on the contract currency basis. Petroleum, coal & natural gas added 0.45 percentage points because of new carry trades into energy commodity exposures. Shocks of risk aversion cause unwinding carry trades that result in declining commodity prices with resulting downward pressure on price indexes. The volatility of inflation adversely affects financial and economic decisions worldwide.

Table IV-7, Japan, Percentage Point Contributions to Change of Corporate Goods Price Index

Groups Mar 2013	Contribution to Change Percentage Points
A. Domestic Corporate Goods Price Index	Monthly Change: 0.1%
Petroleum & Coal Products	0.04
Scrap & Waste	0.03
Chemicals & Related Products	0.02
Electric Power, Gas & Water	0.02
Iron & Steel	0.02
Nonferrous Metals	-0.02
B. Export Price Index	Monthly Change: -0.2% contract currency
General Purpose, Production & Business Oriented Machinery	-0.08
Textiles	-0.07
Metals & Related Products	-0.06
Chemicals & Related Products	0.07
C. Import Price Index	Monthly Change: 0.3 % contract currency basis
Petroleum, Coal & Natural Gas	0.45
Metals & Related Products	-0.09

Source: Bank of Japan

China is experiencing similar inflation behavior as the advanced economies in prior months in the form of declining commodity prices but differs in decreasing inflation of producer prices relative to a year earlier. As shown in Table IV-8, inflation of the price indexes for industry in Mar 2013 is 0.0 percent; 12-month inflation is minus 1.9 percent in Mar; and cumulative inflation in Jan-Mar 2013 relative to Jan-Mar 2012 is minus 1.7 percent. Inflation of segments in Mar 2013 in China is provided in Table IV-8 in column “Month Mar 2013 ∆%.” There were increases of prices of mining & quarrying of 0.4 percent in Mar but decrease of 5.6 percent in 12 months. Prices of consumer goods decreased 0.1 percent in Mar and increased 0.5 percent in 12 months. Prices of inputs in the purchaser price index decreased 0.1 percent in Mar and declined 2.0 percent in 12 months. Fuel and power increased 0.5 percent in Mar and declined 3.2 percent in 12 months. An important category of inputs for exports is textile raw materials, increasing 0.1 percent in Feb and declining 0.9 percent in 12 months.

Table IV-8, China, Price Indexes for Industry ∆%

	Month Mar 2013 ∆%	12-Month Mar 2013 ∆%	Jan-Mar 2013/Jan-Mar 2012 ∆%
I Producer Price Indexes	0.0	-1.9	-1.7
Means of Production	0.0	-2.7	-2.5
Mining & Quarrying	0.4	-5.6	-5.3
Raw Materials	0.1	-3.2	-2.7
Processing	-0.1	-2.1	-2.1
Consumer Goods	-0.1	0.5	0.6
Food	-0.2	1.2	1.3
Clothing	-0.1	1.4	1.5
Daily Use Articles	-0.1	0.3	0.6
Durable Consumer Goods	-0.1	-0.8	-0.9
II Purchaser Price Indexes	-0.1	-2.0	-1.9
Fuel and Power	0.5	-3.2	-2.9
Ferrous Metals	0.1	-5.0	-5.6
Nonferrous Metals	-1.1	-3.7	-2.6
Raw Chemical Materials	-0.2	-3.1	-3.1
Wood & Pulp	0.4	-0.2	-0.4
Building Materials	-0.3	-2.0	-1.7
Other Industrial Raw Materials	0.1	-0.7	-0.8
Agricultural	-0.6	1.9	2.3
Textile Raw Materials	0.1	-0.9	-0.9

Source: National Bureau of Statistics of China http://www.stats.gov.cn/english/

China’s producer price inflation follows waves similar to those around the world but with declining trend since May 2012, as shown in Table IV-9. In the first wave, annual equivalent inflation was 6.4 percent in Jan-Jun 2011, driven by carry trades from zero interest rates to commodity futures. In the second wave, risk aversion unwound carry trades, resulting in annual equivalent inflation of minus 3.1 percent in Jul-Nov 2011. In the third wave, renewed risk aversion resulted in annual equivalent inflation of minus 2.4 percent in Dec 2011-Jan 2012. In the fourth wave, new carry trades resulted in annual equivalent inflation of 2.4 percent in Feb-Apr 2012. In the fifth wave, annual equivalent is minus 5.8 percent in May-Sep 2012. There are declining producer prices in China in Aug-Sep 2012 in contrast with increases worldwide. In a sixth wave, producer prices increased 0.2 percent in Oct 2012, which is equivalent to 2.4 percent in a year. In an eighth wave, annual equivalent inflation was minus 1.2 percent in Nov-Dec 2012. In the ninth wave, annual equivalent inflation in Jan-Mar 2013 is 1.6 percent.

Table IV-9, China, Month and 12-Month Rate of Change of Producer Price Index, ∆%

	12-Month ∆%	Month ∆%
Mar 2013	-1.9	0.0
Feb	-1.6	0.2
Jan	-1.6	0.2
AE ∆% Jan-Mar		1.6
Dec 2012	-1.9	-0.1
Nov	-2.2	-0.1
AE ∆% Nov-Dec		-1.2
Oct	-2.8	0.2
AE ∆% Oct		2.4
Sep	-3.6	-0.1
Aug	-3.5	-0.5
Jul	-2.9	-0.8
Jun	-2.1	-0.7
May	-1.4	-0.4
AE ∆% May-Sep		-5.8
Apr	-0.7	0.2
Mar	-0.3	0.3
Feb	0.0	0.1
AE ∆% Feb-Apr		2.4
Jan	0.7	-0.1
Dec 2011	1.7	-0.3
AE ∆% Dec-Jan		-2.4
Nov	2.7	-0.7
Oct	5.0	-0.7
Sep	6.5	0.0
Aug	7.3	0.1
Jul	7.5	0.0
AE ∆% Jul-Nov		-3.1
Jun	7.1	0.0
May	6.8	0.3
Apr	6.8	0.5
Mar	7.3	0.6
Feb	7.2	0.8
Jan	6.6	0.9
AE ∆% Jan-Jun		6.4
Dec 2010	5.9	0.7

AE: Annual Equivalent

Source: National Bureau of Statistics of China

Chart IV-9 of the National Bureau of Statistics of China provides monthly and 12-month rates of inflation of the price indexes for the industrial sector. Negative monthly rates in Oct, Nov, Dec 2011, Jan, Mar, Apr, May, Jun, Jul, Aug, Sep, Nov and Dec 2012 pulled down the 12-month rates to 5.0 percent in Oct 2011, 2.7 percent in Nov, 1.7 percent in Dec, 0.7 percent in Jan 2012, 0.0 percent in Feb, minus 0.3 percent in Mar, minus 0.7 percent in Apr, minus 1.4 percent in May, 2.1 in Jun, minus 2.9 percent in Jul, minus 3.5 percent in Aug, minus 3.6 percent in Sep. The increase of 0.2 percent in Oct 2012 pulled up the 12-month rate to minus 2.8 percent and the rate eased to minus 2.2 percent in Nov 2012 and minus 1.9 percent in Dec 2012. Increases of 0.2 percent in Jan and Feb 2013 pulled the 12-month rate to minus 1.6 percent while no change in Mar 2013 brought down the 12-month rate to minus 1.9 percent.

Chart IV-9, China, Producer Prices for the Industrial Sector Month and 12 months ∆%

Source: National Bureau of Statistics of China http://www.stats.gov.cn/english/

Chart IV-10 of the National Bureau of Statistics of China provides monthly and 12-month inflation of the purchaser product indices for the industrial sector. Decreasing monthly inflation with four successive contractions from Oct 2011 to Jan 2012 and May-Aug 2012 pulled down the 12-month rate to minus 4.1 percent in Aug and Sep. Consecutive increases of 0.1 percent in Sep and Oct 2012 raised the 12-month rate to minus 3.3 percent in Oct 2012. The rate eased to minus 2.8 in Nov 2012 with decrease of 0.2 percent in Nov 2012 and minus 2.4 percent in Dec 2012 with monthly decrease of 0.1 percent. Increase of 0.3 percent in Jan 2013 and 0.2 in Feb 2013 pulled the 12-month rate to minus 1.9 percent. Decrease of prices of 0.1 percent in Mar 2013 brought down the 12-month rate to minus 2.0 percent.

Chart IV-10, China, Purchaser Product Indices for Industrial Sector

Source: National Bureau of Statistics of China

China is highly conscious of food price inflation because of its high weight in the basket of consumption of the population. Consumer price inflation in China in Mar 2013 was minus 0.9 percent and 2.1 percent in 12 months, as shown in Table IV-10. Food prices decreased 2.9 percent in Mar 2013, increasing 2.7 percent in 12 months because of inclement winter weather in prior months. Another area of concern is housing inflation, which was 0.3 in Feb but increased 2.8 percent in 12 months. Prices of services increased 0.5 percent in Mar and gained 2.9 percent in 12 months.

Table IV-10, China, Consumer Price Index

2013	Mar 2013 Month ∆%	Mar 2013 12-Month ∆%	Jan-Mar 2013 ∆% Jan-Mar 2012
Consumer Prices	-0.9	2.1	2.4
Urban	-0.9	2.0	2.4
Rural	-1.0	2.2	2.6
Food	-2.9	2.7	3.8
Non-food	0.1	1.8	1.7
Consumer Goods	-1.3	1.7	2.3
Services	0.0	3.1	2.8
Commodity Categories:
Food	-2.9	2.7	3.8
Tobacco, Liquor	-0.1	1.0	1.2
Clothing	0.6	2.3	2.3
Household	0.0	1.6	1.6
Healthcare & Personal Articles	0.0	1.7	1.7
Transportation & Communication	-0.3	-0.3	-0.1
Recreation, Education, Culture & Services	-0.4	1.7	1.4
Residence	0.5	2.9	2.9

Source: National Bureau of Statistics of China http://www.stats.gov.cn/english/

Month and 12-month rates of change of consumer prices are provided in Table IV-11. There are waves of consumer price inflation in China similar to those around the world (http://cmpassocregulationblog.blogspot.com/2013/03/recovery-without-hiring-ten-million.html and earlier http://cmpassocregulationblog.blogspot.com/2013/02/world-inflation-waves-united-states.html). In the first wave, consumer prices increased at the annual equivalent rate of 8.3 percent in Jan-Mar 2011, driven by commodity price increases resulting from unconventional monetary policy of zero interest rates. In the second wave, risk aversion unwound carry trades with annual equivalent inflation falling to the rate of 2.0 percent in Apr-Jun 2011. In the third wave, inflation returned at 2.9 percent with renewed interest in commodity exposures in Jul-Nov 2011. In the fourth wave, inflation returned at a high 5.8 percent annual equivalent in Dec 2011 to Mar 2012. In the fifth wave, annual equivalent inflation was minus 3.9 percent in Apr to Jun 2012. In the sixth wave, annual equivalent inflation rose to 4.1 percent in Jul-Sep 2012. In the seventh wave, inflation was minus 1.2 percent annual equivalent in Oct 2012 and 0.0 percent in Oct-Nov 2012. In the eighth wave, annual equivalent inflation was 12.2 percent in Dec 2012-Feb 2013 primarily because of winter weather that caused increases in food prices. In the ninth wave, collapse of food prices resulted in annual equivalent inflation of minus 10.3 percent in Mar 2013. Inflation volatility originating in unconventional monetary policy clouds investment and consumption decisions by business and households.

Table IV-11, China, Month and 12-Month Rates of Change of Consumer Price Index ∆%

	Month ∆%	12-Month ∆%
Mar 2013	-0.9	2.1
AE ∆% Mar	-10.3
Feb	1.1	3.2
Jan	1.0	2.0
Dec 2012	0.8	2.5
AE ∆% Dec-Feb	12.2
Nov	0.1	2.0
Oct	-0.1	1.7
AE ∆% Oct-Nov	0.0
Sep	0.3	1.9
Aug	0.6	2.0
Jul	0.1	1.8
AE ∆% Jul-Sep	4.1
Jun	-0.6	2.2
May	-0.3	3.0
Apr	-0.1	3.4
AE ∆% Apr to Jun	-3.9
Mar	0.2	3.6
Feb	-0.1	3.2
Jan	1.5	4.5
Dec 2011	0.3	4.1
AE ∆% Dec to Mar	5.8
Nov	-0.2	4.2
Oct	0.1	5.5
Sep	0.5	6.1
Aug	0.3	6.2
Jul	0.5	6.5
AE ∆% Jul to Nov	2.9
Jun	0.3	6.4
May	0.1	5.5
Apr	0.1	5.3
AE ∆% Apr to Jun	2.0	2.0
Mar	-0.2	5.4
Feb	1.2	4.9
Jan	1.0	4.9
AE ∆% Jan to Mar	8.3
Dec 2010	0.5	4.6

AE: Annual Equivalent

Source: National Bureau of Statistics of China http://www.stats.gov.cn/english/

Chart IV-11 of the National Bureau of Statistics of China provides monthly and 12-month rates of consumer price inflation. In contrast with producer prices, consumer prices had not moderated at the monthly marginal rates. Consumer prices fell 0.2 percent in Nov 2011 after increasing only 0.1 percent in Oct but increased 0.3 percent in Dec and a high 1.5 percent in Jan 2012, declining 0.1 percent in Feb, rising 0.2 percent in Mar and declining 0.1 percent in Apr, 0.3 percent in May and 0.6 percent in Jun 2012 but increasing 0.1 percent in Jul, 0.6 percent in Aug 2012 and 0.3 percent in Sep 2012. Consumer prices fell 0.1 percent in Oct 2012. The decline of 0.1 percent in Feb 2012 pulled down the 12-month rate to 3.2 percent, which bounced back to 3.6 percent in Mar with the monthly increase of 0.2 percent and fell to 2.2 percent in Jun with increasing pace of monthly decline from Apr to Jun 2012. Even with increase of 0.1 percent in Jul 2012, consumer price inflation in 12 months fell to 1.8 percent in Jul 2012 but bounced back to 2.0 percent with increase of 0.6 percent in Aug. In Sep, increase of 0.3 percent still maintained 12-month inflation at 1.9 percent. The decline of 0.1 percent in Oct 2012 pulled down the 12-month rate to 1.7 percent, which is the lowest in Chart IV-3. Increase of 0.1 percent in Nov 2012 pulled up the 12-month rate to 2.0 percent. Abnormal increase of 0.8 percent in Dec 2012 because of winter weather pulled up the 12-month rate to 2.5 percent. Even with increase of 1.0 percent in Jan 2013 12-month inflation fell to 2.0 percent. Inflation of 1.1 percent in Feb 2013 pulled the 12-month rate to 3.2 percent. Collapse of food prices with decline of consumer prices by 0.9 percent in Mar 2013 brought down the 12-month rate to 2.1 percent.

Chart IV-11, China, Consumer Prices ∆% Month and 12 Months Oct 2011 to Oct 2012

Source: National Bureau of Statistics of China

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

The estimate of consumer price inflation in Germany in Table IV-12 is 1.4 percent in 12 months ending in Mar 2013, 0.5 percent NSA in Mar 2013 relative to Feb 2013 and 0.1 percent SA in Mar 2013 relative to Feb 2013. There are waves of consumer price inflation in Germany similar to those worldwide (http://cmpassocregulationblog.blogspot.com/2013/03/recovery-without-hiring-ten-million.html and earlier http://cmpassocregulationblog.blogspot.com/2013/02/world-inflation-waves-united-states.html), as shown in Table IV-12. In the first wave, annual equivalent inflation was 3.0 percent in Feb-Apr 2011 NSA and 2.4 percent SA during risk appetite in carry trades from zero interest rates to commodity futures. In the second wave, annual equivalent consumer price inflation collapsed to 0.6 percent NSA and 3.0 percent SA in May-Jun 2011 because of risk aversion caused by European sovereign debt event. In the third wave, annual equivalent consumer price inflation was 1.7 percent NSA and 1.9 percent SA in Jul-Nov 2011 because of relaxed risk aversion. In the fourth wave, annual equivalent inflation was 0.6 percent NSA and 1.8 percent SA in Dec 2011 to Jan 2012. In the fifth wave, annual equivalent inflation rose to 4.5 percent NSA and 2.0 percent SA in Feb-Apr 2012 during another energy-commodity carry trade shock. In the sixth wave, annual equivalent inflation in May-Jun 2012 is minus 1.2 percent NSA and 1.2 percent SA. In the seventh wave, annual equivalent inflation NSA is 4.9 percent in Jul-Aug 2012 and 3.7 percent SA. In the eighth wave in Sep-Dec 2012, annual equivalent inflation is 1.5 percent NSA and 1.5 percent SA. In the ninth wave, annual equivalent inflation fell to minus 5.8 percent NSA in Jan 2013 and minus 1.2 percent SA. In the eleventh wave, annual equivalent inflation rose to 6.8 percent NSA in Feb-Mar 2013 and 1.2 percent CSA. Under unconventional monetary policy of zero interest rates and quantitative easing inflation becomes highly volatile during alternative shocks of risk aversion and risk appetite, preventing sound investment and consumption decisions.

Table IV-12, Germany, Consumer Price Index ∆%

	12-Month ∆%	Month ∆% NSA	Month ∆% CSA
Mar 2013	1.4	0.5	0.1
Feb	1.5	0.6	0.1
AE ∆% Feb-Mar		6.8	1.2
Jan	1.7	-0.5	-0.1
AE ∆% Jan		-5.8	-1.2
Dec 2012	2.0	0.3	0.2
Nov	1.9	0.1	0.1
Oct	2.0	0.0	0.1
Sep	2.0	0.1	0.1
AE ∆% Sep-Dec		1.5	1.5
Aug	2.2	0.4	0.3
Jul	1.9	0.4	0.3
AE ∆% Jul-Aug		4.9	3.7
Jun	1.7	-0.2	0.0
May	2.0	0.0	0.2
AE ∆% May-Jun		-1.2	1.2
Apr	2.0	-0.2	0.1
Mar	2.2	0.6	0.2
Feb	2.2	0.7	0.2
AE ∆% Feb-Apr		4.5	2.0
Jan	2.1	-0.1	0.3
Dec 2011	2.0	0.2	0.0
AE ∆% Dec-Jan		0.6	1.8
Nov	2.4	0.2	0.2
Oct	2.3	0.0	0.1
Sep	2.4	0.2	0.3
Aug	2.1	0.1	0.1
Jul	2.1	0.2	0.1
AE ∆% Jul-Nov		1.7	1.9
Jun	2.1	0.1	0.3
May	2.0	0.0	0.2
AE ∆% May-Jun		0.6	3.0
Apr	1.9	0.0	0.2
Mar	2.0	0.6	0.2
Feb	1.9	0.6	0.2
Jan	1.7	-0.2	0.2
AE ∆% Feb-Apr		3.0	2.4
Dec 2010	1.3	0.6	0.2
Nov	1.5	0.1	0.2
Oct	1.3	0.1	0.2
Sep	1.2	-0.1	0.1
Aug	1.0	0.1	0.1
Annual Average ∆%
2012	2.0
2011	2.1
2010	1.1
2009	0.4
2008	2.6
Dec 2009	0.8
Dec 2008	1.1
Dec 2007	3.2
Dec 2006	1.4
Dec 2005	1.4
Dec 2004	2.2
Dec 2003	1.1
Dec 2002	1.1
Dec 2001	1.6

AE: Annual Equivalent

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

Chart IV-12 of the Statistisches Bundesamt Deutschland, or federal statistical office of Germany, provides the unadjusted consumer price index of Germany from 2005 to 2013. There is evident acceleration in the form of sharper slope in the first months of 2011 and then a flattening in subsequent months with renewed strength in Dec, decline in Jan 2012 and another upward spike from Feb to Apr 2012, new drop in May-Jun 2012 and increases in Jul and Aug 2012 relaxed in Sep-Nov 2012. Inflation returned in Dec 2012 and fell in Jan 2013, rebounding in Feb-Mar 2013. If risk aversion declines, new carry trades from zero interest rates to commodity futures could again result in higher inflation.

Chart IV-12, Germany, Consumer Price Index, Unadjusted, 2005=100

Source: Statistisches Bundesamt Deutschland

Chart IV-13, of the Statistisches Bundesamt Deutschland, or Federal Statistical Agency of Germany, provides the unadjusted consumer price index and trend of Germany from 2009 to 2013. Chart IV-13 captures inflation waves with alternation of periods of positive and negative slopes resulting from zero interest rates with shocks of risk appetite and risk aversion. For example, the negative slope of decline of inflation by 0.2 percent in Jun 2012 and 0.0 percent in May 2012 follows an upward slope of price increases in Feb-Apr 2012 after decline of inflation by 0.1 percent in Jan 2012. The final segment shows another positive slope caused by inflation of 0.4 percent in Jul 2012, which is followed by 0.4 percent in Aug 2012 and flattening segment as inflation remains almost unchanged with 0.1 percent in Sep 0.0 percent in Oct 2012, increasing 0.1 percent in Nov 2012 and increasing 0.3 percent in Dec 2012. Inflation fell 0.5 percent in Jan 2013 and jumped 0.6 percent in Feb 2013 and 0.5 percent in Mar 2013. The waves occur around an upward trend of prices, disproving the proposition of fear of deflation.

Chart IV-13, Germany, Consumer Price Index, Unadjusted and Trend, 2005=100

Source: Statistisches Bundesamt Deutschland

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

Table IV-13 provides the monthly and 12-month rate of inflation for segments of the consumer price index of Germany in Mar 2013. Inflation excluding energy increased 0.7 percent in Mar 2013 and rose 1.6 percent in 12 months. Excluding household energy inflation was 0.5 percent in Mar 2013 and rose 1.2 percent in 12 months. Food prices increased 0.9 percent in Mar 2013 and increased 3.7 percent in 12 months. There were differences in inflation of energy-related prices. Heating oil fell 6.2 percent in 12 months and decreased 3.1 percent in Mar. Motor fuels decreased 3.4 percent in Mar and decreased 6.7 percent in 12 months.

Table IV-13, Germany, Consumer Price Index ∆%

Mar 2013	Weight	12- Month ∆%	Month ∆%
Total	1,000.00	1.4	0.5
Excluding heating oil and motor fuels	950.52	1.9	0.7
Excluding household energy	931.81	1.2	0.5
Excluding Energy	893.44	1.6	0.7
Total Goods	479.77	1.4	0.4
Nondurable Consumer Goods	307.89	1.6	-0.3
Medium-Term Life Consumer Goods	91.05	2.1	2.9
Durable Consumer Goods	80.83	-0.2	0.2
Services	520.23	1.5	0.5
Energy Components
Motor Fuels	38.37	-6.7	-3.4
Household Energy	68.19	4.7	-0.3
Heating Oil	11.11	-6.2	-3.1
Food	90.52	3.7	0.9

Source: Statistisches Bundesamt Deutschland https://www.destatis.de/EN/PressServices/Press/pr/2013/04/PE13_135_611.html;jsessionid=EEAA55E4364EE2FA5E5FE3DC00BF56E7.cae2

Table IV-14 provides monthly and 12 months consumer price inflation in France. There are the same waves as in inflation worldwide (http://cmpassocregulationblog.blogspot.com/2013/03/recovery-without-hiring-ten-million.html and earlier http://cmpassocregulationblog.blogspot.com/2013/02/world-inflation-waves-united-states.html). In the first wave, annual equivalent inflation in Jan-Apr 2011 was 4.3 percent driven by the carry trade from zero interest rates to commodity futures positions in an environment of risk appetite. In the second wave, risk aversion caused the reversal of carry trades into commodity futures, resulting in the fall of the annual equivalent inflation rate to minus 1.2 percent in May-Jul 2011. In the third wave, annual equivalent inflation rose to 3.0 percent in Aug-Nov 2011 with alternations of risk aversion and risk appetite. In the fourth wave, risk aversion originating in the European debt crisis caused annual equivalent inflation of 0.0 percent from Dec 2011 to Jan 2012. In the fifth wave, annual equivalent inflation increased to 5.3 percent in Feb-Apr 2012. In the sixth wave, annual equivalent inflation was minus 2.4 percent in May-Jul 2012 during another bout of risk aversion causing reversal of carry trades from zero interest rates to commodity price futures exposures. In the seventh wave, annual equivalent inflation jumped to 8.7 percent in Aug 2012, 3.0 percent in Aug-Sep 2012 and 2.8 percent in Aug-Oct 2012. In the eighth wave, annual equivalent inflation was minus 2.4 percent in Nov 2012 and minus 1.6 percent in Nov 2012 to Jan 2013. In the ninth wave, annual equivalent inflation was 6.8 percent in Feb-Mar 2013.

Table IV-14, France, Consumer Price Index, Month and 12-Month ∆%

	Month ∆%	12-Month ∆%
Mar 2013	0.8	1.0
Feb	0.3	1.0
AE ∆% Feb-Mar	6.8
Jan	-0.5	1.2
Dec 2012	0.3	1.3
Nov	-0.2	1.4
AE ∆% Nov-Jan	-1.6
Oct	0.2	1.9
Sep	-0.2	1.9
Aug	0.7	2.1
AE ∆% Aug-Oct	2.8
Jul	-0.5	1.9
Jun	0.0	1.9
May	-0.1	2.0
AE ∆% May-Jul	-2.4
Apr	0.1	2.1
Mar	0.8	2.3
Feb	0.4	2.3
AE ∆% Feb-Apr	5.3
Jan	-0.4	2.4
Dec 2011	0.4	2.5
AE ∆% Dec-Jan	0.0
Nov	0.3	2.5
Oct	0.3	2.4
Sep	-0.1	2.2
Aug	0.5	2.2
AE ∆% Aug-Nov	3.0
Jul	-0.5	1.9
Jun	0.1	2.1
May	0.1	2.0
AE ∆% May-Jul	-1.2
Apr	0.3	2.1
Mar	0.8	2.0
Feb	0.5	1.6
Jan	-0.2	1.8
AE ∆% Jan-Apr	4.3
Dec 2010	0.4	1.8
Annual
2012		2.0
2011		2.1
2010		1.5
2009		0.1
2008		2.8
2007		1.5
2006		1.6
2005		1.8
2004		2.1
2003		2.1
2002		1.9
2001		1.7
2000		1.7
1999		0.5
1998		0.7
1997		1.2
1996		2.0
1995		1.8
1994		1.6
1993		2.1
1992		2.4
1991		3.2

AE: Annual Equivalent Metropolitan France

Source: Institut National de la Statistique et des Études Économiques http://www.insee.fr/en/themes/info-rapide.asp?id=29&date=20130411

Table IV-15 provides consumer price inflation in France and of various items in Mar 2013 and in the 12 months ending in Mar 2013. Inflation of all items was 0.8 percent in Mar 2013 and 1.0 percent in 12 months. Energy prices decreased 0.2 percent in Mar 2013 and increased 1.0 percent in 12 months. Transport and communications increased 0.8 percent in Mar 2013 and fell 6.7 percent in 12 months. Food and rentals and dwellings show the higher 12-month increases of 1.4 percent and 2.0 percent, respectively.

Table IV-15, France, Consumer Price Index, Month and 12-Month Percentage Changes of Index and Components, ∆%

Mar 2013	Weights	Month ∆%	12-Month ∆%
All Items	10000	0.8	1.0
Food	1658	0.5	1.4
Manufactured Products	2378	2.0	0.0
Energy	822	-0.2	1.0
Petroleum Products	495	-0.2	-2.0
Services	4576	0.4	1.2
Rentals, Dwellings	748	0.2	2.0
Transport and Communications	506	0.8	-6.7

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=29&date=20130411

Chart IV-14 of the Institut National de la Statistique et des Études Économiques (INSEE) of France shows headline and core consumer price inflation of France. Inflation rose during the commodity price shock of unconventional monetary policy. Risk aversion in late 2008 and beginning of 2009 caused collapse of valuation of commodity futures with resulting decline in inflation. Unconventional monetary policy with alternations of risk aversion resulted in higher inflation in France that stabilized in recent months until the increase of 0.2 percent in Oct 2011, 0.3 percent in Nov and 0.4 percent in Dec that were followed by decline of 0.4 percent in Jan 2012 and increases of 0.4 percent in Feb and 0.8 percent in Mar followed by 0.1 percent in Apr minus 0.1 percent in May and no change in Jun 2012 with marginal decline of 0.4 percent in Jul. Inflation returned with 0.7 percent in Aug 2012 but decline of 0.3 percent in Sep 2012 followed with increase of 0.2 percent in Oct 2012 and decrease of 0.2 percent in Nov 2012. Inflation in Dec 2012 was 0.3 percent and minus 0.5 percent in Jan 2013. Inflation returned at 0.3 percent in Feb 2013. Both the headline and core indexes are showing negative slopes in the new environment of risk aversion that causes reversals of carry trades into commodity futures prices. The 12-month rate of inflation has declined from 2.5 percent in Dec 2011 to 1.3 percent in Dec 2012, 1.2 percent in Jan 2013 and 1.0 percent in Feb-Mar 2013.

Chart IV-14, France, Consumer Price Index (IPC) and Core Consumer Price Index (ISJ) 12 Months Rates of Change

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=29&date=20130411

The first wave of commodity price increases in the first four months of Jan-Apr 2011 also influenced the surge of consumer price inflation in Italy shown in Table IV-16. Annual equivalent inflation in the first four months of 2011 was 4.9 percent. The crisis of confidence or risk aversion resulted in reversal of carry trades on commodity positions. Consumer price inflation in Italy was subdued in the second wave in Jun and May 2011 at 0.1 percent for annual equivalent 1.2 percent. In the third wave in Jul-Sep 2011, annual equivalent inflation increased to 2.4 percent. In the fourth wave, annual equivalent inflation in Oct-Nov 2011 jumped again at 3.0 percent. Inflation returned in the fifth wave from Dec 2011 to Jan 2012 at annual equivalent 4.3 percent. In the sixth wave, annual equivalent inflation rose to 5.7 percent in Feb-Apr 2012. In the seventh wave, annual equivalent inflation was 1.2 percent in May-Jun 2012. In the eighth wave, annual equivalent inflation increased to 3.0 percent in Jul-Aug 2012. In the ninth wave, inflation collapsed to zero in Sep-Oct 2012 and was minus 0.8 percent in annual equivalent in Sep-Nov 2012. In the tenth wave, annual equivalent inflation in Dec 2012 to Mar 2013 was 2.4 percent. Economies are shocked worldwide by intermittent waves of inflation originating in combination of zero interest rates and quantitative easing with alternation of risk appetite and risk aversion (http://cmpassocregulationblog.blogspot.com/2013/03/recovery-without-hiring-ten-million.html

and earlier http://cmpassocregulationblog.blogspot.com/2013/02/world-inflation-waves-united-states.html).

Table IV-16, Italy, Consumer Price Index

	Month	12 Months
Mar 2013	0.2	1.6
Feb	0.1	1.9
Jan	0.2	2.2
Dec 2012	0.2	2.3
AE ∆% Dec 2012-Mar 2013	2.4
Nov 2012	-0.2	2.5
Oct	0.0	2.6
Sep	0.0	3.2
AE ∆% Sep-Nov	-0.8
Aug	0.4	3.2
Jul	0.1	3.1
AE ∆% Jul-Aug	3.0
June	0.2	3.3
May	0.0	3.2
AE ∆% May-Jun	1.2
Apr	0.5	3.3
Mar	0.5	3.3
Feb	0.4	3.3
AE ∆% Feb-Apr	5.7
Jan	0.3	3.2
Dec 2011	0.4	3.3
AE ∆% Dec-Jan	4.3
Nov	-0.1	3.3
Oct	0.6	3.4
AE ∆% Oct-Nov	3.0
Sep	0.0	3.0
Aug	0.3	2.8
Jul	0.3	2.7
AE ∆% Jul-Sep	2.4
Jun	0.1	2.7
May	0.1	2.6
AE ∆% May-Jun	1.2
Apr	0.5	2.6
Mar	0.4	2.5
Feb	0.3	2.4
Jan	0.4	2.1
AE ∆% Jan-Apr	4.9
Dec 2010	0.4	1.9
Annual
2012		3.0
2011		2.8
2010		1.5
2009		0.8
2008		3.3
2007		1.8
2006		2.1

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/87441

Consumer price inflation in Italy by segments in the estimate by ISTAT for Feb 2013 is provided in Table IV-17. Total consumer price inflation in Mar 2013 was 0.2 percent and 1.6 percent in 12 months. Inflation of goods was 0.1 percent in Mar 2013 and 2.0 percent in 12 months. Prices of durable goods decreased 0.2 percent in Mar and decreased 0.3 percent in 12 months, as typical in most countries. Prices of energy increased 0.2 percent in Mar and increased 3.4 percent in 12 months. Food prices increased 0.1 percent in Feb and increased 2.5 percent in 12 months. Prices of services decreased 0.1 percent in Mar and rose 2.5 percent in 12 months. Transport prices, also influenced by commodity prices, increased 1.7 percent in Mar and increased 3.3 percent in 12 months. Carry trades from zero interest rates to positions in commodity futures cause increases in commodity prices. Waves of inflation originate in periods when there is no risk aversion and commodity prices decline during periods of risk aversion (http://cmpassocregulationblog.blogspot.com/2013/03/recovery-without-hiring-ten-million.html and earlier http://cmpassocregulationblog.blogspot.com/2013/02/world-inflation-waves-united-states.html).

Table IV-17, Italy, Consumer Price Index and Segments, Month and 12-Month ∆%

Mar 2013	Weights	Month ∆%	12-Month ∆%
General Index	1,000,000	0.2	1.6
I Goods	559,402	0.1	1.7
Food	168,499	0.1	2.5
Energy	94,758	0.2	3.4
Durable	89,934	-0.2	-0.3
Nondurable	71,031	0.0	1.2
II Services	440,598	0.5	1.7
Housing	71,158	0.1	2.0
Communications	20,227	-0.7	-5.0
Transport	81,266	1.7	3.3

Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/87441

Chart IV-14 of the Istituto Nazionale di Statistica shows moderation in 12-month percentage changes of the consumer price index of Italy with marginal increase followed by decline to 2.5 percent in Nov 2012, 2.3 percent in Dec 2012, 2.2 percent in Jan 2013, 1.9 percent in Feb 2013 and 1.6 percent in Mar 2013.

Chart, IV-14, Italy, Consumer Price Index, 12-Month Percentage Changes

Source: Istituto Nazionale di Statistica

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

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 ∆% 2012	Real GDP ∆% 2013	Real GDP ∆% 2014	Real GDP ∆% 2015
World	69,899	3.3	3.6	4.2	4.4
G7	33,697	1.4	1.5	2.2	2.5
Canada	1,739	1.9	2.0	2.4	2.4
France	2,778	0.1	0.4	1.1	1.5
DE	3,607	0.9	0.9	1.4	1.4
Italy	2,199	-2.3	-0.7	0.5	1.2
Japan	5,867	2.2	1.2	1.1	1.2
UK	2,431	-0.4	1.1	2.2	2.6
US	15,076	2.2	2.1	2.9	3.4
Euro Area	13,114	-0.4	0.2	1.2	1.5
DE	3,607	0.9	0.9	1.4	1.4
France	2,778	0.1	0.4	1.1	1.5
Italy	2,199	-2.3	-0.7	0.5	1.2
POT	238	-3.0	-1.0	1.2	1.9
Ireland	221	0.4	1.4	2.5	2.9
Greece	299	-6.0	-4.0	0.0	2.8
Spain	1,480	-1.5	-1.3	1.0	1.6
EMDE	25,438	5.3	5.6	5.9	6.1
Brazil	2,493	1.5	3.9	4.2	4.2
Russia	1,850	3.7	3.8	3.9	3.9
India	1,827	4.9	6.0	6.4	6.7
China	7,298	7.8	8.2	8.5	8.5

Notes; DE: Germany; EMDE: Emerging and Developing Economies (150 countries); POT: Portugal

Source: IMF World Economic Outlook databank http://www.imf.org/external/datamapper/index.php?db=WEO

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 2.4 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,

0.4 percent at SAAR and 1.7 percent relative to IVQ2011 (http://cmpassocregulationblog.blogspot.com/2013/04/mediocre-and-decelerating-united-states.html and earlier at http://cmpassocregulationblog.blogspot.com/2013/03/mediocre-gdp-growth-at-16-to-20-percent.html) and weak hiring (Section I and earlier http://cmpassocregulationblog.blogspot.com/2013/03/recovery-without-hiring-ten-million.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 changed 0.0 percent relative to a year earlier. UK GDP increased 0.9 percent in IIIQ2012 and increased 0.4 percent relative to a year earlier. UK GDP fell 0.3 percent in IVQ2012 relative to IIIQ2012 and increased 0.2 percent relative to a year earlier. Italy has experienced decline of GDP in six consecutive quarters from IIIQ2011 to IVQ2012. Italy’s GDP fell 0.9 percent in IQ2012 and declined 1.6 percent relative to IQ2011. Italy’s GDP fell 0.7 percent in IIQ2012 and declined 2.6 percent relative to a year earlier. In IIIQ2012, Italy’s GDP fell 0.2 percent and declined 2.6 percent relative to a year earlier. The GDP of Italy contracted 0.9 percent in IVQ2012 and fell 2.8 percent relative to a year earlier. France’s GDP fell 0.1 percent in IQ2012 and increased 0.5 percent relative to a year earlier. France’s GDP decreased 0.1 percent in IIQ2012 and increased 0.1 percent relative to a year earlier. In IIIQ2012, France’s GDP increased 0.2 percent and increased 0.1 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	-0.1	0.5
Italy	-0.9	-1.6
United Kingdom	-0.1	0.3
	IIQ2012/IQ2012	IIQ2012/IIQ2011
United States	QOQ: 0.3 SAAR: 1.3	2.1
Japan	QOQ: -0.2 SAAR: -0.9	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	-2.6
United Kingdom	-0.4	0.0
	IIIQ2012/ IIQ2012	IIIQ2012/ IIIQ2011
United States	QOQ: 0.8 SAAR: 3.1	2.6
Japan	QOQ: –0.9 SAAR: –3.7	0.4
China	2.2	7.4
Euro Area	-0.1	-0.8
Germany	0.2	0.4
France	0.2	0.1
Italy	-0.2	-2.6
United Kingdom	0.9	0.4
	IVQ2012/IIIQ2012	IVQ2012/IVQ2011
United States	QOQ: 0.1 SAAR: 0.4	1.7
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	-2.8
United Kingdom	-0.3	0.2

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 http://cmpassocregulationblog.blogspot.com/2013/03/united-states-commercial-banks-assets.html and earlier 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 Feb 2013, Japan’s exports increased 2.9 percent in 12 months and imports increased 11.9 percent. 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. In Mar 2013, China exports increased 10.0 percent relative to a year earlier and imports 14.1 percent. Germany’s exports decreased 1.5 percent in the month of Feb 2013 and decreased 2.8 percent in the 12 months ending in Feb 2013 while imports decreased 3.8 percent in the month of Feb and decreased 5.9 percent in the 12 months ending in Feb. 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 0.7 percentage points from UK value added in IQ2012, deducted 0.8 percentage points in IIQ2012, added 0.4 percentage points in IIIQ2012 and subtracted 0.2 percentage points in IVQ2012. France’s exports decreased 1.9 percent in Feb 2013 while imports decreased 0.8 percent and net trade deducted 0.4 percentage points from GDP growth in IIQ2012, adding 0.3 percentage points in IIIQ2012 and 0.2 percentage points in IVQ2012. US exports increased 0.8 percent in Feb 2013 and goods exports increased 2.2 percent in Jan-Feb 2013 relative to a year earlier but net trade added 0.38 percentage points to GDP growth in IIIQ2012 and added 0.33 percentage points in IVQ2012. US imports increased 0.0 percent in Feb 2013 and goods imports decreased 0.1 percent in Jan-Feb 2013 relative to a year earlier. In the six months ending in Feb 2013, United States national industrial production accumulated increase of 2.5 percent at the annual equivalent rate of 5.1 percent, which is higher than 2.5 percent growth in 12 months. Business equipment decreased 0.4 percent in Sep, decreased 1.2 percent in Oct, increased 3.1 percent in Nov, increased 0.5 percent in Dec, fell 1.3 percent in Jan, and increased 2.5 percent in Feb 2013, growing 3.2 percent in the 12 months ending in Feb 2013 and at the annual equivalent rate of 6.4 percent in the six months ending in Feb 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 increased to 79.6 percent [in Feb 2013], a rate that is 0.6 percentage points below its long-run (1972--2012) average.” United States industry is apparently decelerating with some strength at the margin. Manufacturing increased 0.8 percent in Feb 2013 seasonally adjusted, increasing 2.2 percent not seasonally adjusted in 12 months, and increased 3.0 percent in the six months ending in Feb 2013 or at the annual equivalent rate of 6.1 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 M ∆%	Exports 12 M ∆%	Imports M ∆%	Imports 12 M ∆%
USA	0.8 Feb	2.2 Jan-Feb	0.0 Jan	-0.1 Jan-Feb
Japan		Feb 2013 -2.9 Jan 2013 6.4 Dec -5.8 Nov -4.1 Oct -6.5 Sep -10.3 Aug -5.8 Jul -8.1		Feb 2013 11.9 Jan 2013 7.3 Dec 1.9 Nov 0.8 Oct -1.6 Sep 4.1 Aug -5.4 Jul 2.1
China		10.0 Mar 13 18.4 Jan-Mar 13		14.1 Mar 13 8.4 Jan-Mar 13
Euro Area	5.2 12-M Jan	7.4 Jan-Dec	1.4 12-M Jan	1.8 Jan-Dec
Germany	-1.5 Feb CSA	-2.8 Feb	-3.8 B CSA	-5.9 Feb
France Feb	-1.9	-3.6	-0.8	-4.2
Italy Jan	1.4	8.7	0.4	-1.8
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 +0.33 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	-0.4 IIQ2012 0.3 IIIQ2012 0.2 IVQ2012
UK	-0.7 IQ2012 -0.8 IIQ2012 +0.4 IIIQ2012 -0.2 IVQ2012

Sources: http://www.census.gov/foreign-trade/ http://www.bea.gov/iTable/index_nipa.cfm

The geographical breakdown of exports and imports of Japan with selected regions and countries is provided in Table V-5 for Feb 2013. The share of Asia in Japan’s trade is more than one half, 52.2 percent of exports and 42.1 percent of imports. Within Asia, exports to China are 15.9 percent of total exports and imports from China 18.5 percent of total imports. While exports to China fell 15.8 percent in the 12 months ending in Feb 2013, imports from China increased 22.0 percent. The second largest export market for Japan in Feb 2013 is the US with share of 19.1 percent of total exports and share of imports from the US of 7.9 percent in total imports. Western Europe has share of 10.6 percent in Japan’s exports and of 9.9 percent in imports. Rates of growth of exports of Japan in Feb 2013 are sharply negative for all countries and regions with the exception of growth of 5.7 percent for exports to the US and 1.3 percent for exports to Australia. 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 2.9 percent in Feb 2013 while imports increased 11.9 percent but higher levels after the earthquake and declining prices may be another factor. Growth rates of imports in the 12 months ending in Feb 2013 are positive for all trading partners. Imports from Asia increased 14.0 percent in the 12 months ending in Feb 2013 while imports from China increased 22.0 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

Feb 2013	Exports Millions Yen	12 months ∆%	Imports Millions Yen	12 months ∆%
Total	5,284,067	-2.9	6,061,534	11.9
Asia	2,757,508	-5.2	2,551,827	14.0
China	842,260	-15.8	1,119,981	22.0
USA	1,007,389	5.7	479,214	0.6
Canada	72,975	-17.2	77,539	22.2
Brazil	39,131	-1.8	97,131	15.1
Mexico	71,309	4.7	29,109	32.3
Western Europe	558,641	-9.0	600,914	11.3
Germany	136,919	-2.5	160,801	7.8
France	44,677	-15.1	80,966	8.9
UK	88,406	-16.7	49,949	19.9
Middle East	194,606	-6.9	1,358,008	14.4
Australia	136,255	1.3	352,350	1.9

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, increased marginally to 53.1 in Mar from 52.9 in Feb, indicating expansion at a moderate rate (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10974).This index has remained above the contraction territory of 50.0 during 44 consecutive months and the average for IQ2013 at 53.0 is slightly higher than 52.9 in IVQ2012. The employment index decreased to 51.4 in Mar relative to 52.3 in Feb with input prices rising at slower rate (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10974) David Hensley, Director of Global Economic Coordination at JP Morgan, finds continuing growth with slowing new orders and slow employment growth raising doubts on the sustainability of growth (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10974). The JP Morgan Global Manufacturing PMI^™, produced by JP Morgan and Markit in association with ISM and IFPSM, increased marginally to 51.2 in Mar from 50.9 in Feb, which is the third consecutive reading above 50 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10951). New export business increased marginally for the first month after eleven consecutive monthly declines. The HSBC Brazil Composite Output Index, compiled by Markit, decreased from 52.9 in Feb to 51.0 in Mar, indicating improvement but with business activity growing at lower rates in both manufacturing and services (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10948). The HSBC Brazil Services Business Activity index, compiled by Markit, decreased from 52.1 in Feb to 50.3 in Mar ((http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10948). Andre Loes, Chief Economist, Brazil, at HSBC, finds recovering economy but within a modest forecast for 2013 lowered from 3 percent to 2.6 percent ((http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10948). The HSBC Brazil Purchasing Managers’ Index^TM (PMI^™) decreased from a 22-month high in Jan 2012 at 53.2 to 52.5 in Feb 2013 and 51.2 in Mar 2013 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10871). The average of 52.5 in IQ2013 was higher than the average of 51.2 for IVQ2012. Andre Loes, Chief Economist, Brazil at HSBC, finds continuing expansion in Brazil’s manufacturing with greater strength in IQ2013 than in IVQ2012 and the highest reading in IQ2011, supporting the view that the economy of Brazil is experiencing moderate recovery (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10871).

VA United States. The Markit Flash US Manufacturing Purchasing Managers’ Index^™ (PMI^™) seasonally adjusted increased to 54.9 in Mar from 54.3 in Feb, continuing to suggest strengthening US manufacturing activity (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10868).

New export orders registered 51.2 in Mar from 48.5 in Feb, indicating expansion at a moderate rate while output continued growth after a high of eleven months in Feb. Chris Williams, Chief Economist at Markit, finds that the survey data are consistent with growth at 2.0 percent in IQ2013 that can provide impulse to US economic growth (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10868). The Markit US Manufacturing Purchasing Managers’ Index^™ (PMI^™) increased to 54.6 in Mar from 54.3 in Feb (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10933). The index of new exports orders increased from 48.5 in Feb 2013 to 51.8 in Mar 2013 while total new orders were unchanged from 54.4 in Feb to 55.4 in Mar. 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=10933). The purchasing managers’ index (PMI) of the Institute for Supply Management (ISM) Report on Business^® decreased 2.9 percentage points from 54.2 in Feb to 51.3 in Mar (http://www.ism.ws/ISMReport/MfgROB.cfm?navItemNumber=12942). The index of new orders decreased 6.4 percentage points from 57.8 in Feb to 51.4 in Mar. The index of exports increased 2.5 percentage points from 53.5 in Feb to 56.0 in Mar, remaining in expansion territory. The Non-Manufacturing ISM Report on Business^® PMI decreased 1.6 percentage points from 56.0 in Feb to 54.4 in Mar, indicating production growth during 44 consecutive months, while the index of new orders decreased 3.6 percentage points from 58.2 in Feb to 54.6 in Mar (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	Feb 12 months NSA ∆%: 2.0; ex food and energy ∆%: 2.0 Feb month SA ∆%: 0.7; ex food and energy ∆%: 0.2 Blog 3/17/13
Producer Price Index	Feb 12-month NSA ∆%: 1.3; ex food and energy ∆% 1.3 Feb month SA ∆% = 0.4; ex food and energy ∆%: 0.1 Blog 3/31/13
PCE Inflation	Jan 12-month NSA ∆%: headline 1.2; ex food and energy ∆% 1.3 Blog 3/31/13
Employment Situation	Household Survey: Feb Unemployment Rate SA 7.6% Blog calculation People in Job Stress Mar: 29.6 million NSA, 18.2% of Labor Force Establishment Survey: Nov Nonfarm Jobs +88,000; Private +95,000 jobs created Feb 12-month Average Hourly Earnings Inflation Adjusted ∆%: 0.1 Blog 4/5/13
Nonfarm Hiring	Nonfarm Hiring fell from 63.8 million in 2006 to 52.0 million in 2012 or by 11.8 million Private-Sector Hiring Jan 2013 4.078 million lower by 1.082 million than 5.160 million in Jan 2006 Blog 3/17/13
GDP Growth	BEA Revised National Income Accounts IQ2012/IQ2011 ∆%: 2.4 IIQ2012/IIQ2011 2.1 IIIQ2012/IIIQ2011 2.6 IVQ2012/IVQ2011 1.7 IQ2012 SAAR 2.0 IIQ2012 SAAR 1.3 IIIQ2012 SAAR 3.1 IVQ2012 SAAR 0.4 Blog 3/31/13
Real Private Fixed Investment	SAAR IVQ2012 9.7 ∆% IVQ2007 to IIIQ2012: minus 11.2% Blog 3/3/13
Personal Income and Consumption	Feb month ∆% SA Real Disposable Personal Income (RDPI) SA ∆% 0.7 Real Personal Consumption Expenditures (RPCE): 0.3 12-month Feb NSA ∆%: RDPI: 0.9; RPCE ∆%: 2.0 Blog 3/31/2013
Quarterly Services Report	IVQ12/IVQ11 SA ∆%: Information 5.4 Financial & Insurance 6.2 Blog 3/10/13
Employment Cost Index	Compensation Private IVQ2012 SA ∆%: 0.5 Dec 12 months ∆%: 2.2 Blog 2/10/13
Industrial Production	Feb month SA ∆%: 0.7 Feb 12 months SA ∆%: 2.5 Manufacturing Feb SA ∆% 0.8 Feb 12 months SA ∆% 2.0, NSA 2.2 Capacity Utilization: 79.6 Blog 3/24/13
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 Feb 10.04 to Mar 9.24 New Orders: From Feb 13.31 to Mar +8.18 Blog 3/24/13
Philadelphia Fed Business Outlook Index	General Index from Feb -12.5 to Mar 2.0 New Orders from Feb -7.8 to Mar 0.5 Blog 3/24/13
Manufacturing Shipments and Orders	New Orders SA Feb ∆% 3.0 Ex Transport 0.3 Jan-Feb NSA New Orders 0.7 Ex transport 0.9 Blog 4/5/13
Durable Goods	Feb New Orders SA ∆%: 5.7; ex transport ∆%: -0.5 Jan-Feb 13/Jan-Feb 12 New Orders NSA ∆%: 0.6; ex transport ∆% 1.2 Blog 3/31/13
Sales of New Motor Vehicles	Jan-Mar 2013 3,688,662; Jan-Mar 2012 3,467,496. Mar 13 SAAR 15.27 million, Feb 13 SAAR 15.38 million, Mar 2012 SAAR 14.12 million Blog 4/5/13
Sales of Merchant Wholesalers	Jan 2013/Jan 2012 NSA ∆%: Total 5.9; Durable Goods: 5.4; Nondurable Goods: 6.2 Blog 3/10/13
Sales and Inventories of Manufacturers, Retailers and Merchant Wholesalers	Jan 13/Jan 12 NSA ∆%: Sales Total Business 4.9; Manufacturers 3.1 Retailers 6.1; Merchant Wholesalers 5.9 Blog 3/17/13
Sales for Retail and Food Services	Feb 2013/Feb 2012 ∆%: Retail and Food Services 3.6; Retail ∆% 3.6 Blog 3/17/13
Value of Construction Put in Place	Feb SAAR month SA ∆%: 1.2 Feb 12-month NSA: 6.9 Jan-Feb 2013 ∆% 6.6 Blog 4/5/13
Case-Shiller Home Prices	Jan 2013/Jan 2012 ∆% NSA: 10 Cities 7.3; 20 Cities: 8.1 ∆% Jan SA: 10 Cities 1.0 ; 20 Cities: 1.0 Blog 3/31/13
FHFA House Price Index Purchases Only	Jan SA ∆% 0.6; 12 month NSA ∆%: 6.5 Blog 3/31/13
New House Sales	Feb 2013 month SAAR ∆%: minus 4.6 Jan-Feb 2013/Jan-Feb 2012 NSA ∆%: 19.0 Blog 3/31/13
Housing Starts and Permits	Feb Starts month SA ∆%: 0.8 ; Permits ∆%: 4.6 Jan-Feb 2013/Jan-Feb 2012 NSA ∆% Starts 26.0; Permits ∆% 32.8 Blog 3/24/13
Trade Balance	Balance Jan SA -$44,448 million versus Dec -$18144 million Exports Jan SA ∆%: -1.2 Imports Jan SA ∆%: 1.8 Goods Exports Jan 2013/2012 NSA ∆%: 4.3 Goods Imports Jan 2013/2012 NSA ∆%: 0.9 Blog 3/10/13
Export and Import Prices	Feb 12-month NSA ∆%: Imports -0.3; Exports 1.5 Blog 3/17/13
Consumer Credit	Feb ∆% annual rate: 7.8 Blog 4/5/13
Net Foreign Purchases of Long-term Treasury Securities	Jan Net Foreign Purchases of Long-term Treasury Securities: $25.7 billion Major Holders of Treasury Securities: China $1264 billion; Japan $1115 billion; Total Foreign US Treasury Holdings Jan $5616 billion Blog 3/17/13
Treasury Budget	Fiscal Year 2013/2012 ∆% Feb: Receipts 13.1; Outlays 2.1; Individual Income Taxes 17.7 Deficit Fiscal Year 2011 $1,297 billion Deficit Fiscal Year 2012 $1,089,353 million Blog 3/17/2013
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	Feb 2013 SAAR ∆%: Securities -3.2 Loans 2.1 Cash Assets 66.6 Deposits 4.5 Blog 3/24/13
Flow of Funds	2012 ∆ since 2007 Assets -$868.9 MM Real estate -$3562.7 MM Financial +$2204.3 MM Net Worth -$46.6 MM Blog 3/17/13
Current Account Balance of Payments	IVQ2012 +$6793 MM %GDP 2.8 Blog 3/17/13

Links to blog comments in Table USA:

03/31/13 http://cmpassocregulationblog.blogspot.com/2013/04/mediocre-and-decelerating-united-states.html

3/24/13 http://cmpassocregulationblog.blogspot.com/2013/03/united-states-commercial-banks-assets.html

3/17/13 http://cmpassocregulationblog.blogspot.com/2013/03/recovery-without-hiring-ten-million.html

3/10/13 http://cmpassocregulationblog.blogspot.com/2013/03/thirty-one-million-unemployed-or.html

3/3/13 http://cmpassocregulationblog.blogspot.com/2013/03/mediocre-gdp-growth-at-16-to-20-percent.html

2/10/13 http://cmpassocregulationblog.blogspot.com/2013/02/united-states-unsustainable-fiscal.html

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

Growth rates and levels of sales in millions of dollars of manufacturers, retailers and merchant wholesalers are provided in Table VA-1. Total business sales increased 1.2 percent in Feb after decreasing 0.1 percent in Jan and increased 0.1 percent in the 12 months ending in Feb 2013. Sales of manufacturers increased 0.9 percent in Feb after increasing 0.4 percent in Jan and increased 0.0 percent in the 12 months ending in Feb. Retailers’ sales increased 1.2 percent in Feb, increased 0.0 percent in Jan and increased 0.9 percent in 12 months ending in Feb. Sales of merchant wholesalers increased 1.7 percent in Feb, decreased 0.8 percent in Jan and decreased 0.3 percent in 12 months ending in Feb. These data are not adjusted for price changes such that they reflect increases in both quantities and prices.

Table VA-1, US, Percentage Changes for Sales of Manufacturers, Retailers and Merchant Wholesalers

	Feb 13/ Jan 13 ∆% SA	Feb 2013 Millions of Dollars NSA	Jan 13/ Dec 12 ∆% SA	Feb 13/ Feb 12 ∆% NSA
Total Business	1.2	1,175,316	-0.1	0.1
Manufacturers	0.9	455,104	0.4	0.0
Retailers	1.2	338,329	0.0	0.9
Merchant Wholesalers	1.7	381,883	-0.8	-0.3

Source: US Census Bureau http://www.census.gov/mtis/

Chart VA-1 of the US Census Bureau provides total US sales of manufacturing, retailers and wholesalers seasonally adjusted (SA) in millions of dollars. Seasonal adjustment softens adjacent changes for purposes of comparing short-term variations free of seasonal factors. There was sharp drop in the global recession followed by sharp recovery with decline and recovery in the final segment above the peak before the global recession. Data are not adjusted for price changes.

Chart VA-1, US, Total Business Sales of Manufacturers, Retailers and Merchant Wholesalers, SA, Millions of Dollars, Jan 1992-Feb 2013

US Census Bureau

Chart VA-2 of the US Census Bureau provides total US sales of manufacturing, retailers and wholesalers not seasonally adjusted (NSA) in millions of dollars. The series without adjustment shows sharp jagged behavior because of monthly fluctuations following seasonal patterns. There is sharp recovery from the global recession in a robust trend, which is mixture of price and quantity effects because data are not adjusted for price changes. There is stability in the final segment.

Chart VA-2, US, Total Business Sales of Manufacturers, Retailers and Merchant Wholesalers, NSA, Millions of Dollars, Jan 1992-Feb 2013

US Census Bureau

Businesses added cautiously to inventories to replenish stocks. Retailers added 0.3 percent to inventories in Feb 2013 and 1.4 percent in Jan with growth of 8.8 percent in 12 months, as shown in Table VA-2. Total business increased inventories by 0.1 percent in Feb, 0.9 percent in Jan and 5.0 percent in 12 months. Inventories sales/ratios of total business continued at a level close to 1.28 under judicious management to avoid costs and risks. Inventory/sales ratios of manufacturers and retailers are higher than for merchant wholesalers. There is stability in inventory/sales ratios in individual months and relative to a year earlier.

Table VA-2, US, Percentage Changes for Inventories of Manufacturers, Retailers and Merchant Wholesalers and Inventory/Sales Ratios

Inventory Change	Feb 13 Millions of Dollars NSA	Feb 13/ Jan 13 ∆% SA	Jan 13/ Dec 12 ∆% SA	Feb 13/ Feb 12 ∆% NSA
Total Business	1,641,222	0.1	0.9	5.0
Manufacturers	622,106	0.2	0.6	2.4
Retailers	513,409	0.3	1.4	8.8
Merchant Wholesalers	505,707	-0.3	0.8	4.6
Inventory/ Sales Ratio NSA	Feb 13 Billions of Dollars NSA	Feb 2013 SA	Jan 2013 SA	Feb 2012 SA
Total Business	1,641,222	1.28	1.29	1.26
Manufacturers	622,106	1.27	1.28	1.28
Retailers	513,409	1.39	1.40	1.33
Merchant Wholesalers	505,707	1.19	1.21	1.18

Source: US Census Bureau http://www.census.gov/mtis/

Chart VA-3 of the US Census Bureau provides total business inventories of manufacturers, retailers and merchant wholesalers seasonally adjusted (SA) in millions of dollars from Jan 1992 to Feb 2013. The impact of the two recessions of 2001 and IVQ2007 to IIQ2009 is evident in the form of sharp reductions in inventories. Inventories have surpassed the peak before the global recession. Data are not adjusted for price changes.

Chart VA-3, US, Total Business Inventories of Manufacturers, Retailers and Merchant Wholesalers, SA, Millions of Dollars, Jan 1992-Feb 2013

US Census Bureau

Chart VA-4 provides total business inventories of manufacturers, retailers and merchant wholesalers not seasonally adjusted (NSA) from Jan 1992 to Feb 2013 in millions of dollars. The recessions of 2001 and IVQ2007 to IIQ2009 are evident in the form of sharp reductions of inventories. There is sharp upward trend of inventory accumulation after both recessions. Total business inventories are significantly higher than in the peak before the global recession.

Chart VA-4, US, Total Business Inventories of Manufacturers, Retailers and Merchant Wholesalers, NSA, Millions of Dollars, Jan 1992-Feb 2013

US Census Bureau

Inventories follow business cycles. When recession hits sales inventories pile up, declining with expansion of the economy. In a fascinating classic opus, Lloyd Meltzer (1941, 129) concludes:

“The dynamic sequences (I) through (6) were intended to show what types of behavior are possible for a system containing a sales output lag. The following conclusions seem to be the most important:

(i) An economy in which business men attempt to recoup inventory losses will always undergo cyclical fluctuations when equilibrium is disturbed, provided the economy is stable.

This is the pure inventory cycle.

(2) The assumption of stability imposes severe limitations upon the possible size of the marginal propensity to consume, particularly if the coefficient of expectation is positive.

(3) The inventory accelerator is a more powerful de-stabilizer than the ordinary acceleration principle. The difference in stability conditions is due to the fact that the former allows for replacement demand whereas the usual analytical formulation of the latter does not. Thus, for inventories, replacement demand acts as a de-stabilizer. Whether it does so for all types of capital goods is a moot question, but I believe cases may occur in which it does not.

(4) Investment for inventory purposes cannot alter the equilibrium of income, which depends only upon the propensity to consume and the amount of non-induced investment.

(5) The apparent instability of a system containing both an accelerator and a coefficient of expectation makes further investigation of possible stabilizers highly desirable.”

Chart VA-5 shows the increase in the inventory/sales ratios during the recession of 2007-2009. The inventory/sales ratio fell during the expansions. The inventory/sales ratio declined to a trough in 2011, climbed and then stabilized at current levels in 2012 and beginning of 2013.

Chart VA-5, Total Business Inventories/Sales Ratios 2002 to 2013

Source: US Census Bureau

Sales and inventories of merchant wholesalers except manufacturers’ sales branches and offices are shown in Table VA-3 for Feb 2013 and percentage changes from the prior month and for Feb 2013 relative to Feb 2012. These data are volatile aggregating diverse categories of durable and nondurable goods without adjustment for price changes. Total sales for the US rose 2.8 percent in Feb 2013 relative to Feb 2012 and increased 1.7 percent in Feb 2013 relative to Jan 2013. The value of total sales is quite high at $786.1 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 Feb 2013 reached $346.9 billion, over two trillion dollars for a year, increasing 0.4 percent in Feb 2013 relative to Jan 2013 and increasing 1.8 percent in Feb 2013 relative to Feb 2012. Sales of automotive products reached $62.7 billion in Feb 2013, decreasing 0.6 percent in the month and increasing 1.9 percent relative to a year earlier. There is strong performance of 6.0 percent in machinery but lower of 0.8 percent in electrical products. Sales of nondurable goods rose 3.6 percent over a year earlier. The influence of commodity prices returned as suggested by increase of 2.1 percent in Feb 2013 and increase of 9.2 percent in Feb 2013 relative to a year earlier in farm products with increase of 10.6 percent in petroleum products in Feb 2013 and increase of 2.9 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 decreased 0.3 percent in Feb 2013 and increased 4.6 percent relative to a year earlier. Inventories of durable goods of $298.9 billion are 59.1 percent of total inventories of $505.7 billion and rose 7.5 percent relative to a year earlier. Automotive inventories decreased 2.3 percent relative to a year earlier. Machinery inventories of $83.9 billion rose 15.6 percent relative to a year earlier. Inventories of nondurable goods of $206.7 billion are 40.9 percent of the total and increased 0.6 percent relative to a year earlier. Inventories of farm products decreased 5.7 percent in Feb relative to Jan and decreased 4.1 percent relative to a year earlier. Inventories of petroleum products decreased 1.7 percent in Feb and decreased 8.9 percent relative to a year earlier.

Table VA-3, US, Sales and Inventories of Merchant Wholesalers except Manufacturers’ Sales Branches and Offices, Month ∆%

2013	Sales $ Billions Jan-Feb 2013 NSA	Sales Feb ∆% SA	Sales∆% Feb 2013 from Feb 2012 NSA	INV $ Billions Feb 2013 NSA	INV Jan ∆% SA	INV ∆% Feb 2013 from Feb 2012 NSA
US Total	786.1	1.7	2.8	505.7	-0.3	4.6
Durable	346.9	0.4	1.8	298.9	0.2	7.5
Automotive	62.7	-0.6	1.9	45.1	0.0	-2.3
Prof. Equip.	58.6	2.2	2.2	34.2	0.5	9.5
Computer Equipment	28.7	2.3	-0.7	13.0	2.2	16.2
Electrical	58.7	-2.3	0.8	42.3	0.4	5.1
Machinery	62.1	0.2	6.0	83.8	0.1	15.6
Not Durable	439.1	2.7	3.6	206.7	-0.9	0.6
Drugs	70.6	-2.4	-0.1	33.9	-3.0	3.1
Apparel	23.4	2.4	6.5	21.7	2.0	1.2
Groceries	93.6	-1.1	1.8	36.0	-0.1	5.7
Farm Products	39.1	2.1	9.2	24.4	-5.7	-4.1
Petroleum	124.4	10.6	2.9	27.4	-1.7	-8.9

Note: INV: inventories

Source: US Census Bureau http://www.census.gov/wholesale/index.html

Chart VA-5 of the US Census Bureau provides wholesale trade sales without adjustment for seasonality or price changes from Jan 1992 to Feb 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-5, US, Wholesale Trade Sales, Monthly, NSA, Jan 1992-Feb 2013, Millions of Dollars

Source: US Census Bureau

Chart VA-6 of the US Census Bureau provides US wholesale trade sales with seasonal adjustment from Jan 1992 to Feb 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-6, US, Wholesale Trade Sales, Monthly, SA, Jan 1992-Feb 2013, Millions of Dollars

Source: US Census Bureau

Inventory/sales ratios of merchant wholesalers except manufacturers’ sales branches and offices are shown in Table VA-4. The total for the US has remained almost without change at 1.19 in Feb 2013, 1.21 in Jan 2013 and 1.18 in Feb 2012. Inventory/sales ratios are higher in durable goods industries but still remain relatively stable with 1.59 in Feb 2013, 1.59 in Jan 2013 and 1.50 in Feb 2012. Computer equipment operates with low inventory/sales ratios of 0.82 in Feb 2013, 0.82 in Jan 2013 and 0.71 in Feb 2012 because of the capacity to fill orders on demand. As expected because of perishable nature, nondurable inventory/sales ratios are quite low with 0.86 in Feb 2013 and 0.90 in Jan 2013, which are almost equal to 0.90 in Feb 2012. There are exceptions such as 1.76 in Feb 2013 in apparel that is equal to 1.76 in Jan 2013 and lower than 1.89 in Feb 2012.

Table VA-4, Inventory/Sales Ratios of Merchant Wholesalers except Manufacturers’ Sales Branches and Offices, % SA

	Feb 2013	Jan 2013	Feb 2012
US Total	1.19	1.21	1.18
Durable	1.59	1.59	1.50
Automotive	1.31	1.30	1.37
Prof. Equip.	1.05	1.07	0.99
Comp. Equip.	0.82	0.82	0.71
Electrical	1.37	1.33	1.30
Machinery	2.49	2.49	2.30
Not Durable	0.86	0.90	0.90
Drugs	1.00	1.00	0.95
Apparel	1.76	1.76	1.89
Groceries	0.74	0.74	0.71
Farm Products	1.08	1.17	1.24
Petroleum	0.39	0.44	0.46

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-7 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-7, US, Inventories of Merchant Wholesalers, Millions of Dollars, NSA, Jan 1992-Feb 2013

Source: US Census Bureau

Inventories of merchant wholesalers except manufacturers’ sales branches in millions of dollars SA are provided in Chart VA-8 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-8, US, Inventories of Merchant Wholesalers, Millions of Dollars, SA, Jan 1992-Feb 2013

Source: US Census Bureau

http://www2.census.gov/wholesale/img/mwtsbrf.jpg

Chart VA-9 provides the chart of the US Census Bureau with inventories/sales ratios of merchant wholesalers from 2004 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-9, US, Monthly Inventories/Sales Ratios of Merchant Wholesalers, SA, 2004-2013

Source: US Census Bureau

Sales of retail and food services decreased 0.4 percent in Mar 2013 after increasing 1.0 percent in Feb 2013 seasonally adjusted (SA), growing 2.8 percent in Jan-Mar 2013 relative to Jan-Mar 2012 not seasonally adjusted (NSA), as shown in Table VA-5. Excluding motor vehicles and parts, retail sales decreased 0.4 percent in Mar 2013, increasing 1.0 percent in Feb 2013 SA and increasing 2.2 percent NSA in Jan-Mar 2013 relative to a year earlier. Sales of motor vehicles and parts decreased 0.6 percent in Mar 2013 after increasing 1.3 percent in Feb 2013 SA and increasing 5.5 percent NSA in Jan-Mar 2013 relative to a year earlier. Gasoline station sales decreased 2.2 percent SA in Mar 2013 after increasing 5.4 percent in Feb 2013 in oscillating prices of gasoline that are moderating, decreasing 0.2 percent in Jan-Mar 2013 relative to a year earlier.

Table VA-5, US, Percentage Change in Monthly Sales for Retail and Food Services, ∆%

	Mar/ Feb ∆% SA	Feb/Jan ∆% SA	Jan-Mar 2013 Million Dollars NSA	Jan-Mar 2013 from Jan-Mar 2012 ∆% NSA
Retail and Food Services	-0.4	1.0	1,189,046	2.8
Excluding Motor Vehicles and Parts	-0.4	1.0	961,321	2.2
Motor Vehicles & Parts	-0.6	1.3	227,725	5.5
Retail	-0.6	1.2	1,057,055	2.7
Building Materials	0.1	0.7	64,147	1.4
Food and Beverage	-0.1	0.8	156,733	2.9
Grocery	0.0	0.8	141,418	2.5
Health & Personal Care Stores	-0.3	-0.1	69,011	-0.4
Clothing & Clothing Accessories Stores	0.1	-0.3	53,593	2.7
Gasoline Stations	-2.2	5.4	129,629	-0.2
General Merchandise Stores	-1.2	0.2	142,374	-4.0
Food Services & Drinking Places	0.7	-0.5	131,991	3.8

Source: US Census Bureau http://www.census.gov/retail/

Chart VA-10 of the US Bureau of the Census shows percentage change of retail and food services sales. Auto sales have been increasing monthly, and particularly relative to a year earlier, but with weakness in the total excluding auto sales and declines or mild growth in general merchandise.

Chart VA-10, US, Percentage Change of Retail and Food Services Sales

Source: US Census Bureau

http://www2.census.gov/retail/releases/historical/marts/img/martsbrf.gif

Chart VA-11 of the US Census Bureau provides total sales of retail trade and food services seasonally adjusted (SA) from Jan 1992 to Mar 2013 in millions of dollars. The impact on sales of the shallow recession of 2001 was much milder than the sharp contraction in the global recession from IVQ2007 to IIQ2009. There is flattening in the final segment of the series followed by another increase. Data are not adjusted for price changes.

Chart VA-11, US, Total Sales of Retail Trade and Food Services, SA, Jan 1992-Mar 2013, Millions of Dollars

Source: US Census Bureau

http://www.census.gov/retail/

Chart VA-12 of the US Census Bureau provides total sales of retail trade and food services not seasonally adjusted (NSA) in millions of dollars from Jan 1992 to Mar 2013. Data are not adjusted for seasonality, which explains sharp jagged behavior, or price changes. There was contraction during the global recession from IVQ2007 to IIQ2009 with strong rebound to a higher level and stability followed by strong increase in the final segment.

Chart VA-12, US, Total Sales of Retail Trade and Food Services, NSA, Jan 1992-Mar 2013, Millions of Dollars

Source: US Census Bureau

http://www.census.gov/retail/

Table VA-7 provides additional information required for understanding the deficit/debt situation of the United States. The table is divided into four parts: Treasury budget in the 2013 fiscal year to Mar 2013; federal fiscal data for the years from 2009 to 2012; federal fiscal data for the years from 2005 to 2008; and Treasury debt held by the public from 2005 to 2012. Receipts increased 12.4 percent in the cumulative fiscal year 2013 for Mar 2013 relative to the cumulative in fiscal year 2012. Individual income taxes increased 14.7 percent relative to the same period a year earlier. Outlays decreased 2.5 percent relative to a year earlier. Total revenues of the US from 2009 to 2012 accumulate to $9019 billion, or $9.0 trillion, while expenditures or outlays accumulate to $14,111 billion, or $14.1 trillion, with the deficit accumulating to $5092 billion, or $5.1 trillion. Revenues decreased 6.6 percent from $9653 billion in the four years from 2005 to 2008 to $9019 billion in the years from 2009 to 2012. Decreasing revenues were caused by the global recession from IVQ2007 (Dec) to IIQ2009 (Jun) and also by growth of only 2.1 percent on average in the cyclical expansion from IIIQ2009 to IVQ2012 (http://cmpassocregulationblog.blogspot.com/2013/04/mediocre-and-decelerating-united-states.html). Boskin (2010Sep) measures that the US economy grew at 6.2 percent in the first four quarters and 4.5 percent in the first 12 quarters after the trough in the second quarter of 1975; and at 7.7 percent in the first four quarters and 5.8 percent in the first 12 quarters after the trough in the first quarter of 1983 (Professor Michael J. Boskin, Summer of Discontent, Wall Street Journal, Sep 2, 2010 http://professional.wsj.com/article/SB10001424052748703882304575465462926649950.html). Weakness of growth and employment creation is analyzed in IB Collapse of United States Dynamism of Income Growth and Employment Creation. There are 29.6 million people without jobs or underemployed that is equivalent to 18.2 percent of the US effective labor force (http://cmpassocregulationblog.blogspot.com/2013/04/thirty-million-unemployed-or.html) and hiring is significantly below the earlier cyclical expansion before 2007 (Section I and earlier http://cmpassocregulationblog.blogspot.com/2013/03/recovery-without-hiring-ten-million.html). In contrast with the decline of revenue, outlays or expenditures increased 30.2 percent from $10,839 billion, or $10.8 trillion, in the four years from 2005 to 2008, to $14,111 billion, or $14.1 trillion, in the four years from 2009 to 2012. Increase in expenditures by 30.2 percent while revenue declined by 6.6 percent caused the increase in the federal deficit from $1186 billion in 2005-2008 to $5092 billion in 2009-2012. Federal revenue was 15.4 percent of GDP on average in the years from 2009 to 2012, which is well below 18.0 percent of GDP on average from 1970 to 2010. Federal outlays were 24.1 percent of GDP on average from 2009 to 2012, which is well above 21.9 percent of GDP on average from 1970 to 2010. The lower part of Table IIB-4 shows that debt held by the public swelled from $5803 billion in 2008 to $11,280 billion in 2012, by $5477 billion or 94.3 percent. Debt held by the public as percent of GDP or economic activity jumped from 40.5 percent in 2008 to 72.5 percent in 2012, which is well above the average of 37.0 percent from 1970 to 2010. The United States faces tough adjustment because growth is unlikely to recover, creating limits on what can be obtained by increasing revenues, while continuing stress of social programs restricts what can be obtained by reducing expenditures.

Table VA-6, US, Treasury Budget in Fiscal Year to Date Million Dollars

Mar 2013	Fiscal Year 2013	Fiscal Year 2012	∆%
Receipts	1,196,611	1,064,384	12.4
Outlays	1,797,095	1,843,360	-2.5
Deficit	-600,484	-778,976	NA
Individual Income Taxes	555,218	484,143	14.7
Social Insurance	307,649	272,225	13.0
	Receipts	Outlays	Deficit (-), Surplus (+)
$ Billions
2012	2,449	3,538	-1,089
Fiscal Year 2011	2,302	3,599	-1,297
Fiscal Year 2010	2,163	3,456	-1,293
Fiscal Year 2009	2,105	3,518	-1,413
Total 2009-2012	9,019	14,111	-5,092
Average % GDP 2009-2012	15.4	24.1	-8.7
Fiscal Year 2008	2,524	2,983	-459
Fiscal Year 2007	2,568	2,729	-161
Fiscal Year 2006	2,407	2,655	-248
Fiscal Year 2005	2,154	2,472	-318
Total 2005-2008	9,653	10,839	-1,186
Average % GDP 2005-2008	17.9	20.1	-2.2
Debt Held by the Public	Billions of Dollars	Percent of GDP
2005	4,592	36.9
2006	4,829	36.6
2007	5,035	36.3
2008	5,803	40.5
2009	7,545	54.1
2010	9,019	62.8
2011	10,128	67.7
2012	11,280	72.5

Sources: http://www.fms.treas.gov/mts/index.html CBO (2012NovMBR). CBO (2011AugBEO); Office of Management and Budget 2011. Historical Tables. Budget of the US Government Fiscal Year 2011. Washington, DC: OMB; CBO. 2011JanBEO. Budget and Economic Outlook. Washington, DC, Jan. CBO. 2012AugBEO. Budget and Economic Outlook. Washington, DC, Aug 22. CBO. 2012Jan31. Historical budget data. Washington, DC, Jan 31. CBO. 2012NovCDR. Choices for deficit reduction. Washington, DC. Nov. CBO. 2013HBDFeb5. Historical budget data—February 2013 baseline projections. Washington, DC, Congressional Budget Office, Feb 5. CBO. 2013HBDFeb5. Historical budget data—February 2013 baseline projections. Washington, DC, Congressional Budget Office, Feb 5.

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.”

Financial markets in Japan and worldwide were shocked by new bold measures of “quantitative and qualitative monetary easing” by the Bank of Japan (http://www.boj.or.jp/en/announcements/release_2013/k130404a.pdf). The objective of policy is to “achieve the price stability target of 2 percent in terms of the year-on-year rate of change in the consumer price index (CPI) at the earliest possible time, with a time horizon of about two years” (http://www.boj.or.jp/en/announcements/release_2013/k130404a.pdf). The main elements of the new policy are as follows:

Monetary Base Control. Most central banks in the world pursue interest rates instead of monetary aggregates, injecting bank reserves to lower interest rates to desired levels. The Bank of Japan (BOJ) has shifted back to monetary aggregates, conducting money market operations with the objective of increasing base money, or monetary liabilities of the government, at the annual rate of 60 to 70 trillion yen. The BOJ estimates base money outstanding at “138 trillion yen at end-2012) and plans to increase it to “200 trillion yen at end-2012 and 270 trillion yen at end 2014” (http://www.boj.or.jp/en/announcements/release_2013/k130404a.pdf).
Maturity Extension of Purchases of Japanese Government Bonds. Purchases of bonds will be extended even up to bonds with maturity of 40 years with the guideline of extending the average maturity of BOJ bond purchases from three to seven years. The BOJ estimates the current average maturity of Japanese government bonds (JGB) at around seven years. The BOJ plans to purchase about 7.5 trillion yen per month (http://www.boj.or.jp/en/announcements/release_2013/rel130404d.pdf). Takashi Nakamichi, Tatsuo Ito and Phred Dvorak, wiring on “Bank of Japan mounts bid for revival,” on Apr 4, 2013, published in the Wall Street Journal (http://online.wsj.com/article/SB10001424127887323646604578401633067110420.html ), find that the limit of maturities of three years on purchases of JGBs was designed to avoid views that the BOJ would finance uncontrolled government deficits.
Seigniorage. The BOJ is pursuing coordination with the government that will take measures to establish “sustainable fiscal structure with a view to ensuring the credibility of fiscal management” (http://www.boj.or.jp/en/announcements/release_2013/k130404a.pdf).
Diversification of Asset Purchases. The BOJ will engage in transactions of exchange traded funds (ETF) and real estate investment trusts (REITS) and not solely on purchases of JGBs. Purchases of ETFs will be at an annual rate of increase of one trillion yen and purchases of REITS at 30 billion yen.

Table VB-BOJF, Bank of Japan, Forecasts of the Majority of Members of the Policy Board, % Year on Year

Fiscal Year Date of Forecast	Real GDP	Domestic CGPI	CPI All Items Less Fresh Food
2011
Apr 2012	-0.2 to –0.2 [-0.2]	+1.7	0.0
Jan 2012	-0.4 to –0.3 [-0.4]	+1.8 to +1.9 [+1.8]	-0.1 to 0.0 [-0.1]
2012
Oct 2012	+1.4 to +1.6 [+1.5]	-1.2 to -0.9 [-1.1]	-0.1 to -0.1 [-0.1]
Jul 2012	+2.2 to +2.4 [+2.2]	-0.3 to 0.0 [-0.2]	+0.1 to +0.3 [+0.2]
Apr 2012	+2.1 to +2.4 [+2.3]	+0.4 to +0.7 [+0.6]	+0.1 to +0.4 [+0.3]
Jan 2012	+1.8 to +2.1 [+2.0]	-0.1 to +0.2 [+0.1]	0.0 to +0.2 [+0.1]
2013
Oct 2012	+1.3 to +1.8 [+1.6]	+0.1 to +0.7 [+0.5]	+0.2 to +0.6 [+0.4]
Jul 2012	+1.6 to +1.8 [+1.7]	+0.6 to +0.8 [+0.6]	+0.5 to +0.7 [+0.7]
Apr 2012	+1.6 to +1.8 [+1.7]	+0.7 to +0.9 [+0.8]	+0.5 to +0.7 [+0.7]
Jan 2012	+1.4 to +1.7 [+1.6]	+0.6 to 1.0 [+0.8]	+0.4 to +0.5 [+0.5]
2014
Oct 2012	+0.2 to +0.7] [+0.6]	+3.7 to +4.4 [+4.2]	+2.4 to +3.0 [+2.8]

Figures in brackets are the median of forecasts of Policy Board members

Source: Policy Board, Bank of Japan

http://www.boj.or.jp/en/mopo/outlook/gor1210a.pdf

Private-sector activity in Japan expanded strongly with the Markit Composite Output PMI^™ Index increasing from 50.2 in Feb to 53.2 in Mar, which is the highest reading in a year (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10950). Paul Smith, economist at Markit and author of the report, finds that the survey data suggest growth of the economy of Japan possibly even higher than 0,5 percent in IQ2013 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10824). The Markit Business Activity Index of Services increased from 51.1 in Feb to 54.0 in Mar, which is the highest level since Sep 2007 when the survey began (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10950). 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=10950). Markit/JMMA Purchasing Managers’ Index^™ (PMI™), seasonally adjusted, increased from 48.5 in Feb to 50.4 in Mar for the first reading above 50.0 since May 2012 (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10885). Foreign business grew at the fastest rate in more than two years with respondents attributing growth to devaluation of the yen and strength in Asia. Andrew Harker, Senior Economist at Markit and author of the report, finds resumption of growth in manufacturing in Japan in Mar 2013 both in new orders and output (http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=10885).Table JPY provides the country data table for Japan.

Table JPY, Japan, Economic Indicators

Historical GDP and CPI	1981-2010 Real GDP Growth and CPI Inflation 1981-2010 Blog 8/9/11 Table 26
Corporate Goods Prices	Feb ∆% +0.1 12 months ∆% minus 0.5 Blog 4/14/13
Consumer Price Index	Feb NSA ∆% -0.2; Feb 12 months NSA ∆% -0.7 Blog 3/31/13
Real GDP Growth	IVQ2012 ∆%: 0.0 on IIIQ2012; IVQ2012 SAAR 0.2; ∆% from quarter a year earlier: 0.5 % Blog 3/10/13
Employment Report	Feb Unemployed 2.77 million Change in unemployed since last year: minus 120 thousand Unemployment rate: 4.2% Blog 3/31/13
All Industry Indices	Jan month SA ∆% -1.4 12-month NSA ∆% -0.5 Blog 3/24/13
Industrial Production	Feb SA month ∆%: -0.1 12-month NSA ∆% -11.0 Blog 3/31/13
Machine Orders	Total Feb ∆% 4.6 Private ∆%: 0.1 Feb ∆% Excluding Volatile Orders 7.5 Blog 4/14/13
Tertiary Index	Feb month SA ∆% 1.1 Feb 12 months NSA ∆% 0.2 Blog 4/14/13
Wholesale and Retail Sales	Feb 12 months: Total ∆%: -1.6 Wholesale ∆%: -1.3 Retail ∆%: -2.3 Blog 3/31/13
Family Income and Expenditure Survey	Feb 12-month ∆% total nominal consumption 0.1, real 0.8 Blog 3/31/13
Trade Balance	Exports Feb 12 months ∆%: -2.9 Imports Feb 12 months ∆% 11.9 Blog 3/24/13

Links to blog comments in Table JPY:

03/31/13 http://cmpassocregulationblog.blogspot.com/2013/04/mediocre-and-decelerating-united-states.html

3/24/13 http://cmpassocregulationblog.blogspot.com/2013/03/united-states-commercial-banks-assets.html

3/10/13 http://cmpassocregulationblog.blogspot.com/2013/03/thirty-one-million-unemployed-or.html

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

The tertiary activity index of Japan increased 1.1 percent SA in Feb 2013 and decreased 1.6 percent NSA in the 12 months ending in Feb 2013, as shown in Table VB-1. The tertiary activity index of Japan seasonally adjusted fell at the annual equivalent rate of minus 4.1 percent in Jan-Apr 2012 for cumulative decline of 1.4 percent but increased 2.6 percent not seasonally adjusted in the 12 months ending in Apr 2012, as shown in Table VB-1. The tertiary activity index fell 0.3 percent in the six months from Jun to Nov 2012 or at the annual equivalent rate of minus 0.6 percent. There was strong impact from the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011 in the decline of the tertiary activity index by 5.4 percent in Mar 2011 and 3.4 percent in 12 months. The performance of the tertiary sector in the quarter Jul-Sep 2011 was weak: increase of 0.4 percent in Jul, increase of 0.1 percent in Aug and decline of 0.2 percent in Sep, after increasing 1.2 percent in Jun. The not seasonally adjusted index increased 4.2 percent in the 12 months ending in Mar 2012 but the 12-month percentage rate dropped to 0.1 percent in Sep 2012, increasing 1.4 percent in the 12 months ending in Oct 2012, 1.0 percent in the 12 months ending in Nov 2012, 0.0 percent in the 12 months ending in Dec 2012, 0.2 percent in the 12 months ending in Jan 2013 and minus 1.6 percent in the 12 months ending in Feb 2013. Most of the growth occurred in the quarter from Apr to Jun 2011 with gain of 4.3 percent or at annual equivalent rate of 18.1 percent.

Table VB-1, Japan, Tertiary Activity Index, ∆%

	Month ∆% SA	12 Months ∆% NSA
Feb 2013	1.1	-1.6
Jan	-1.5	0.2
Dec 2012	1.3	0.0
Nov	-0.5	1.0
Oct	0.2	1.4
Sep	0.2	0.1
Aug	0.3	0.6
Jul	-0.6	0.9
Jun	0.1	0.8
May	0.9	3.2
Apr	-0.2	2.6
Mar	-0.6	4.2
Feb	0.0	2.4
Jan	-0.6	0.4
Dec 2011	1.6	1.2
Nov	-0.8	-0.3
Oct	0.6	0.9
Sep	-0.2	0.1
Aug	0.1	0.8
Jul	0.4	0.1
Jun	1.2	1.0
May	0.9	-0.2
Apr	2.1	-2.3
Mar	-5.4	-3.4
Feb	0.3	2.0
Jan	0.5	1.0
Dec 2010	-0.2	1.8
Nov	0.6	2.5
Oct	0.2	0.5
Sep	-0.4	1.3
Aug	0.1	2.3
Jul	0.7	1.6
Jun	0.1	1.0
May	-0.3	1.2
Dec 2009		-5.2
Dec 2008		-3.3
Dec 2007		-0.3
Dec 2006		0.6
Dec 2005		2.6
Dec 2004		1.6
Calendar Year
2012		1.4
2011		0.1
2010		1.3
2009		-5.2
2008		-1.0
2007		1.0
2006		1.8
2005		1.9
2004		1.8

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

Month and 12-month rates of growth of the tertiary activity index of Japan and components in Feb 2013 are provided in Table VB-2. Electricity, gas, heat supply and water increased 1.2 percent in Feb 2013 and decreased 6.6 percent in the 12 months ending in Feb 2013. Wholesale and retail trade increased 0.9 percent in the month of Feb and decreased 3.5 percent in 12 months. Information and communications increased 0.9 percent in Feb and increased 1.1 percent in 12 months.

Table VB-2, Japan, Tertiary Index and Components, Month and 12-Month Percentage Changes ∆%

Feb 2013	Weight	Month ∆% SA	12 Months ∆% NSA
Tertiary Index	10,000.0	1.1	-1.6
Electricity, Gas, Heat Supply & Water	372.9	1.2	-6.6
Information & Communications	951.2	0.9	1.1
Wholesale & Retail Trade	2,641.2	0.9	-3.5
Finance & Insurance	971.1	1.9	3.9
Real Estate & Goods Rental & Leasing	903.4	0.3	-0.4
Scientific Research, Professional & Technical Services	551.3	2.0	-8.9
Accommodations, Eating, Drinking	496.0	0.7	-1.2
Living-Related, Personal, Amusement Services	552.7	0.9	-1.6
Learning Support	116.9	-0.5	0.4
Medical, Health Care, Welfare	921.1	0.5	0.5
Miscellaneous ex Government	626.7	0.4	-1.7

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

Japan’s total machinery orders seasonally adjusted in Table VB-1 increased 4.6 percent in Feb 2013 after decreasing 3.0 percent in Jan 2013, decreasing 1.6 percent in Dec 2012 and increasing 5.3 percent in Nov. Total private sector orders increased 0.1 percent in Feb 2013, decreased 7.2 percent in Jan 2013 after falling 9.8 percent in Dec 2012, increasing 15.2 percent in Nov. Private-sector orders excluding volatile orders, which are closely watched, increased 7.5 percent in Feb 2013, decreased 13.1 percent in Jan 2013 and increased 2.8 percent in Dec and 3.9 percent in Nov. Orders for manufacturing increased 8.6 percent in Feb 2012, falling 13.2 percent in Jan 2013 after increasing 3.0 percent in Dec and 3.9 percent in Nov. Overseas orders increased 8.0 in Feb 2013 and 4.8 percent in Jan but decreased 12.6 percent in Dec 2012 after increasing 17.0 percent in Nov. There is significant volatility in industrial orders in advanced economies.

Table VB-1, Japan, Machinery Orders, Month ∆%, SA

2012-2013	Feb 13	Jan 13	Dec 12	Nov 12
Total	4.6	-3.0	-1.6	5.3
Private Sector	0.1	-7.2	-9.8	15.2
Excluding Volatile Orders	7.5	-13.1	2.8	3.9
Mfg	8.6	-13.2	3.0	3.9
Non Mfg ex Volatile	0.6	-6.3	-8.0	6.2
Government	21.5	-26.1	16.4	-2.6
From Overseas	8.0	4.8	-12.6	17.0
Through Agencies	-1.6	-0.7	3.4	6.4

Note: Mfg: manufacturing

Source: Japan Economic and Social Research Institute, Cabinet Office

http://www.esri.cao.go.jp/index-e.html

Total orders for machinery and total private-sector orders excluding volatile orders for Japan are shown in Chart VB-1 of Japan’s Economic and Social Research Institute at the Cabinet Office. The trend of private-sector orders excluding volatile orders was showing recovery from the drop after Mar 2011 because of the earthquake/tsunami. There was reversal of the trend of increase in total orders with recent decreases and an upward movement in the final data point. Fluctuations still prevent detecting longer-term trends but recovery is still evident from the global recession. There was a major setback by the declines in May 2012 shown in the final segment of Chart VB-1 with partial recovery in Jun 2012, decline again in Jul and Aug 2012 and rebound in total orders in Nov reversed in Dec but decline in orders excluding volatile segments with increase in Nov-Dec 2012. The final segment shows growth in Feb 2013.

Chart VB-1, Japan, Machinery Orders

Source: Japan Economic and Social Research Institute, Cabinet Office

http://www.esri.cao.go.jp/index-e.html

Table VB-4 provides values and percentage changes from a year earlier of Japan’s machinery orders without seasonal adjustment. Total orders of JPY 1,698,308 million in Feb 2013 are divided between JPY 672,839 million overseas orders, or 39.6 percent of the total, and domestic orders of JPY 936,776 million, or 55.2 percent of the total, with orders through agencies of JPY 88,693 million, or 5.2 percent of the total. Orders through agencies are not shown in the table because of the minor value. Twelve-month percentages changes in Feb 2013 continued to reverse increases in Jul 2012: minus 14.8 percent for total orders, minus 21.0 percent for overseas orders, minus 10.7 percent for domestic orders and minus 11.3 percent for private orders excluding volatile items. All 12-month percentage changes in the quarter Dec 2012 to Feb 2013 are sharply negative.

Table VB-2, Japan, Machinery Orders, 12 Months ∆% and Million Yen, Original Series

	Total	Overseas	Domestic	Private ex Volatile
Value Feb 2013	1,698,308	672,839	936,776	632,381
% Total	100.0	39.6	55.2	37.2
Value Feb 2012	1,992,950	851,704	1,048,746	712,679
% Total	100.0	42.7	52.6	35.8
12-month ∆%	-14.8	-21.0	-10.7	-11.3
Feb 2013	-14.8	-21.0	-10.7	-11.3
Jan 2013	-24.8	-36.7	-11.8	-9.7
Dec 2012	-12.5	-24.1	-3.3	-3.4
Nov 2012	-8.6	-9.6	-8.5	0.3
Oct 2012	-6.9	-12.8	-2.6	1.2
Sep 2012	-7.8	-18.4	-1.8	-7.8
Aug 2012	-18.6	-31.1	-10.2	-6.1
Jul 2012	2.6	-1.9	3.2	1.7
Jun 2012	-10.9	-11.3	-12.4	-9.9
May 2012	-6.8	-7.0	-8.6	1.0
Apr 2012	7.5	-9.6	23.0	6.6
Mar 2012	8.1	-10.0	19.0	-1.1
Feb 2012	-9.3	-8.9	-11.2	8.9
Jan 2012	9.8	18.3	0.5	5.7
Dec 2011	0.8	12.6	-8.5	6.3
Nov 2011	11.0	8.0	13.5	12.5
Oct 2011	-6.8	-15.6	-1.0	1.5
Dec 2010	9.4	3.5	14.1	-0.6
Dec 2009	1.8	0.4	3.6	-1.9
Dec 2008	-23.3	-29.4	-17.4	-24.7
Dec 2007	1.3	9.8	-4.3	-6.4
Dec 2006	0.8	0.9	-0.1	0.1

Note: Total machinery orders = overseas + domestic demand + orders through agencies. Orders through agencies in Feb 2013 were JPY 88,693 million or 5.2 percent of the total and 4.6 percent of the total in Feb 2012, and are not shown in the table. The data are the original numbers without any adjustments and differ from the seasonally adjusted data.

Source: Japan Economic and Social Research Institute, Cabinet Office http://www.esri.cao.go.jp/index-e.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. 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, declining marginally to 54.5 in Feb 2013 and 55.6 in Mar 2013.

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

	Total Index	New Orders	Interm. Input Prices	Subs Prices	Exp
Mar 2013	55.6	52.0	55.3	50.0	62.4
Feb	54.5	51.8	56.2	51.1	62.7
Jan	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

Chart CIPMNM provides China’s nonmanufacturing purchasing managers’ index. 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 55.6 in Mar 2013.

Chart CIPMNM, China, Nonmanufacturing Index of Purchasing Managers, Seasonally Adjusted

Source: National Bureau of Statistics of China

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 50.9 in Mar 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 52.3 in Mar 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 49.8 in Mar 2013.

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

	IPM	PI	NOI	INV	EMP	SDEL
Mar 2013	50.9	52.7	52.3	47.5	49.8	51.1
Feb	50.1	51.2	50.1	49.5	47.6	48.3
Jan	50.4	51.3	51.6	50.1	47.8	50.0
Dec 2012	50.6	52.0	51.2	47.3	49.0	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

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. 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 50.9 in Mar 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