Word Inflation Waves, Squeeze of Economic Activity by Carry Trades Induced by Zero Interest Rates, United States Industrial Production, Peaking Valuations of Risk Financial Assets, World Economic Slowdown and Global Recession Risk: Part III

 

 

Word Inflation Waves, Squeeze of Economic Activity by Carry Trades Induced by Zero Interest Rates, United States Industrial Production, Peaking Valuations of Risk Financial Assets, World Economic Slowdown and Global Recession Risk

Carlos M. Pelaez

© Carlos M. Pelaez, 2010, 2011, 2012, 2013

Executive Summary

I World Inflation Waves

IA Appendix: Transmission of Unconventional Monetary Policy

IA1 Theory

IA2 Policy

IA3 Evidence

IA4 Unwinding Strategy

IB United States Inflation

IC Long-term US Inflation

ID Current US Inflation

IE Theory and Reality of Economic History and Monetary Policy Based on Fear of Deflation

II United States Industrial Production

III World Financial Turbulence

IIIA Financial Risks

IIIE Appendix Euro Zone Survival Risk

IIIF Appendix on Sovereign Bond Valuation

IV Global Inflation

V World Economic Slowdown

VA United States

VB Japan

VC China

VD Euro Area

VE Germany

VF France

VG Italy

VH United Kingdom

VI Valuation of Risk Financial Assets

VII Economic Indicators

VIII Interest Rates

IX Conclusion

References

Appendixes

Appendix I The Great Inflation

IIIB Appendix on Safe Haven Currencies

IIIC Appendix on Fiscal Compact

IIID Appendix on European Central Bank Large Scale Lender of Last Resort

IIIG Appendix on Deficit Financing of Growth and the Debt Crisis

IIIGA Monetary Policy with Deficit Financing of Economic Growth

IIIGB Adjustment during the Debt Crisis of the 1980s

V World Economic Slowdown. Table V-1 is constructed with the database of the IMF (http://www.imf.org/external/pubs/ft/weo/2013/01/weodata/index.aspx) to show GDP in dollars in 2012 and the growth rate of real GDP of the world and selected regional countries from 2013 to 2016. The data illustrate the concept often repeated of “two-speed recovery” of the world economy from the recession of 2007 to 2009. The IMF has lowered its forecast of the world economy to 3.3 percent in 2013 but accelerating to 4.0 percent in 2014, 4.4 percent in 2015 and 4.5 percent in 2016. Slow-speed recovery occurs in the “major advanced economies” of the G7 that account for $33,932 billion of world output of $71,707 billion, or 47.3 percent, but are projected to grow at much lower rates than world output, 2.1 percent on average from 2013 to 2016 in contrast with 4.1 percent for the world as a whole. While the world would grow 17.2 percent in the four years from 2013 to 2016, the G7 as a whole would grow 8.8 percent. The difference in dollars of 2012 is rather high: growing by 17.2 percent would add $12.3 trillion of output to the world economy, or roughly, two times the output of the economy of Japan of $5,964 but growing by 8.8 percent would add $6.3 trillion of output to the world, or about the output of Japan in 2012. 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 2012 of $27,290 billion, or 38.1 percent of world output. The EMDEs would grow cumulatively 25.2 percent or at the average yearly rate of 5.8 percent, contributing $6.9 trillion from 2013 to 2016 or the equivalent of somewhat less than the GDP of $8,227 billion of China in 2012. The final four countries in Table 1 often referred as BRIC (Brazil, Russia, India, China), are large, rapidly growing emerging economies. Their combined output in 2012 adds to $14,470 billion, or 20.2 percent of world output, which is equivalent to 42.6 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 2012	Real GDP ∆% 2013	Real GDP ∆% 2014	Real GDP ∆% 2015	Real GDP ∆% 2016
World	71,707	3.3	4.0	4.4	4.5
G7	33,932	1.3	2.2	2.5	2.5
Canada	1,819	1.5	2.4	2.5	2.4
France	2,609	-0.1	0.9	1.5	1.7
DE	3,401	0.6	1.5	1.3	1.3
Italy	2,014	-1.5	0.5	1.2	1.4
Japan	5,964	1.6	1.4	1.1	1.2
UK	2,441	0.7	1.5	1.8	1.9
US	15,685	1.9	2.9	3.6	3.4
Euro Area	12,198	-0.3	1.1	1.4	1.6
DE	3,401	0.6	1.5	1.3	1.3
France	2,609	-0.1	0.9	1.5	1.7
Italy	2,014	-1.5	0.5	1.2	1.4
POT	213	-2.3	0.6	1.5	1.8
Ireland	210	1.1	2.2	2.7	2.7
Greece	249	-4.2	0.6	2.9	3.7
Spain	1,352	-1.6	0.7	1.4	1.5
EMDE	27,290	5.3	5.7	6.0	6.1
Brazil	2,396	3.0	4.0	4.1	4.2
Russia	2,022	3.4	3.8	3.7	3.6
India	1,825	5.7	6.2	6.6	6.9
China	8,227	8.0	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/pubs/ft/weo/2013/01/weodata/index.aspx

Continuing high rates of unemployment in advanced economies constitute another characteristic of the database of the WEO (http://www.imf.org/external/pubs/ft/weo/2013/01/weodata/index.aspx). Table I-2 is constructed with the WEO database to provide rates of unemployment from 2012 to 2016 for major countries and regions. In fact, unemployment rates for 2012 in Table I-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. The rates of unemployment are particularly high for the countries with sovereign debt difficulties in Europe: 15.7 percent for Portugal (POT), 14.7 percent for Ireland, 24.2 percent for Greece, 25.0 percent for Spain and 10.6 percent for Italy, which is lower but still high. The G7 rate of unemployment is 7.4 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 2012	% Labor Force 2013	% Labor Force 2014	% Labor Force 2015	% Labor Force 2016
World	NA	NA	NA	NA	NA
G7	7.4	7.4	7.3	7.0	6.6
Canada	7.3	7.3	7.2	7.1	7.0
France	10.2	11.2	11.6	11.4	10.9
DE	5.5	5.6	5.7	5.6	5.6
Italy	10.6	12.0	12.4	12.0	11.2
Japan	4.4	4.1	4.1	4.1	4.1
UK	8.0	7.8	7.8	7.4	6.9
US	8.1	7.7	7.5	6.9	6.3
Euro Area	11.4	12.3	12.3	11.9	11.4
DE	5.5	5.6	5.7	5.6	5.6
France	10.2	11.2	11.6	11.4	10.9
Italy	10.6	12.0	12.4	12.0	11.2
POT	15.7	18.3	18.5	18.1	17.5
Ireland	14.7	14.2	13.8	12.9	11.9
Greece	24.2	27.0	26.1	24.0	21.0
Spain	25.0	27.0	26.5	25.6	24.7
EMDE	NA	NA	NA	NA	NA
Brazil	5.5	6.0	6.5	6.5	6.5
Russia	6.0	5.5	5.5	5.5	5.5
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/pubs/ft/weo/2013/01/weodata/index.aspx

Table V-3 provides the latest available estimates of GDP for the regions and countries followed in this blog from IQ2012 to IQ2013 available now for all countries. Growth is weak throughout most of the world. Japan’s GDP increased 1.3 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 5.3 percent in IQ2012. Growth of 4.0 percent in IIQ2012 in Japan relative to IIQ2011 has effects of the low level of output because of Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Japan’s GDP contracted 0.9 percent in IIIQ2012 at the SAAR of minus 3.5 percent and increased 0.3 percent relative to a year earlier. Japan’s GDP grew 0.3 percent in IVQ2012 at the SAAR of 1.0 percent and increased 0.5 percent relative to a year earlier. Japan grew 0.9 percent in IQ2013 at the SAAR of 3.5 percent and 0.2 percent relative to a year earlier. China grew at 1.9 percent in IIQ2012, which annualizes to 7.8 percent and 7.6 percent relative to a year earlier. China grew at 2.1 percent in IIIQ2012, which annualizes at 8.7 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. In IQ2013, China grew at 1.6 percent, which annualizes at 6.6 percent and 7.7 percent relative to a year earlier. 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, 7.9 percent in IVQ2012 relative to year earlier and 7.7 percent in IQ2013. GDP fell 0.1 percent in the euro area in IQ2012 and decreased 0.1 in IQ2012 relative to a year earlier. Euro area GDP contracted 0.2 percent IIQ2012 and fell 0.5 percent relative to a year earlier. In IIIQ2012, euro area GDP fell 0.1 percent and declined 0.7 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. In IQ2013, the GDP of the euro area fell 0.2 percent and decreased 1.0 percent relative to a year earlier. Germany’s GDP increased 0.6 percent in IQ2012 and 1.8 percent relative to a year earlier. In IIQ2012, Germany’s GDP increased 0.2 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 0.7 percent in IVQ2012 and increased 0.0 percent relative to a year earlier. In IQ2013, Germany’s GDP increased 0.1 percent and fell 1.4 percent relative to a year earlier. Growth of US GDP in IQ2012 was 0.5 percent, at SAAR of 2.0 percent and higher by 2.4 percent relative to IQ2011. US GDP increased 0.5 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. In IQ2013, US GDP grew at 2.5 percent SAAR, 0.6 percent relative to the prior quarter and 1.8 percent relative to the same quarter in 2013 (http://cmpassocregulationblog.blogspot.com/2013/04/mediocre-and-decelerating-united-states_28.html) with weak hiring (http://cmpassocregulationblog.blogspot.com/2013/05/recovery-without-hiring-collapse-of.html and earlier http://cmpassocregulationblog.blogspot.com/2013/04/recovery-without-hiring-ten-million.html). In IQ2012, UK GDP fell 0.1 percent, increasing 0.5 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. UK GDP increased 0.3 percent in IQ2013 and 0.6 percent relative to a year earlier. Italy has experienced decline of GDP in seven consecutive quarters from IIIQ2011 to IQ2013. Italy’s GDP fell 1.0 percent in IQ2012 and declined 1.7 percent relative to IQ2011. Italy’s GDP fell 0.6 percent in IIQ2012 and declined 2.5 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. In IQ2013, Italy’s GDP contracted 0.5 percent and fell 2.3 percent relative to a year earlier. France’s GDP changed 0.0 percent in IQ2012 and increased 0.3 percent relative to a year earlier. France’s GDP decreased 0.2 percent in IIQ2012 and increased 0.1 percent relative to a year earlier. In IIIQ2012, France’s GDP increased 0.1 percent and increased 0.0 percent relative to a year earlier. France’s GDP fell 0.2 percent in IVQ2012 and declined 0.3 percent relative to a year earlier. In IQ2013, France GDP fell 0.2 percent and declined 0.4 percent relative to a year earlier.

Table V-3, Percentage Changes of GDP Quarter on Prior Quarter and on Same Quarter Year Earlier, ∆%

	IQ2012/IVQ2011	IQ2012/IQ2011
United States	QOQ:0.5        SAAR: 2.0	2.4
Japan	QOQ: 1.3 SAAR: 5.3	3.4
China	1.6	8.1
Euro Area	-0.1	-0.1
Germany	0.6	1.8
France	0.0	0.3
Italy	-1.0	-1.7
United Kingdom	-0.1	0.5
	IIQ2012/IQ2012	IIQ2012/IIQ2011
United States	QOQ:0.3         SAAR: 1.3	2.1
Japan	QOQ: -0.2 SAAR: -0.9	4.0
China	1.9	7.6
Euro Area	-0.2	-0.5
Germany	0.2	0.5 1.0 CA
France	-0.2	0.1
Italy	-0.6	-2.5
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: –3.5	0.3
China	2.1	7.4
Euro Area	-0.1	-0.7
Germany	0.2	0.4
France	0.1	0.0
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: 0.3 SAAR: 1.0	0.5
China	2.0	7.9
Euro Area	-0.6	-0.9
Germany	-0.7	0.0
France	-0.2	-0.3
Italy	-0.9	-2.8
United Kingdom	-0.3	0.2
	IQ2013/IVQ2012	IQ2013/IQ2012
United States	QOQ: 0.6 SAAR: 2.5	1.8
Japan	QOQ: 0.9 SAAR: 3.5	0.2
China	1.6	7.7
Euro Area	-0.2	-1.0
Germany	0.1	-1.4
France	-0.2	-0.4
Italy	-0.5	-2.3
UK	0.3	0.6

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 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 (http://cmpassocregulationblog.blogspot.com/2013/04/world-inflation-waves-squeeze-of.html and earlier 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 and earlier 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 Mar 2013, Japan’s exports grew 1.1 percent in 12 months while imports increased 5.5 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 Apr 2013, China exports increased 14.7 percent relative to a year earlier and imports 16.8 percent. Germany’s exports increased 0.5 percent in the month of Mar 2013 and decreased 4.2 percent in the 12 months ending in Mar 2013 while imports increased 0.8 percent in the month of Mar and decreased 6.9 percent in the 12 months ending in Mar. 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 increased 0.5 percent in Mar 2013 while imports decreased 1.1 percent and net trade added 0.2 percentage points to GDP growth in IIQ2012, adding 0.2 percentage points in IIIQ2012 and 0.2 percentage points in IVQ2012. Net trade deducted 0.2 percentage points from France’s GDP growth in IQ2013. US exports decreased 0.9 percent in Mar 2013 and goods exports increased 2.2 percent in Jan-Mar 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. In IQ2013, net trade deducted 0.50 percentage points from US GDP growth. US imports decreased 2.5 percent in Mar 2013 and goods imports decreased 0.1 percent in Jan-Mar 2013 relative to a year earlier. In the six months ending in Apr 2013, United States national industrial production accumulated increase of 2.0 percent at the annual equivalent rate of 4.1 percent, which is higher than 1.9 percent growth in 12 months. Excluding 1.3 percent growth in Nov 2012 in the rebound from hurricane Sandy, growth in the five months from Dec 2012 to Apr 2013 accumulated to 0.7 percent or 1.7 percent annual equivalent. Business equipment decreased 0.5 percent in Apr 2013, growing 3.4 percent in the 12 months ending in Apr 2013 and at the annual equivalent rate of 5.6 percent in the six months ending in Apr 2013 and 0.9 percent annual equivalent in the five months ending in Apr 2013. Capacity utilization of total industry is analyzed by the Fed in its report (http://www.federalreserve.gov/releases/g17/Current/default.htm): “The rate of capacity utilization for total industry decreased 0.5 percentage point to 77.8 percent, a rate 0.1 percentage point above its level of a year earlier but 2.4 percentage points below its long-run (1972--2012) average.” United States industry is apparently decelerating with some strength at the margin. Manufacturing decreased 0.4 percent in Apr 2013 seasonally adjusted, increasing 2.1 percent not seasonally adjusted in 12 months. Manufacturing grew cumulatively 2.1 percent in the six months ending in Apr 2013 or at the annual equivalent rate of 4.3 percent. Excluding the increase of 1.4 percent in Nov 2012 because of recovery from hurricane Sandy, manufacturing accumulated growth of 0.7 percent from Dec 2012 to Apr 2013 or at the annual equivalent rate of 1.7 percent. Manufacturing fell 21.9 from the peak in Jun 2007 to the trough in Apr 2009 and increased 16.8 percent from the trough in Apr 2009 to Dec 2012. Manufacturing fell 7.0 percent from the peak in Jun 2007 to Mar 2013 and increased 19.4 from the trough in Apr 2008 to Mar 2013. Manufacturing grew 18.5 percent from the trough in Apr 2009 to Apr 2013. Manufacturing output in Apr 2013 is 7.4 percent below the peak in Jun 2007. 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	-0.9 Mar	2.2 Jan-Mar	-2.5 Jan	-0.1 Jan-Mar
Japan		Mar 2013 1.1 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		Mar 2013 5.5 Feb 2013 7.3 Jan 2013 7.3 Dec 1.9 Nov 0.8 Oct -1.6 Sep 4.1 Aug -5.4 Jul 2.1
China		14.7 Apr 10.0 Mar 13 17.3 Jan-Apr 13		16.8 Apr 14.1 Mar 13 10.6 Jan-Apr 13
Euro Area	0.1 12-M Mar	1.3 Jan-Mar	-9.9 12-Mar	-5.2 Jan-Mar
Germany	0.5 Mar CSA	-4.2 Mar	0.8 Mar CSA	-6.9 Mar
France Mar	1.4	-0.4	-1.1	-3.1
Italy Mar	1.2	-6.0	0.2	-10.6
UK	3.5 Mar	-2.0 Jan-Mar13 12/Jan-Mar 13	2.6 Mar	-1.0 Jan-Mar 13/Jan-Mar 12
Net Trade % Points GDP Growth	% Points
USA	IQ2013 -0.50 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	0.2 IIQ2012   0.1 IIIQ2012 0.2 IVQ2012 -0.2 IQ2013
UK	-0.7 IQ2012 -0.8 IIQ2012 +0.4 IIIQ2012 -0.2 IVQ2012

Sources: Country Statistical Agencies 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 Mar 2013. The share of Asia in Japan’s trade is more than one half, 54.2 percent of exports and 43.2 percent of imports. Within Asia, exports to China are 17.7 percent of total exports and imports from China 20.2 percent of total imports. While exports to China fell 2.5 percent in the 12 months ending in Mar 2013, imports from China increased 1.0 percent. The second largest export market for Japan in Mar 2013 is the US with share of 17.5 percent of total exports and share of imports from the US of 8.1 percent in total imports. Western Europe has share of 9.8 percent in Japan’s exports and of 10.5 percent in imports. Rates of growth of exports of Japan in Mar 2013 are negative for several countries and regions with the exception of growth of 7.0 percent for exports to the US, 22.3 for exports to Mexico, 3.6 percent for exports to Brazil and 1.0 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 increase of Japan’s exports by 1.1 percent in Mar 2013 while imports increased 5.5 percent but higher levels after the earthquake and declining prices may be another factor. Growth rates of imports in the 12 months ending in Mar 2013 are positive for most trading partners. Imports from Asia increased 3.8 percent in the 12 months ending in Mar 2013 while imports from China increased 1.0 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

Mar 2013	Exports Millions Yen	12 months ∆%	Imports Millions Yen	12 months ∆%
Total	6,271,355	1.1	6,633,776	5.5
Asia	3,399,786	0.3	2,863,414	3.8
China	1,108,606	-2.5	1,342,491	1.0
USA	1,096,769	7.0	535,136	-0.4
Canada	78,247	-7.9	91,097	5.0
Brazil	50,166	3.6	86,684	10.4
Mexico	88,090	22.3	31,335	-6.8
Western Europe	615,009	-4.7	696,019	10.8
Germany	153,886	-1.4	185,366	0.4
France	49,858	-16.6	103,961	30.1
UK	80,750	-12.4	47,673	-14.4
Middle East	224,218	-7.1	1,313,653	2.7
Australia	150,352	1.0	399,424	6.1

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 increasing growth of the volume of world trade of goods and services from 3.6 percent in 2013 to 6.1 percent in 2015 and 5.7 percent in 2018. World trade would be slower for advanced economies while emerging and developing economies (EMDE) experience faster growth. World economic slowdown would more challenging with lower growth of world trade.

Table V-6, IMF, Projections of World Trade, ∆%

	2013	2014	2015	Average ∆% 2013-2018
World Trade Volume (Goods and Services)	3.6	5.3	6.1	5.7
Oil Price USD/Barrel	102.60	97.58	NA	NA
Commodity Price Index	181.84	174.06	NA	NA
Commodity Industrial Inputs Price 2005=100	170.04	164.66	NA	NA
Imports Goods & Services
G7	1.8	4.0	4.7	4.3
EMDE	6.2	7.3	7.9	7.5
Exports Goods & Services
G7	2.2	4.4	4.9	4.5
EMDE	4.8	6.5	7.6	7.1

Notes: Commodity Price Index includes Fuel and Non-fuel Prices; Commodity Industrial Inputs Price includes agricultural raw materials and metal prices; Oil price is average of WTI, Brent and Dubai

Source: International Monetary Fund World Economic Outlook databank

http://www.imf.org/external/pubs/ft/weo/2013/01/weodata/index.aspx

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 fell to 51.9 in Apr from 53.0 in Mar, indicating expansion at a moderate rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/d2e650432b25425ab2bfac6532ac0dda).This index has remained above the contraction territory of 50.0 during 45 consecutive months. The employment index decreased to 50.4 in Apr relative to 51.4 in Mar with input prices rising at slower rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/d2e650432b25425ab2bfac6532ac0dda).David Hensley, Director of Global Economic Coordination at JP Morgan, finds slowdown across manufacturing and services with output growing at the lowest rate in six months (http://www.markiteconomics.com/Survey/PressRelease.mvc/d2e650432b25425ab2bfac6532ac0dda). The JP Morgan Global Manufacturing PMI^™, produced by JP Morgan and Markit in association with ISM and IFPSM, decreased marginally to 50.5 in Apr from 51.1 in Mar, which is the fourth consecutive reading above 50 (http://www.markiteconomics.com/Survey/PressRelease.mvc/2b14d16a09f7424aa7baed58f4f284ff). New export business increased marginally for the second consecutive month after eleven consecutive monthly declines. The HSBC Brazil Composite Output Index, compiled by Markit, increased marginally from 51.0 in Mar to 51.5 in Apr, indicating improvement but with business activity growing accelerating in services but slowing in manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/53f380f4e26742e8b5bb6ddda8a09652). The HSBC Brazil Services Business Activity index, compiled by Markit, increased from 50.3 in Mar to 51.3 in Apr (http://www.markiteconomics.com/Survey/PressRelease.mvc/53f380f4e26742e8b5bb6ddda8a09652). Andre Loes, Chief Economist, Brazil, at HSBC, finds recovering economy but within a modest forecast (http://www.markiteconomics.com/Survey/PressRelease.mvc/53f380f4e26742e8b5bb6ddda8a09652). The HSBC Brazil Purchasing Managers’ Index^TM (PMI^™) decreased from 51.8 in Mar to 50.8 in Apr (http://www.markiteconomics.com/Survey/PressRelease.mvc/7622c1409310421184b7f7f5314594e1). Andre Loes, Chief Economist, Brazil at HSBC, finds continuing expansion in Brazil’s manufacturing with greater strength in Jan 2013, supporting the view that the economy of Brazil is experiencing moderate recovery (http://www.markiteconomics.com/Survey/PressRelease.mvc/7622c1409310421184b7f7f5314594e1).

VA United States. The Markit Flash US Manufacturing Purchasing Managers’ Index^™ (PMI^™) seasonally adjusted fell to 52.0 in Apr from 54.6 in Mar, which is the lowest reading in six months (http://www.markiteconomics.com/Survey/PressRelease.mvc/8b5f686e481f42199fa60c1ae997959c).New export orders registered 52.2 in Apr from 51.8 in Mar, indicating expansion at a moderate rate while output fell from 56.6 in Mar to 53.6 in Apr. Chris Williams, Chief Economist at Markit, finds that the survey data are consistent with growth at only 2.0 percent annual rythm in the beginning of IIQ2013 (http://www.markiteconomics.com/Survey/PressRelease.mvc/8b5f686e481f42199fa60c1ae997959c). The Markit US Manufacturing Purchasing Managers’ Index^™ (PMI^™) decreased to 52.1 in Apr from 54.6 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/caf2295d7e5642779cb9b6bf7c81c0d3). The index of new exports orders was unchanged from 51.8 in Apr 2013 from 51.8 in Mar 2013 while total new orders fell from 55.4 in Mar to 51.5 in Apr. Chris Williamson, Chief Economist at Markit, finds that weakness of new orders of manufacturing in the US suggest slower growth than in the preceding first quarter of 2013 (http://www.markiteconomics.com/Survey/PressRelease.mvc/caf2295d7e5642779cb9b6bf7c81c0d3). The purchasing managers’ index (PMI) of the Institute for Supply Management (ISM) Report on Business^® decreased 0.6 percentage points from 51.3 in Mar to 50.7 in Apr (http://www.ism.ws/ISMReport/MfgROB.cfm?navItemNumber=12942). The index of new orders increased 0.9 percentage points from 51.4 in Mar to 52.3 in Apr. The index of exports decreased 2.0 percentage points from 56.0 in Mar to 54.0 in Apr, remaining in expansion territory. The Non-Manufacturing ISM Report on Business^® PMI decreased 1.3 percentage points from 54.4 in Mar to 53.1 in Apr, indicating production growth during 45 consecutive months, while the index of new orders decreased 0.1 percentage points from 54.6 in Mar to 54.5 in Apr (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	Apr 12 months NSA ∆%: 1.1; ex food and energy ∆%: 1.7 Apr month SA ∆%: -0.4; ex food and energy ∆%: 0.1 Blog 5/19/13
Producer Price Index	Apr 12-month NSA ∆%: 0.6; ex food and energy ∆% 1.7 Apr month SA ∆% = -0.7; ex food and energy ∆%: 0.1 Blog 5/19/13
PCE Inflation	Mar 12-month NSA ∆%: headline 1.0; ex food and energy ∆% 1.1 Blog 5/5/13
Employment Situation	Household Survey: Apr Unemployment Rate SA 7.5% Blog calculation People in Job Stress Apr: 28.6 million NSA, 17.6% of Labor Force Establishment Survey: Nov Nonfarm Jobs +165,000; Private +176,000 jobs created  Mar 12-month Average Hourly Earnings Inflation Adjusted ∆%: 0.4 Blog 5/5/13
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 Mar 2013 3.869 million lower by 0.746 million than 4.615 million in Mar 2007 Blog 5/12/13
GDP Growth	BEA Revised National Income Accounts IQ2012/IQ2011 ∆%: 2.4 IIQ2012/IIQ2011 2.1 IIIQ2012/IIIQ2011 2.6 IVQ2012/IVQ2011 1.7 IQ2013/IQ2012 1.8 IQ2012 SAAR 2.0 IIQ2012 SAAR 1.3 IIIQ2012 SAAR 3.1 IVQ2012 SAAR 0.4 IQ2013 SAAR 2.5 Blog 3/31/13 4/28/13
Real Private Fixed Investment	SAAR IQ2013 4.1 ∆% IVQ2007 to IIIQ2012: minus 8.8% Blog 4/28/13
Personal Income and Consumption	Mar month ∆% SA Real Disposable Personal Income (RDPI) SA ∆% 0.3 Real Personal Consumption Expenditures (RPCE): 0.3 12-month Mar NSA ∆%: RDPI: 1.1; RPCE ∆%: 2.0 Blog 5/5/2013
Quarterly Services Report	IVQ12/IVQ11 SA ∆%: Information 5.4 Financial & Insurance 6.2 Blog 3/10/13
Employment Cost Index	Compensation Private IQ2013 SA ∆%: 0.3 Jan 13 months ∆%: 1.7 Blog 5/5/13
Industrial Production	Apr month SA ∆%: -0.5 Apr 12 months SA ∆%: 1.9 Manufacturing Apr SA ∆% -0.4 Apr 12 months SA ∆% 1.3, NSA 2.1 Capacity Utilization: 77.8 Blog 5/19/13
Productivity and Costs	Nonfarm Business Productivity IQ2013∆% SAAE 0.7; IQ2013/IQ2012 ∆% 0.9; Unit Labor Costs SAAE IQ2013 ∆% 0.5; IQ2013/IQ2012 ∆%: 0.6 Blog 5/5/2013
New York Fed Manufacturing Index	General Business Conditions From Apr 3.05 to May -1.43 New Orders: From Apr 2.20 to May -1.17 Blog 5/19/13
Philadelphia Fed Business Outlook Index	General Index from Apr 1.3 to May -5.2 New Orders from Apr -1.0 to May -7.9 Blog 5/19/13
Manufacturing Shipments and Orders	New Orders SA Mar ∆% -4.0 Ex Transport -2.0 Jan-Mar NSA New Orders -0.2 Ex transport -0.1 Blog 5/5/13
Durable Goods	Mar New Orders SA ∆%: minus 5.7; ex transport ∆%: minus 1.4 Jan-Mar 13/Jan-Mar 12 New Orders NSA ∆%: minus 0.1; ex transport ∆% 0.2 Blog 4/28/13
Sales of New Motor Vehicles	Jan-Apr 2013 4,974,000; Jan-Apr 2012 4,652,005. Apr 13 SAAR 14.92 million, Mar 13 SAAR 15.27 million, Apr 2012 SAAR 14.12 million Blog 5/5/13
Sales of Merchant Wholesalers	Jan-Mar 2013/Jan-Mar 2012 NSA ∆%: Total 1.2; Durable Goods: 0.5; Nondurable Goods: 1.8 Blog 5/12/13
Sales and Inventories of Manufacturers, Retailers and Merchant Wholesalers	Mar 13/Mar 12 NSA ∆%: Sales Total Business 0.1; Manufacturers 0.2 Retailers 1.7; Merchant Wholesalers -1.5 Blog 5/19/13
Sales for Retail and Food Services	Jan-Apr 2013/Jan-Apr 2012 ∆%: Retail and Food Services 3.3; Retail ∆% 3.2 Blog 5/19/13
Value of Construction Put in Place	Mar SAAR month SA ∆%: -1.7 Mar 12-month NSA: 4.9 Jan-Mar 2013 ∆% 4.7 Blog 5/5/13
Case-Shiller Home Prices	Feb 2013/Feb 2012 ∆% NSA: 10 Cities 8.6; 20 Cities: 9.3 ∆% Feb SA: 10 Cities 1.2 ; 20 Cities: 1.2 Blog 5/5/13
FHFA House Price Index Purchases Only	Feb SA ∆% 0.7; 12 month NSA ∆%: 7.0 Blog 4/28/13
New House Sales	Mar 2013 month SAAR ∆%: minus 1.5 Jan-Mar 2013/Jan-Mar 2012 NSA ∆%: 19.6 Blog 4/28/13
Housing Starts and Permits	Apr Starts month SA ∆%: -16.5 ; Permits ∆%: +14.3 Jan-Apr 2013/Jan-Apr 2012 NSA ∆% Starts 28.9; Permits  ∆% 27.3 Blog 5/19/13
Trade Balance	Balance Mar SA -$38,829 million versus Feb -$42,960 million Exports Mar SA ∆%: -0.9 Imports Mar SA ∆%: -2.5 Goods Exports Jan-Mar 2013/2012 NSA ∆%: 0.5 Goods Imports Jan-Mar 2013/2012 NSA ∆%: -2.8 Blog 5/12/13
Export and Import Prices	Apr 12-month NSA ∆%: Imports -2.6; Exports -0.9 Blog 5/19/13
Consumer Credit	Mar ∆% annual rate: 3.4 Blog 5/12/13
Net Foreign Purchases of Long-term Treasury Securities	Mar Net Foreign Purchases of Long-term Treasury Securities: -$13.5 billion Major Holders of Treasury Securities: China $1251 billion; Japan $1105 billion; Total Foreign US Treasury Holdings Feb $5758 billion Blog 5/19/13
Treasury Budget	Fiscal Year 2013/2012 ∆% Apr: Receipts 15.9; Outlays minus 0.6; Individual Income Taxes 20.0 Deficit Fiscal Year 2011 $1,297 billion Deficit Fiscal Year 2012 $1,089,353 million Blog 5/12/2013
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	Mar 2013 SAAR ∆%: Securities -4.3 Loans 2.1 Cash Assets 85.5 Deposits 7.6 Blog 4/28/13
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:

5/12/13 http://cmpassocregulationblog.blogspot.com/2013/05/recovery-without-hiring-collapse-of.html

5/5/13 http://cmpassocregulationblog.blogspot.com/2013/05/twenty-nine-million-unemployed-or.html

4/28/13 http://cmpassocregulationblog.blogspot.com/2013/04/mediocre-and-decelerating-united-states_28.html

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

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 decreased 1.1 percent in Mar after increasing 1.0 percent in Feb and increased 0.1 percent in the 12 months ending in Mar 2013. Sales of manufacturers decreased 1.0 percent in Mar after increasing 0.4 percent in Feb and increased 0.2 percent in the 12 months ending in Mar. Retailers’ sales decreased 0.6 percent in Mar, increased 1.3 percent in Feb and increased 1.7 percent in 12 months ending in Mar. Sales of merchant wholesalers decreased 1.6 percent in Mar, increased 1.5 percent in Feb and decreased 1.5 percent in 12 months ending in Mar. 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

	Mar 13/   Feb 13 ∆% SA	Mar 2013 Millions of Dollars NSA	Feb 13/ Jan 13  ∆% SA	Mar 13/ Mar 12 ∆% NSA
Total Business	-1.1	1,307,287	1.0	0.1
Manufacturers	-1.0	504,070	0.4	0.2
Retailers	-0.6	379,989	1.3	1.7
Merchant Wholesalers	-1.6	423,228	1.5	-1.5

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-Mar 2013

US Census Bureau

http://www.census.gov/mtis/

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-Mar 2013

US Census Bureau

http://www.census.gov/mtis/

Businesses added cautiously to inventories to replenish stocks. Retailers reduced inventories by 0.5 percent in Mar 2013 and added 0.2 percent in Feb with growth of 7.4 percent in 12 months, as shown in Table VA-2. Total business changed inventories by 0.0 percent in Mar, 0.0 percent in Feb and 4.5 percent in 12 months. Inventories sales/ratios of total business continued at a level close to 1.29 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	Mar 13 Millions of Dollars NSA	Mar 13/ Feb 13 ∆% SA	Feb 13/  Jan 13 ∆% SA	Mar 13/  Mar 12 ∆% NSA
Total Business	1,643,981	0.0	0.0	4.5
Manufacturers	619,537	0.0	0.2	2.1
Retailers	517,919	-0.5	0.2	7.4
Merchant Wholesalers	506,525	0.4	-0.3	4.6
Inventory/ Sales Ratio NSA	Mar 13 Billions of Dollars NSA	Mar 2013 SA	Feb 2013 SA	Mar 2012 SA
Total Business	1,643,981	1.29	1.28	1.26
Manufacturers	619,537	1.29	1.27	1.28
Retailers	517,919	1.39	1.39	1.33
Merchant Wholesalers	506,525	1.21	1.19	1.17

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 Mar 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-Mar 2013

US Census Bureau

http://www.census.gov/mtis/

Chart VA-4 provides total business inventories of manufacturers, retailers and merchant wholesalers not seasonally adjusted (NSA) from Jan 1992 to Mar 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-Mar 2013

US Census Bureau

http://www.census.gov/mtis/

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

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

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

This is the pure inventory cycle.

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

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

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

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

Chart VA-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

http://www.census.gov/mtis/

Sales of retail and food services increased 0.1 percent in Apr 2013 after decreasing 0.5 percent in Mar 2013 seasonally adjusted (SA), growing 3.3 percent in Jan-Apr 2013 relative to Jan-Apr 2012 not seasonally adjusted (NSA), as shown in Table VA-3. Excluding motor vehicles and parts, retail sales decreased 0.1 percent in Apr 2013, decreasing 0.4 percent in Mar 2013 SA and increasing 2.5 percent NSA in Jan-Apr 2013 relative to a year earlier. Sales of motor vehicles and parts increased 1.0 percent in Apr 2013 after decreasing 0.6 percent in Mar 2013 SA and increasing 7.0 percent NSA in Jan-Apr 2013 relative to a year earlier. Gasoline station sales decreased 4.7 percent SA in Apr 2013 after decreasing 3.2 percent in Mar 2013 in oscillating prices of gasoline that are moderating, decreasing 1.1 percent in Jan-Apr 2013 relative to a year earlier.

Table VA-3, US, Percentage Change in Monthly Sales for Retail and Food Services, ∆%

	Apr/ Mar ∆% SA	Mar/Feb ∆% SA	Jan-Apr 2013 Million Dollars NSA	Jan-Apr 2013 from Jan-Apr 2012 ∆% NSA
Retail and Food Services	0.1	-0.5	1,606,433	3.3
Excluding Motor Vehicles and Parts	-0.1	-0.4	1,296,442	2.5
Motor Vehicles & Parts	1.0	-0.6	309,991	7.0
Retail	0.0	-0.6	1,428,294	3.2
Building Materials	1.5	-1.0	92,709	2.4
Food and Beverage	-0.8	0.2	208,526	2.4
Grocery	-0.5	0.2	188,119	2.2
Health & Personal Care Stores	-0.1	-0.6	91,542	-0.5
Clothing & Clothing Accessories Stores	1.2	0.7	72,726	2.9
Gasoline Stations	-4.7	-3.2	174,738	-1.1
General Merchandise Stores	1.0	-0.7	191,819	-3.4
Food Services & Drinking Places	0.8	0.5	178,139	3.9

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

Chart VA-6 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-6, 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-7 of the US Census Bureau provides total sales of retail trade and food services seasonally adjusted (SA) from Jan 1992 to Apr 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-7, US, Total Sales of Retail Trade and Food Services, SA, Jan 1992-Apr 2013, Millions of Dollars

Source: US Census Bureau

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

Chart VA-8 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 Apr 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-8, US, Total Sales of Retail Trade and Food Services, NSA, Jan 1992-Apr 2013, Millions of Dollars

Source: US Census Bureau

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

Seasonally adjusted annual rates (SAAR) of housing starts and permits are shown in Table VA-4. Housing starts decreased 16.5 percent in Apr 2013 after increasing 5.4 percent in Mar 2013 and 7.9 percent in Feb 2013. Housing permits, indicating future activity, increased 14.3 percent in Apr 2013 after decreasing 6.5 percent in Mar 2013 and increasing 3.9 percent in Feb 2013. Monthly rates in starts and permits fluctuate significantly as shown in Table VA-1.

Table VA-4, US, Housing Starts and Permits SSAR Month ∆%

	Housing  Starts SAAR	Month ∆%	Housing Permits SAAR	Month ∆%
Apr 2013	853	-16.5	1017	14.3
Mar	1021	5.4	890	-6.5
Feb	969	7.9	952	3.9
Jan	898	-8.6	915	-3.0
Dec 2012	983	16.7	943	1.1
Nov	842	-2.5	933	2.8
Oct	864	1.2	908	-1.4
Sep	854	14.0	921	11.4
Aug	749	1.1	827	-1.4
Jul	741	-2.1	839	6.9
Jun	757	6.5	785	-2.6
May	711	-5.7	806	7.6
Apr	754	6.6	749	-4.6
Mar	707	-0.8	785	6.2
Feb	713	-1.4	739	3.5
Jan	723	4.2	714	2.4
Dec 2011	694	-2.4	697	-1.3
Nov	711	16.6	706	5.2
Oct	610	-6.2	671	10.0
Sep	650	11.1	610	-5.7
Aug	585	-6.1	647	4.2
Jul	623	2.5	621	-2.4
Jun	608	8.4	636	2.9
May	561	1.3	618	6.4
Apr	554	-7.7	581	-0.3
Mar	600	16.1	583	7.6
Feb	517	-17.9	542	-5.9
Jan	630	16.9	576	-8.9
Dec 2010	539	-1.1	632	12.9
Nov	545	0.4	560	0.4
Oct	543	-8.6	558	-0.9
Sep	594	-0.8	563	-2.9

SAAR: Seasonally Adjusted Annual Rate

Source: US Census Bureau http://www.census.gov/construction/nrc/

Housing starts and permits in Jan-Apr not-seasonally adjusted are provided in Table VA-5. Housing starts increased 28.9 percent in Jan-Apr 2013 relative to Jan-Apr 2012 and in the same period new permits increased 27.3 percent. Construction of new houses in the US remains at very depressed levels. Housing starts fell 54.2 percent in Jan-Apr 2013 relative to Jan-Apr 2006 and fell 54.8 percent relative to Jan-Apr 2005. Housing permits fell 55.7 percent in Jan-Apr 2013 relative to Jan-Apr 2006 and fell 56.0 percent in Jan-Apr 2013 from Jan-Apr 2005.

Table VA-5, US, Housing Starts and New Permits, Thousands of Units, NSA, and %

	Housing Starts	New Permits
Jan-Apr 2013	286.0	297.0
Jan-Apr 2012	221.8	233.3
∆% Jan-Apr 2013/Jan-Apr 2012	28.9	27.3
Jan-Apr 2006	624.6	667.9
∆% Jan-Apr 2013/Jan-Apr 2012	-54.2	-55.5
Jan-Apr 2005	632.8	675.7
∆% Jan-Apr 2013/Jan-Apr 2012	-54.8	-56.0

Source: US Census Bureau http://www.census.gov/construction/nrc/

Chart VA-8 of the US Census Bureau shows the sharp increase in construction of new houses from 2000 to 2006. Housing construction fell sharply through the recession, recovering from the trough around IIQ2009. The right-hand side of Chart VA-8 shows a mild downward trend or stagnation from mid-2010 to the present in single-family houses with a recent mild upward trend in recent months in the category of two or more units but marginal decline in recent months.

Chart VA-8, US, New Housing Units Started in the US, SAAR (Seasonally Adjusted Annual Rate)

Source: US Census Bureau

http://www.census.gov/briefrm/esbr/www/esbr020.html

Table VA-6 provides new housing units started in the US at seasonally adjusted annual rates (SAAR) from Jan-Apr and Dec of the year from 2000 to 2013. SAARs have dropped from high levels around 2 million in 2005-2006 to the range of 707,000 in Mar 2012 to 983,000 in Dec 2012 and 1,021,000 in Mar 2013, which is an improvement over the range of 517,000 in Feb 2011 to 708,000 in Nov 2011.

Table VA-6, New Housing Units Started in the US, Seasonally Adjusted Annual Rates, Thousands of Units

	Jan	Feb	Mar	Apr	Dec
2000	1,636	1,737	1,604	1,626	1,532
2001	1,600	1,625	1,590	1,649	1,568
2002	1,698	1,829	1,642	1,592	1,788
2003	1,853	1,629	1,726	1,643	2,057
2004	1,911	1,846	1,998	2,003	2,042
2005	2,144	2,207	1,864	2,061	1,994
2006	2,273	2,119	1,969	1,821	1,649
2007	1,409	1,480	1,495	1,490	1,037
2008	1,084	1,103	1,005	1,013	560
2009	490	582	505	478	581
2010	614	604	636	687	539
2011	630	517	600	554	694
2012	723	713	707	754	983
2013	898	969	1,021	853	NA

Source: US Census Bureau http://www.census.gov/construction/nrc/

Chart VA-9 of the US Census Bureau provides construction of new housing units started in the US at seasonally adjusted annual rate (SAAR) from Jan 1959 to Apr 2013 that help to analyze in historical perspective the debacle of US new house construction. There are three periods in the series. (1) There is stationary behavior with wide fluctuations from 1959 to the beginning of the decade of the 1970s. (2) There is sharp upward trend from the 1990s to 2006 propelled by the US housing subsidy, politics of Fannie Mae and Freddie Mac and unconventional monetary policy of near zero interest rates from Jun 2003 to Jun 2004 and suspension of the auction of 30-year Treasury bonds intended to lower mortgage rates. The financial crisis and global recession were caused by interest rate and housing subsidies and affordability policies that encouraged high leverage and risks, low liquidity and unsound credit (Pelaez and Pelaez, Financial Regulation after the Global Recession (2009a), 157-66, Regulation of Banks and Finance (2009b), 217-27, International Financial Architecture (2005), 15-18, The Global Recession Risk (2007), 221-5, Globalization and the State Vol. II (2008b), 197-213, Government Intervention in Globalization (2008c), 182-4). Several past comments of this blog elaborate on these arguments, among which: http://cmpassocregulationblog.blogspot.com/2011/07/causes-of-2007-creditdollar-crisis.html http://cmpassocregulationblog.blogspot.com/2011/01/professor-mckinnons-bubble-economy.html http://cmpassocregulationblog.blogspot.com/2011/01/world-inflation-quantitative-easing.html http://cmpassocregulationblog.blogspot.com/2011/01/treasury-yields-valuation-of-risk.html http://cmpassocregulationblog.blogspot.com/2010/11/quantitative-easing-theory-evidence-and.html http://cmpassocregulationblog.blogspot.com/2010/12/is-fed-printing-money-what-are.html  . (3) Housing construction dropped vertically during the global recession. There was initial stability followed by some recovery in recent months.

Chart VA-9, US, New Housing Units Started in the US, SAAR (Seasonally Adjusted Annual Rate), Thousands of Units, Jan 1959-Apr 2013

Source: US Census Bureau http://www.census.gov/construction/nrc/

Table VA-4 provides actual new housing units started in the US, or not seasonally adjusted, in Jan-Jun and Dec from 2000 to 2012 and Apr 2013. The number of housing units started fell from the peak of 197.9 thousand in May 2005 to 76.7 thousand in Apr 2013 or 61.2 percent. The number of housing units started fell from 184.6 thousand in Apr 2004 to 76.7 thousand in Apr 2013 or by 58.5 percent. The number of housing units started jumped from 49.0 thousand in Apr 2011 to 76.7 thousand in Apr 2013 or by 56.5 percent.

Table VA-7, New Housing Units Started in the US, Not Seasonally Adjusted, Thousands of Units

	Jan	Feb	Mar	Apr	May	Jun	Dec
2000	104.0	119.7	133.4	149.5	152.9	146.3	100.7
2001	106.4	108.2	133.2	151.3	154.0	155.2	104.6
2002	110.4	120.4	138.2	148.8	165.5	160.3	123.1
2003	117.8	109.7	147.2	151.2	165.0	174.5	144.2
2004	124.5	126.4	173.8	179.5	187.6	172.3	140.2
2005	142.9	149.1	156.2	184.6	197.9	192.8	136.0
2006	153.0	145.1	165.9	160.5	190.2	170.2	112.4
2007	95.0	103.1	123.8	135.6	136.5	137.8	68.9
2008	70.8	78.4	82.2	89.5	91.7	102.5	37.7
2009	31.9	39.8	42.7	42.5	52.2	59.1	36.6
2010	38.9	40.7	54.7	62.0	56.2	53.8	33.8
2011	40.2	35.4	49.9	49.0	54.0	60.5	42.7
2012	47.2	49.7	58.0	66.8	67.8	74.7	63.2
2013	58.7	66.1	84.5	76.7	NA	NA	NA

Source: US Census Bureau http://www.census.gov/construction/nrc/

Chart VA-10 of the US Census Bureau provides new housing units started in the US not seasonally adjusted (NSA) from Jan 1959 to Apr 2013. There is the same behavior as in Chart VA-9 SA but with sharper fluctuations in the original series without seasonal adjustment. There are the same three periods. (1) The series is virtually stationary with wide fluctuations from 1959 to the late 1980s. (2) There is downward trend during the savings and loans crisis of the 1980s. Benston and Kaufman (1997, 139) find that there was failure of 1150 US commercial and savings banks between 1983 and 1990, or about 8 percent of the industry in 1980, which is nearly twice more than between the establishment of the Federal Deposit Insurance Corporation in 1934 through 1983. More than 900 savings and loans associations, representing 25 percent of the industry, were closed, merged or placed in conservatorships (see Pelaez and Pelaez, Regulation of Banks and Finance (2008b), 74-7). The Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) created the Resolution Trust Corporation (RTC) and the Savings Association Insurance Fund (SAIF) that received $150 billion of taxpayer funds to resolve insolvent savings and loans. The GDP of the US in 1989 was $5482.1 billion (http://www.bea.gov/iTable/index_nipa.cfm), such that the partial cost to taxpayers of that bailout was around 2.74 percent of GDP in a year. US GDP in 2012 is estimated at $15,684.8 billion, such that the bailout would be equivalent to cost to taxpayers of about $429.8 billion in current GDP terms. A major difference with the Troubled Asset Relief Program (TARP) for private-sector banks is that most of the costs were recovered with interest gains whereas in the case of savings and loans there was no recovery. (3) There is vertical drop of new housing construction in the US during the global recession from (Dec) IVQ2007 to (Jun) IIQ2009 (http://www.nber.org/cycles/cyclesmain.html). The final segment shows upward trend but it could be simply part of yet another fluctuation. Marginal improvement in housing in the US should not obscure the current depressed levels relative to earlier periods.

Chart VA-10, US, New Housing Units Started in the US, Not Seasonally Adjusted, Thousands of Units, Jan 1959-Apr 2013

Source: US Census Bureau http://www.census.gov/construction/nrc/

A longer perspective on residential construction in the US is provided by Table VA-8 with annual data from 1960 to 2012. Housing starts fell 62.3 percent from 2005 to 2012, 50.2 percent from 2000 to 2012 and 45.4 percent relative to the average from 1959 to 1963. Housing permits fell 61.5 percent from 2005 to 2012, 47.9 percent from 2000 to 2012 and 28.4 percent from the average of 1969-1963 to 2012. Housing starts rose 31.8 from 2000 to 2005 while housing permits grew 35.4 percent. From 1990 to 2000, housing starts increased 31.5 percent while permits increased 43.3 percent.

Table VA-8, US, Annual New Privately Owned Housing Units Authorized by Building Permits in Permit-Issuing Places and New Privately Owned Housing Units Started, Thousands

	Starts	Permits
2012	780.6	829.7
∆% 2012/2011	28.2	32.9
∆% 2012/2010	33.0	37.2
∆% 2012/2005	-62.3	-61.5
∆% 2012/2000	-50.2	-47.9
∆% 2012/Av 1959-1963	-45.4	-28.4
2011	608.8	624.1
∆% 2011/2005	-70.6	-71.0
∆% 2011/2000	-61.2	-60.8
∆% 2011/Av 1959-1963	-57.4	-46.1
2010	586.9	604.6
2009	554.0	583.0
2008	905.5	905.4
2007	1,355,0	1,398.4
2006	1,800.9	1,838.9
2005	2,068.3	2,155.3
∆% 2005/2000	31.8	35.4
2004	1,955.8	2,070.1
2003	1,847.7	1,889.2
2002	1,704.9	1,747.2
2001	1,602.7	1,636.7
2000	1,568.7	1,592.3
∆% 2000/1990	31.5	43.3
1990	1,192,7	1,110.8
1980	1,292.2	1,190.6
1970	1,433.6	1,351.5
Average 1959-63	1,429.7	1158.2

Source: US Census Bureau http://www.census.gov/construction/nrc/

IIA2 United States Import and Export Prices. Chart IIA2-1 provides prices of total US imports 2001-2013. Prices fell during the contraction of 2001. Import price inflation accelerated after unconventional monetary policy of near zero interest rates in 2003-2004 and quantitative easing by withdrawing supply with the suspension of 30-year Treasury bond auctions. Slow pace of adjusting fed funds rates from 1 percent by increments of 25 basis points in 17 consecutive meetings of the Federal Open Market Committee (FOMC) between Jun 2004 and Jun 2006 continued to give impetus to carry trades. The reduction of fed funds rates toward zero in 2008 fueled a spectacular global hunt for yields that caused commodity price inflation in the middle of a global recession. After risk aversion in 2009 because of the announcement of TARP (Troubled Asset Relief Program) creating anxiety on “toxic assets” in bank balance sheets (see Cochrane and Zingales 2009), prices collapsed because of unwinding carry trades. Renewed price increases returned with zero interest rates and quantitative easing. Monetary policy impulses in massive doses have driven inflation and valuation of risk financial assets in wide fluctuations over a decade.

Chart IIA2-1, US, Prices of Total US Imports 2001=100, 2001-2013

Source: Bureau of Labor Statistics http://www.bls.gov/mxp/data.htm

Chart IIA2-2 provides 12-month percentage changes of prices of total US imports from 2001 to 2013. The only plausible explanation for the wide oscillations is by the carry trade originating in unconventional monetary policy. Import prices jumped in 2008 during deep and protracted global recession driven by carry trades from zero interest rates to long, leveraged positions in commodity futures. Carry trades were unwound during the financial panic in the final quarter of 2008 that resulted in flight to government obligations. Import prices jumped again in 2009 with subdued risk aversion because US banks did not have unsustainable toxic assets. Import prices then fluctuated as carry trades were resumed during periods of risk appetite and unwound during risk aversion resulting from the European debt crisis.

Chart IIA2-2, US, Prices of Total US Imports, 12-Month Percentage Changes, 2001-2013

Source: Bureau of Labor Statistics http://www.bls.gov/mxp/data.htm

Chart IIA2-3 provides prices of US imports from 1982 to 2013. There is no similar episode to that of the increase of commodity prices in 2008 during a protracted and deep global recession with subsequent collapse during a flight into government obligations. Trade prices have been driven by carry trades created by unconventional monetary policy in the past decade.

Chart IIA2-3, US, Prices of Total US Imports, 2001=100, 1982-2013

Source: Bureau of Labor Statistics http://www.bls.gov/mxp/data.htm

Chart IIA2-4 provides 12-month percentage changes of US total imports from 1982 to 2013. There have not been wide consecutive oscillations as the ones during the global recession of IVQ2007 to IIQ2009.

Chart IIA2-4, US, Prices of Total US Imports, 12-Month Percentage Changes, 1982-2013

Source: Bureau of Labor Statistics http://www.bls.gov/mxp/data.htm

Chart IIA2-5 provides the index of US export prices from 2001 to 2013. Import and export prices have been driven by impulses of unconventional monetary policy in massive doses. The most recent segment in Chart IIA2-5 shows declining trend resulting from a combination of the world economic slowdown and the decline of commodity prices as carry trade exposures are unwound because of risk aversion to the sovereign debt crisis in Europe and slowdown in the world economy.

Chart IIA2-5, US, Prices of Total US Exports, 2001=100, 2001-2013

Source: Bureau of Labor Statistics http://www.bls.gov/mxp/data.htm

Chart IIA2-6 provides prices of US total exports from 1982 to 2013. The rise before the global recession from 2003 to 2008, driven by carry trades, is also unique in the series and is followed by another steep increase after risk aversion moderated in IQ2009.

Chart IIA2-6, US, Prices of Total US Exports, 2001=100, 1982-2013

Source: Bureau of Labor Statistics http://www.bls.gov/mxp/data.htm

Chart IIA2-7 provides 12-month percentage changes of total US exports from 1982 to 2013. The uniqueness of the oscillations around the global recession of IVQ2007 to IIQ2009 is clearly revealed.

Chart IIA2-7, US, Prices of Total US Exports, 12-Month Percentage Changes, 1982-2013

Source:

Bureau of Labor Statistics http://www.bls.gov/mxp/data.htm

Twelve-month percentage changes of US prices of exports and imports are provided in Table IIA2-1. Import prices have been driven since 2003 by unconventional monetary policy of near zero interest rates influencing commodity prices according to moods of risk aversion. In a global recession without risk aversion until the panic of Sep 2008 with flight to government obligations, import prices increased 21.4 percent in the 12 months ending in Jul 2008, 18.1 percent in the 12 months ending in Aug 2008, 13.1 percent in the 12 months ending in Sep 2008, 4.9 percent in the twelve months ending in Oct 2008 and fell 5.9 percent in the 12 months ending in Nov 2008 when risk aversion developed in 2008 until mid 2009 (http://www.bls.gov/mxp/data.htm). Import prices rose again sharply in Nov 2010 by 4.1 percent and in Nov 2011 by 0.1 percent in the presence of zero interest rates with relaxed mood of risk aversion until carry trades were unwound in May 2011 and following months as shown by decrease of import prices by 1.4 percent in the 12 months ending in Nov 2012 and 1.8 percent in Dec 2012 and decrease of 0.3 percent in prices of exports in the 12 months ending in Dec 2012. Import prices increased 15.2 percent in the 12 months ending in Mar 2008, fell 14.9 percent in the 12 months ending in Mar 2009 and increased 11.2 percent in the 12 months ending in Mar 2010. Fluctuations are much sharper in imports because of the high content of oil that as all commodities futures contracts increases sharply with zero interest rates and risk appetite, contracting under risk aversion. There is similar behavior of prices of imports ex fuels, exports and exports ex agricultural goods but less pronounced than for commodity-rich prices dominated by carry trades from zero interest rates. A critical event resulting from unconventional monetary policy driving higher commodity prices by carry trades is the deterioration of the terms of trade, or export prices relative to import prices, that has adversely affected US real income growth relative to what it would have been in the absence of unconventional monetary policy. Europe, Japan and other advanced economies have experienced similar deterioration of their terms of trade. Because of unwinding carry trades of commodity futures as a result of risk aversion, import prices decreased 2.6 percent in the 12 months ending in Apr 2013, export prices decreased 0.9 percent and prices of nonagricultural exports fell 1.5 percent. Imports excluding fuel fell 0.7 percent in the 12 months ending in Apr 2013. At the margin, price changes over the year in world exports and imports are decreasing or increasing moderately because of unwinding carry trades in a temporary mood of risk aversion if exposures in commodity futures.

Table IIA2-1, US, Twelve-Month Percentage Rates of Change of Prices of Exports and Imports

	Imports	Imports Ex Fuels	Exports	Exports Non-Ag
Apr 2013	-2.6	-0.7	-0.9	-1.5
Apr 2012	0.8	1.3	0.7	1.2
Apr 2011	11.9	4.6	9.2	6.8
Apr 2010	11.2	3.2	5.5	5.7
Apr 2009	-16.4	-3.8	-6.7	-5.4
Apr 2008	16.9	6.0	8.0	5.7
Apr 2007	2.1	2.7	5.1	4.0
Apr 2006	5.8	0.6	2.5	2.6
Apr 2005	8.4	2.4	3.1	4.5
Apr 2004	4.6	2.4	4.1	2.4
Apr 2003	1.8	0.4	1.6	1.2
Apr 2002	-3.6	NA	-1.9	-2.0
Apr 2001	-0.7	NA	-0.1	-0.1

Source: Bureau of Labor Statistics http://www.bls.gov/mxp/data.htm

Table IIA2-2 provides 12-month percentage changes of the import price index all commodities from 2001 to 2013. Interest rates moving toward zero during unconventional monetary policy in 2008 induced carry trades into highly leveraged commodity derivatives positions that caused increases in 12-month percentage changes of import prices of around 20 percent. The flight into dollars and Treasury securities by fears of toxic assets in banks in the proposal of TARP (Cochrane and Zingales 2009) caused reversion of carry trades and collapse of commodity futures. Twelve-month percentage changes of import prices at the end of 2012 and into 2013 occurred during another bout of risk aversion.

Table IIA2-2, US, Twelve-Month Percentage Changes of Import Price Index All Commodities, 2001-2013

Year	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Dec
2001	2.8	0.2	-1.6	-0.7	-0.8	-2.6	-4.1	-4.4	-9.1
2002	-8.9	-8.3	-5.6	-3.6	-3.7	-3.6	-1.7	-1.3	4.2
2003	5.8	7.5	6.8	1.8	1.0	2.2	2.3	2.0	2.4
2004	2.2	0.9	1.1	4.6	6.9	5.7	5.6	7.1	6.7
2005	5.7	6.1	7.6	8.4	5.9	7.4	8.2	8.2	8.0
2006	8.7	6.9	4.5	5.8	8.6	7.4	7.0	6.0	2.5
2007	0.0	1.2	2.8	2.1	1.2	2.3	2.8	1.9	10.6
2008	13.6	13.5	15.2	16.9	19.1	21.3	21.4	18.1	-10.1
2009	-12.5	-12.7	-14.9	-16.4	-17.3	-17.5	-19.1	-15.3	8.6
2010	11.4	11.3	11.2	11.2	8.5	4.3	4.9	3.8	5.3
2011	5.6	7.6	10.3	11.9	12.9	13.6	13.7	12.9	8.5
2012	6.9	5.1	3.5	0.8	-0.8	-2.5	-3.3	-1.8	-2.0
2013	-1.5	-0.6	-2.2	-2.6

Source: Bureau of Labor Statistics http://www.bls.gov/mxp/data.htm

There is finer detail in one-month percentage changes of imports of the US in Table IIA2-3. Carry trades into commodity futures induced by interest rates moving to zero in unconventional monetary policy caused sharp monthly increases in import prices for cumulative increase of 13.8 percent from Mar to Jul 2008 at average rate of 2.6 percent per month or annual equivalent in five months of 36.4 percent (3.1 percent in Mar 2008, 2.8 percent in Apr 2008, 2.8 percent in May 2008, 3.0 percent in Jun 2008 and 1.4 percent in Jul 2008, data from http://www.bls.gov/mxp/data.htm). There is no other explanation for increases in import prices during sharp global recession and contracting world trade. Import prices then fell 23.4 percent from Aug 2008 to Jan 2009 or at the annual equivalent rate of minus 41.4 percent in the flight to US government securities in fear of the need to buy toxic assets from banks in the TARP program (Cochrane and Zingales 2009). Risk aversion during the first sovereign debt crisis of the euro area in May-Jun 2010 caused decline of US import prices at the annual equivalent rate of 11.4 percent. US import prices have been driven by combinations of carry trades induced by unconventional monetary policy and bouts of risk aversion (Section I and earlier http://cmpassocregulationblog.blogspot.com/2013/04/world-inflation-waves-squeeze-of.html

http://cmpassocregulationblog.blogspot.com/2013/03/recovery-without-hiring-ten-million.html). US import prices increased 0.5 percent in Jan 2013 and 0.9 percent in Feb 2013 for annual equivalent rate of 8.7 percent, similar to those in national price indexes worldwide, originating in carry trades from zero interest rates to commodity futures. Import prices fell 0.2 percent in Mar 2013 and 0.5 percent in Apr 2013.

Table IIA2-3, US, One-Month Percentage Changes of Import Price Index All Commodities, 2001-2013

Year	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Dec
2001	0.0	-0.6	-1.6	-0.5	0.2	-0.4	-1.5	-0.1	-0.1	-1.0
2002	0.2	0.0	1.3	1.6	0.1	-0.3	0.4	0.3	0.7	0.6
2003	1.8	1.7	0.6	-3.1	-0.7	0.9	0.5	0.0	-0.5	0.7
2004	1.5	0.4	0.8	0.2	1.5	-0.2	0.4	1.5	0.5	-1.4
2005	0.6	0.9	2.2	0.9	-0.8	1.2	1.2	1.4	2.1	0.0
2006	1.2	-0.8	-0.1	2.1	1.8	0.1	0.8	0.5	-2.2	1.1
2007	-1.2	0.4	1.6	1.4	0.9	1.2	1.3	-0.3	0.6	-0.2
2008	1.5	0.2	3.1	2.8	2.8	3.0	1.4	-3.1	-3.6	-4.6
2009	-1.3	0.0	0.5	1.1	1.7	2.7	-0.6	1.5	0.2	0.2
2010	1.2	-0.1	0.4	1.1	-0.8	-1.2	0.0	0.4	0.0	1.4
2011	1.5	1.7	3.0	2.6	0.1	-0.6	0.1	-0.4	-0.1	0.0
2012	0.0	0.0	1.4	-0.1	-1.5	-2.3	-0.7	1.2	1.0	-0.6
2013	0.5	0.9	-0.2	-0.5

Source: Bureau of Labor Statistics http://www.bls.gov/mxp/data.htm

Chart IIA2-8 shows the US monthly import price index of all commodities excluding fuels from 2001 to 2013. All curves of nominal values follow the same behavior under the influence of unconventional monetary policy. Zero interest rates without risk aversion result in jumps of nominal values while under strong risk aversion even with zero interest rates there are declines of nominal values.

Chart IIA2-8, US, Import Price Index All Commodities Excluding Fuels, 2001=100, 2001-2013

Source: US Bureau of Labor Statistics

http://www.bls.gov/mxp/data.htm

Chart IIA2-9 provides 12-month percentage changes of the US import price index excluding fuels between 2001 and 2013. There is the same behavior of carry trades driving up without risk aversion and down with risk aversion prices of raw materials, commodities and food in international trade during the global recession of IVQ2007 to IIQ2009 and in previous and subsequent periods.

Chart IIA2-9, US, Import Price Index All Commodities Excluding Fuels, 12-Month Percentage Changes, 2002-2013

Source: US Bureau of Labor Statistics

http://www.bls.gov/mxp/data.htm

Chart IIA2-10 provides the monthly US import price index ex petroleum from 2001 to 2013. Prices including or excluding commodities follow the same fluctuations and trends originating in impulses of unconventional monetary policy of zero interest rates.

Chart IIA2-10, US, Import Price Index ex Petroleum, 2001=100, 2000-2013

Source: US Bureau of Labor Statistics

http://www.bls.gov/mxp/data.htm

Chart IIA2-11 provides the US import price index ex petroleum from 1982 to 2013. There is the same unique hump in 2008 caused by carry trades from zero interest rates to prices of commodities and raw materials.

Chart IIA2-11, US, Import Price Index ex Petroleum, 2001=100, 1985-2013

Source: US Bureau of Labor Statistics

http://www.bls.gov/mxp/data.htm

Chart IIA2-12 provides 12-month percentage changes of the import price index ex petroleum from 1986 to 2013. The oscillations caused by the carry trade in increasing prices of commodities and raw materials without risk aversion and subsequently decreasing them during risk aversion are unique.

Chart IIA2-12, US, Import Price Index ex Petroleum, 12-Month Percentage Changes, 1986-2013

Source: US Bureau of Labor Statistics

http://www.bls.gov/mxp/data.htm

Chart IIA2-13 of the US Energy Information Administration shows the price of WTI crude oil since the 1980s. Chart IA2-13 captures commodity price shocks during the past decade. The costly mirage of deflation was caused by the decline in oil prices during the recession of 2001. The upward trend after 2003 was promoted by the carry trade from near zero interest rates. The jump above $140/barrel during the global recession in 2008 at $145.29/barrel on Jul 3, 2008, can only be explained by the carry trade promoted by monetary policy of zero fed funds rate. After moderation of risk aversion, the carry trade returned with resulting sharp upward trend of crude prices. Risk aversion resulted in another drop in recent weeks followed by some recovery and renewed deterioration.

Chart IIA2-13, US, Crude Oil Futures Contract

Source: US Energy Information Administration

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

The price index of US imports of petroleum and petroleum products in shown in Chart IIA2-14. There is similar behavior of the curves all driven by the same impulses of monetary policy.

Chart IIA2-14, US, Import Price Index of Petroleum and Petroleum Products, 2001=100, 2001-2013

Source: US Bureau of Labor Statistics

http://www.bls.gov/mxp/data.htm

Chart IIA2-15 provides the price index of petroleum and petroleum products from 1982 to 2013. The rise in prices during the global recession in 2008 and the decline after the flight to government obligations is unique in the history of the series. Increases in prices of trade in petroleum and petroleum products were induced by carry trades and declines by unwinding carry trades in flight to government obligations

Chart IIA2-15, US, Import Price Index of Petroleum and Petroleum Products, 2001=100, 1982-2013

Source: US Bureau of Labor Statistics

http://www.bls.gov/mxp/data.htm

Chart IIA2-16 provides 12-month percentage changes of the price index of US imports of petroleum and petroleum products from 1982 to 2013. There were wider oscillations in this index from 1999 to 2001 (see Barsky and Killian 2004 for an explanation).

Chart IIA2-16, US, Import Price Index of Petroleum and Petroleum Products, 12-Month Percentage Changes, 1982-2013

Source: US Bureau of Labor Statistics

http://www.bls.gov/mxp/data.htm

The price index of US exports of agricultural commodities is in Chart IIA2-17 from 2001 to 2013. There are similar fluctuations and trends as in all other price index originating in unconventional monetary policy repeated over a decade. The most recent segment in 2011 has declining trend in a new flight from risk resulting from the sovereign debt crisis in Europe followed by declines in Jun 2012 and Nov 2012 with stability in Dec 2012 into 2013.

Chart IIA2-17, US, Exports Price Index of Agricultural Commodities, 2001=100, 2001-2013

Source: US Bureau of Labor Statistics

http://www.bls.gov/mxp/data.htm

Chart IIA2-18 provides the price index of US exports of agricultural commodities from 1982 to 2013. The increase in 2008 in the middle of deep, protracted contraction was induced by unconventional monetary policy. The decline from 2008 into 2009 was caused by unwinding carry trades in a flight to government obligations. The increase into 2011 and current pause were also induced by unconventional monetary policy in waves of increases during relaxed risk aversion and declines during unwinding of positions because of aversion to financial risk.

Chart IIA2-18, US, Exports Price Index of Agricultural Commodities, 2001=100, 1982-2013

Source: US Bureau of Labor Statistics

http://www.bls.gov/mxp/data.htm

Chart IIA2-19 provides 12-month percentage changes of the index of US exports of agricultural commodities from 1986 to 2013. The wide swings in 2008, 2009 and 2011 are only explained by unconventional monetary policy inducing carry trades from zero interest rates to commodity futures and reversals during risk aversion.

Chart IIA2-19, US, Exports Price Index of Agricultural Commodities, 12-Month Percentage Changes, 1986-2013

Source: US Bureau of Labor Statistics

http://www.bls.gov/mxp/data.htm

Chart IIA2-20 shows the export price index of nonagricultural commodities from 2001 to 2013. Unconventional monetary policy of zero interest rates drove price behavior during the past decade. Policy has been based on the myth of stimulating the economy by climbing the negative slope of an imaginary short-term Phillips curve.

Chart IIA2-20, US, Exports Price Index of Nonagricultural Commodities, 2001=100, 2001-2013

Source: US Bureau of Labor Statistics

http://www.bls.gov/mxp/data.htm

Chart IIA2-21 provides a longer perspective of the price index of US nonagricultural commodities from 1982 to 2013. Increases and decreases around the global contraction after 2007 were caused by carry trade induced by unconventional monetary policy.

Chart IIA2-21, US, Exports Price Index of Nonagricultural Commodities, 2001=100, 1982-2013

Source: US Bureau of Labor Statistics

http://www.bls.gov/mxp/data.htm

Finally, Chart IIA2-22 provides 12-month percentage changes of the price index of US exports of nonagricultural commodities from 1986 to 2013. The wide swings before, during and after the global recession beginning in 2007 were caused by carry trades induced by unconventional monetary policy.

Chart IIA2-22, US, Exports Price Index of Nonagricultural Commodities, 12-Month Percentage Changes, 1986-2013

Source: US Bureau of Labor Statistics

http://www.bls.gov/mxp/data.htm

Risk aversion channels funds toward US long-term and short-term securities that finance the US balance of payments and fiscal deficits benefitting currently from risk flight to US dollar denominated assets. Net foreign purchases of US long-term securities (row C in Table VA-9) stabilized from minus $13.3 billion in Feb 2013 to minus $13.5 billion in Mar 2013. Foreign (residents) purchases minus sales of US long-term securities (row A in Table VA-9) in Feb 2013 of $12.2 billion increased to $15.3 billion in Mar 2013. Net US (residents) purchases of long-term foreign securities (row B in Table VA-9) decreased from minus $25.4 billion in Feb 2013 to minus $28.8 billion in Mar 2013. In Mar 2013,

C = A + B = $15.3 billion - $28.8 billion = -$13.5 billion

There are minor rounding errors. There is decreasing demand in Table VA-9 in Jan in A1 private purchases by residents overseas of US long-term securities of $9.7 billion of which increases in A11 Treasury securities of $22.1 billion, decrease in A12 of $7.8 billion in agency securities, decrease by $8.2 billion of corporate bonds and increase of $3.6 billion in equities. Worldwide risk aversion causes flight into US Treasury obligations with significant oscillations. Official purchases of securities in row A2 decreased $1.5 billion with decrease of Treasury securities of $7.1 billion in Dec. Official purchases of agency securities increased $5.6 billion in Mar and decreased $1.1 billion in Feb. Row D shows increase in Mar in purchases of short-term dollar denominated obligations. Foreign private holdings of US Treasury bills increased $15.8 billion (row D11) with foreign official holdings increasing $18.5 billion while the category “other” increased $1.3 billion. Risk aversion of default losses in foreign securities dominates decisions to accept zero interest rates in Treasury securities with no perception of principal losses. In the case of long-term securities, investors prefer to sacrifice inflation and possible duration risk to avoid principal losses.

Table VA-9, Net Cross-Borders Flows of US Long-Term Securities, Billion Dollars, NSA

	Mar 2012 12 Months	Mar 2013 12 Months	Feb 2013	Mar 2013
A Foreign Purchases less Sales of US LT Securities	481.1	545.5	12.2	15.3
A1 Private	289.0	341.6	13.3	9.7
A11 Treasury	265.9	167.7	9.3	22.1
A12 Agency	73.9	110.1	-1.9	-7.8
A13 Corporate Bonds	-54.1	-17.5	8.6	-8.2
A14 Equities	3.2	81.3	-2.7	3.6
A2 Official	192.1	203.9	-1.1	5.6
A21 Treasury	180.8	153.5	-6.7	-16.8
A22 Agency	7.5	23.8	3.9	17.3
A23 Corporate Bonds	0.3	13.6	1.0	2.0
A24 Equities	3.4	13.0	0.7	3.2
B Net US Purchases of LT Foreign Securities	-36.0	-118.1	-25.4	-28.8
B1 Foreign Bonds	2.6	-26.0	-6.9	-2.0
B2 Foreign Equities	-38.6	-92.1	-18.6	-26.8
C Net Foreign Purchases of US LT Securities	445.1	427.4	-13.3	-13.5
D Increase in Foreign Holdings of Dollar Denominated Short-term	-56.4	111.8	11.8	35.6
D1 US Treasury Bills	-30.8	86.1	14.0	34.2
D11 Private	25.9	40.2	5.5	15.8
D12 Official	-56.7	45.8	8.5	18.5
D2 Other	-25.7	25.7	-2.1	1.3

C = A + B;

A = A1 + A2

A1 = A11 + A12 + A13 + A14

A2 = A21 + A22 + A23 + A24

B = B1 + B2

D = D1 + D2

Sources: http://www.treasury.gov/resource-center/data-chart-center/tic/Pages/ticpress.aspx

Table VA-10 provides major foreign holders of US Treasury securities. China is the largest holder with $1250.5 billion in Mar 2013, increasing 9.3 percent from $1144.0billion in Mar 2012. Japan increased its holdings from $1080.4 billion in Mar 2012 to $1105.0 billion in Mar 2013 or by 2.3 percent likely in part by intervention to buy dollars against the yen to depreciate the overvalued yen/dollar rate that diminishes the competitiveness of Japan. Total foreign holdings of Treasury securities rose from $5147.6 billion in Mar 2012 to $5758.4 billion in Mar 2013, or 11.9 percent. The US continues to finance its fiscal and balance of payments deficits with foreign savings (see Pelaez and Pelaez, The Global Recession Risk (2007)). A point of saturation of holdings of US Treasury debt may be reached as foreign holders evaluate the threat of reduction of principal by dollar devaluation and reduction of prices by increases in yield, including possibly risk premium. Shultz et al (2012) find that the Fed financed three-quarters of the US deficit in fiscal year 2011, with foreign governments financing significant part of the remainder of the US deficit while the Fed owns one in six dollars of US national debt. Concentrations of debt in few holders are perilous because of sudden exodus in fear of devaluation and yield increases and the limit of refinancing old debt and placing new debt. In their classic work on “unpleasant monetarist arithmetic,” Sargent and Wallace (1981, 2) consider a regime of domination of monetary policy by fiscal policy (emphasis added):

“Imagine that fiscal policy dominates monetary policy. The fiscal authority independently sets its budgets, announcing all current and future deficits and surpluses and thus determining the amount of revenue that must be raised through bond sales and seignorage. Under this second coordination scheme, the monetary authority faces the constraints imposed by the demand for government bonds, for it must try to finance with seignorage any discrepancy between the revenue demanded by the fiscal authority and the amount of bonds that can be sold to the public. Suppose that the demand for government bonds implies an interest rate on bonds greater than the economy’s rate of growth. Then if the fiscal authority runs deficits, the monetary authority is unable to control either the growth rate of the monetary base or inflation forever. If the principal and interest due on these additional bonds are raised by selling still more bonds, so as to continue to hold down the growth of base money, then, because the interest rate on bonds is greater than the economy’s growth rate, the real stock of bonds will growth faster than the size of the economy. This cannot go on forever, since the demand for bonds places an upper limit on the stock of bonds relative to the size of the economy. Once that limit is reached, the principal and interest due on the bonds already sold to fight inflation must be financed, at least in part, by seignorage, requiring the creation of additional base money.”

Table VA-10, US, Major Foreign Holders of Treasury Securities $ Billions at End of Period

	Mar 2013	Feb 2013	Mar 2012
Total	5758.4	5718.8	5147.6
China	1250.5	1251.9	1144.0
Japan	1105.0	1105.5	1080.4
Caribbean Banking Centers	291.3	280.3	234.8
Oil Exporters	261.5	256.8	262.4
Brazil	258.6	256.5	238.1
Taiwan	189.0	190.0	190.1
Belgium	184.3	187.3	141.4
Switzerland	184.2	186.9	150.4
Russia	162.5	164.9	151.1
Luxembourg	155.0	151.4	137.9
United Kingdom	150.6	139.3	126.0
Hong Kong	147.1	144.7	140.5
Foreign Official Holdings	4099.1	4097.4	3722.6
A. Treasury Bills	404.0	385.6	358.2
B. Treasury Bonds and Notes	3695.0	3711.8	3364.3

Source: http://www.treasury.gov/resource-center/data-chart-center/tic/Pages/ticsec2.aspx#ussecs

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/gor1304b.pdf). For fiscal 2013, the forecast is of growth of GDP between 2.4 and 3.0 percent, with the all items CPI less fresh food of 0.4 to 0.8 percent. The critical difference is forecast of the CPI excluding fresh food of 2.7 to 3.6 percent in 2014 and 1.6 to 2.9 percent in 2015. The new monetary policy of the Bank of Japan aims to increase inflation to 2 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:

1. 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).
2. 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.
3. 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).
4. 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	CPI All Items Less Fresh Food	Excluding Effects of Consumption Tax Hikes
2012
Apr 2013	+1.0 to +1.0 [+1.0]	-0.2
Jan 2013	+1.0 to +1.1 [+1.0]	-0.2 to –0.1 [-0.2]
2013
Apr 2013	+2.4 to +3.0 [+2.9]	+0.4 to +0.8 [+0.7]
Jan 2013	+1.9 to +2.5 [+2.3]	+0.3 to +0.6 [+0.4]
2014
Apr 2013	+1.0 to +1.5 [+1.4]	+2.7 to +3.6 [+3.4]	+0.7 to +1.6 [+1.4]
Jan 2013	+0.6 to +1.0 [+0.8]	+2.5 to +3.0 [+2.9]	+0.5 to +1.0 [+0.9]
2015
Apr 2013	+1.4 to +1.9 [+1.6]	+1.6 to +2.9 [+2.6]	+0.9 to +2.2 [+1.9]

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/gor1304a.pdf

Private-sector activity in Japan expanded moderately with the Markit Composite Output PMI^™ Index decreasing from 53.2 in Mar to 51.8 in Apr (http://www.markiteconomics.com/Survey/PressRelease.mvc/00f4933645f042f98ebcece4b088a884). Paul Smith, economist at Markit and author of the report, finds that the survey data suggest continuing growth of the economy of Japan after strong performance in IQ2013 (http://www.markiteconomics.com/Survey/PressRelease.mvc/00f4933645f042f98ebcece4b088a884). The Markit Business Activity Index of Services decreased from 54.0 in Mar, which is the highest level since Sep 2007 when the survey began, to 51.7 in Apr (http://www.markiteconomics.com/Survey/PressRelease.mvc/00f4933645f042f98ebcece4b088a884). Paul Smith, Senior Economist at Markit and author of the report, finds continuing confidence in demand for services (http://www.markiteconomics.com/Survey/PressRelease.mvc/00f4933645f042f98ebcece4b088a884). Markit/JMMA Purchasing Managers’ Index^™ (PMI™), seasonally adjusted, increased from 50.4 in Mar to 51.1 in Apr for the second consecutive and highest reading above 50.0 since May 2012 (http://www.markiteconomics.com/Survey/PressRelease.mvc/18ffdfb11432422bbaa05b971dbe5a15). Foreign and domestic business continued improvement with yen devaluation supporting foreign demand but with increases in input costs. Paul Smith, Senior Economist at Markit and author of the report, finds survey data consistent with quarterly growth of manufacturing around 2 percent (http://www.markiteconomics.com/Survey/PressRelease.mvc/18ffdfb11432422bbaa05b971dbe5a15).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	Apr ∆% +0.3 12 months ∆% 0.0 Blog 5/19/13
Consumer Price Index	Mar NSA ∆% 0.2; Mar 12 months NSA ∆% -0.9 Blog 4/28/13
Real GDP Growth	IQ2013 ∆%: 0.9 on IVQ2012;  IQ2013 SAAR 3.5; ∆% from quarter a year earlier: 0.2 % Blog 5/19/13
Employment Report	Mar Unemployed 2.8 million Change in unemployed since last year: minus 270 thousand Unemployment rate: 4.1% Blog 5/5/13
All Industry Indices	Feb month SA ∆% 0.6 12-month NSA ∆% -2.5 Blog 4/28/13
Industrial Production	Mar SA month ∆%: 0.2 12-month NSA ∆% -7.3 Blog 5/5/13
Machine Orders	Total Mar ∆% 27.8 Private ∆%: 22.3 Mar ∆% Excluding Volatile Orders 14.2 Blog 5/19/13
Tertiary Index	Mar month SA ∆% -1.3 Mar 12 months NSA ∆% -0.1 Blog 5/19/13
Wholesale and Retail Sales	Mar 12 months: Total ∆%: -1.2 Wholesale ∆%: -1.5 Retail ∆%: -0.3 Blog 5/5/13
Family Income and Expenditure Survey	Mar 12-month ∆% total nominal consumption 4.1, real 5.2 Blog 5/5/13
Trade Balance	Exports Mar 12 months ∆%: 1.1 Imports Mar 12 months ∆% 5.5 Blog 4/21/13

Links to blog comments in Table JPY:

5/5/13 http://cmpassocregulationblog.blogspot.com/2013/05/twenty-nine-million-unemployed-or.html

4/28/13 http://cmpassocregulationblog.blogspot.com/2013/04/mediocre-and-decelerating-united-states_28.html

4/21/13 http://cmpassocregulationblog.blogspot.com/2013/04/world-inflation-waves-squeeze-of.html

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

The economy of Japan grew 0.9 percent in IQ2013, seasonally adjusted, as shown in Table VB-1, incorporating the latest estimates and revisions. Japan’s GDP increased 0.3 percent in IVQ2012 relative to IIIQ2012. IQ2012 GDP growth was revised to 1.3 percent; IIQGDP growth was revised to -0.2 percent; and IIIQ2012 growth was revised to -0.9 percent. The economy of Japan had already weakened in IVQ2010 when GDP fell revised 0.3 percent. As in other advanced economies, Japan’s recovery from the global recession has not been robust. GDP fell 1.9 percent in IQ2011 and fell again 1.0 percent in IIQ2011 as a result of the disruption of the tragic Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Recovery was robust in the first two quarters of 2010 but GDP grew at 1.5 percent in IIIQ2010 and fell 0.3 percent in IVQ2010. The deepest quarterly contractions in the recession were 3.3 percent in IVQ2008 and 4.0 percent in IQ2009.

Table VB-1, Japan, Real GDP ∆% Changes from the Previous Quarter Seasonally Adjusted ∆%

	IQ	IIQ	IIIQ	IVQ
2013	0.9
2012	1.3	-0.2	-0.9	0.3
2011	-1.9	-1.0	2.7	0.2
2010	1.4	0.9	1.5	-0.3
2009	-4.0	1.6	0.1	1.8
2008	0.6	-1.2	-1.0	-3.3
2007	1.0	0.1	-0.3	0.9
2006	0.4	0.4	0.0	1.3
2005	0.2	1.3	0.4	0.2
2004	1.1	-0.1	0.2	-0.2
2003	-0.5	1.2	0.4	1.1
2002	-0.2	1.0	0.6	0.4
2001	0.7	-0.2	-1.1	-0.1
2000	1.7	0.2	-0.3	0.7
1999	-0.9	0.4	-0.1	0.4

Source: http://www.esri.cao.go.jp/en/sna/sokuhou/sokuhou_top.html

Table VB-2 provides contributions to real GDP at seasonally adjusted annual rates (SAAR). Japan grew at 3.5 percent SAAR in IQ2013 driven by contributions of 2.3 percent of personal consumption (PC) and 1.5 percent of net trade. The SAAR of GDP in IVQ2012 was 1.0 percent: 1.1 percentage points from growth of personal consumption expenditures (PC) less 0.3 percentage points of net trade (exports less imports) less 0.95percentage points of private inventory investment (PINV) plus 0.6 percentage points of government consumption. The SAAR of GDP in IIIQ2011 was revised to a high 11.3 percent. Net trade deducted from GDP growth in three quarters of 2011 and provided the growth impulse of 3.6 percentage points in IIIQ2011. Growth in 2011 and IQ2012 was driven by personal consumption expenditures that deducted 1.0 percentage points from GDP growth in IIIQ2012 but added 1.1 percentage points to GDP growth in IVQ2012.

Table VB-2, Japan, Contributions to Changes in Real GDP, Seasonally Adjusted Annual Rates (SAAR), %

	GDP	PC	GFCF	Trade	PINV	GOVC
2013
I	3.5	2.3	0.1	1.5	-0.8	0.5
2012
I	5.3	2.0	-0.4	0.3	2.1	1.2
II	-0.9	0.5	1.2	-1.2	-1.8	0.4
III	-3.5	-1.0	-1.0	-2.5	0.6	0.3
IV	1.0	1.1	0.2	-0.3	-0.5	0.6
2011
I	-7.4	-3.7	-0.5	-1.2	-2.1	0.1
II	-3.8	2.2	-0.3	-4.2	-2.0	0.2
III	11.3	3.6	1.4	3.6	2.5	0.2
IV	0.8	1.6	3.7	-2.9	-1.8	0.3
2010
I	5.7	1.2	0.2	2.1	2.6	-0.5
II	3.8	0.1	0.8	0.2	1.6	1.1
III	6.1	3.3	0.9	0.3	1.4	0.3
IV	-1.3	-0.5	-0.7	-0.3	-0.1	0.4
2009
I	-15.1	-2.2	-1.9	-4.4	-7.4	0.8
II	6.7	4.1	-3.3	7.4	-2.2	0.6
III	0.4	0.2	-1.3	2.1	-1.5	1.0
IV	7.6	3.7	0.2	2.8	0.6	0.3
2008
I	2.6	1.3	0.4	1.2	-0.3	0.0
II	-4.7	-3.2	-2.4	0.5	1.1	-0.8
III	-4.0	-0.4	-0.9	-0.1	-2.6	0.0
IV	-12.4	-2.8	-4.5	-11.4	5.7	0.3
2007
I	4.0	0.8	0.6	1.1	1.2	0.4
II	0.5	0.6	-1.6	0.8	0.0	0.5
III	-1.4	-0.8	-1.7	2.0	-0.6	-0.2
IV	3.5	0.3	0.3	1.4	0.9	0.6

Note: PC: Private Consumption; GFCF: Gross Fixed Capital Formation; PINV: Private Inventory; Trade: Net Exports; GOVC: Government Consumption

Source: http://www.esri.cao.go.jp/en/sna/sokuhou/sokuhou_top.html

Long-term economic growth in Japan significantly improved by increasing competitiveness in world markets. Net trade of exports and imports is an important component of the GDP accounts of Japan. Table VB-3 provides quarterly data for net trade, exports and imports of Japan. Net trade had strong positive contributions to GDP growth in Japan in all quarters from IQ2007 to IIQ2009 with exception of IVQ2008, IIIQ2008 and IQ2009. The US recession is dated by the National Bureau of Economic Research (NBER) as beginning in IVQ2007 (Dec) and ending in IIQ2009 (Jun) (http://www.nber.org/cycles/cyclesmain.html). Net trade contributions helped to cushion the economy of Japan from the global recession. Net trade deducted from GDP growth in seven of the nine quarters from IVQ2010 IVQ2012. The only strong contribution of net trade was 3.6 percent in IIIQ2011. Net trade added 1.5 percentage points to GDP growth in IQ2013. Private consumption assumed the role of driver of Japan’s economic growth but should moderate as in most mature economies.

Table VB-3, Japan, Contributions to Changes in Real GDP, Seasonally Adjusted Annual Rates (SAAR), %

	Net Trade	Exports	Imports
2013
I	1.5	2.1	-0.6
2012
I	0.3	1.7	-1.3
II	-1.2	0.0	-1.2
III	-2.5	-2.7	0.2
IV	-0.3	-1.7	1.5
2011
I	-1.2	-0.5	-0.7
II	-4.2	-4.4	0.2
III	3.6	5.5	-1.9
IV	-2.9	-1.9	-1.0
2010
I	2.1	3.5	-1.3
II	0.2	2.8	-2.6
III	0.3	1.2	-0.9
IV	-0.3	0.1	-0.4
2009
I	-4.4	-16.4	12.0
II	7.4	4.7	2.7
III	2.1	5.2	-3.1
IV	2.8	4.1	-1.3
2008
I	1.2	2.1	-1.0
II	0.5	-1.5	2.1
III	-0.1	0.1	-0.1
IV	-11.4	-10.2	-1.2
2007
I	1.1	1.7	-0.5
II	0.8	1.6	-0.8
III	2.0	1.4	0.6
IV	1.4	2.0	-0.7

Source: http://www.esri.cao.go.jp/en/sna/sokuhou/sokuhou_top.html

Japan’s percentage growth of GDP not seasonally adjusted in a quarter relative to the same quarter a year earlier is shown in Table VB-4. Contraction of GDP in a quarter relative to the same quarter a year earlier extended over seven quarters from IIQ2008 through IVQ2009. Contraction was sharpest in IQ2009 with output declining 9.4 percent relative to a year earlier. Yearly quarterly rates of growth of Japan were relatively high for a mature economy through the decade with the exception of the contractions from IVQ2001 to IIQ2002 and after 2007. The Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011 caused flat GDP in IQ2011 relative to the same quarter a year earlier and decline of 1.6 percent in IIQ2011. GDP fell 0.5 percent in IIIQ2011 relative to a year earlier and fell 0.3 percent in IVQ2011 relative to a year earlier. Growth resumed with 3.4 percent in IQ2012 relative to a year earlier. Growth of 4.0 percent in IIQ2012 is largely caused by the low level in IIQ2011 resulting from the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. GDP increased 0.3 percent in IIIQ2012 relative to a year earlier and 0.5 percent in IVQ2012 relative to a year earlier. GDP grew 0.2 percent in IQ2013 relative to a year earlier. Japan faces the challenge of recovery from the devastation of the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011 in an environment of declining world trade and bouts of risk aversion that cause appreciation of the Japanese yen that erode the country’s competitiveness in world markets.

Table VB-4, Japan, Real GDP ∆% Changes from Same Quarter Year Earlier, NSA ∆%

	IQ	IIQ	IIIQ	IVQ
2013	0.2
2012	3.4	4.0	0.3	0.5
2011	0.0	-1.6	-0.5	-0.3
2010	4.9	4.4	6.0	3.3
2009	-9.4	-6.6	-5.6	-0.5
2008	1.4	-0.1	-0.6	-4.7
2007	2.8	2.3	2.0	1.6
2006	2.6	1.3	0.9	2.0
2005	0.4	1.4	1.5	1.9
2004	4.0	2.6	2.2	0.7
2003	1.7	1.8	1.5	1.8
2002	-1.6	-0.2	1.4	1.6
2001	1.6	0.9	0.0	-1.0
2000	2.7	2.4	2.2	1.8
1999	-0.3	0.1	-0.1	-0.5

Source: http://www.esri.cao.go.jp/en/sna/sokuhou/sokuhou_top.html

Japan’s total machinery orders seasonally adjusted in Table VB-5 strengthened in Mar 2013, growing 27.8 percent seasonally adjusted. Private sector orders increased 22.3 and 14.2 percent excluding volatile orders. Orders from overseas jumped 52.1 percent and manufacturing orders 14.3 percent.

Table VB-5, Japan, Machinery Orders, Month ∆%, SA 

2012-2013	Mar 13	Feb 13	Jan 13	Dec 12
Total	27.8	0.9	1.1	-9.0
Private Sector	22.3	-2.2	-3.4	-4.3
Excluding Volatile Orders	14.2	4.2	-7.5	-1.3
Mfg	13.3	4.9	-10.0	1.0
Non Mfg ex Volatile	14.3	0.3	-4.5	-7.8
Government	15.2	15.2	-17.3	6.8
From Overseas	52.1	1.0	-3.7	-8.3
Through Agencies	35.2	-0.3	-0.6	2.2

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-Mar 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-6 provides values and percentage changes from a year earlier of Japan’s machinery orders without seasonal adjustment. Total orders of JPY 3,859,764 million in Mar 2013 are divided between JPY 1,443,467 million overseas orders, or 37.4 percent of the total, and domestic orders of JPY 2,279,684 million, or 58.8 percent of the total, with orders through agencies of JPY 145,613 million, or 3.8 percent of the total. Orders through agencies are not shown in the table because of the minor value. Twelve-month percentages changes in Mar 2013 are strong with 11.5 percent for total orders, 27.5 percent for foreign orders, 3.3 percent for domestic orders and 2.4 percent for orders excluding volatile components.

Table VB-6, Japan, Machinery Orders, 12 Months ∆% and Million Yen, Original Series  

	Total	Overseas	Domestic	Private ex Volatile
Value Mar 2013	3,859,764	1,443,467	2,270,684	1,153,476
% Total	100.0	37.4	58.8	29.9
Value Mar 2012	3,462,415	1,132,510	2,199,111	1,126,865
% Total	100.0	32.7	63.5	35.8
12-month ∆%	11.5	27.5	3.3	2.4
Mar 2013	11.5	27.5	3.3	2.4
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 Mar 2013 were JPY 145,613 million or 3.8 percent of the total and 3.8 percent of the total in Mar 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

The tertiary activity index of Japan decreased 1.3 percent SA in Mar 2013 and decreased 0.1 percent NSA in the 12 months ending in Mar 2013, as shown in Table VB-7. The index is showing significant volatility with increase of 1.2 percent in Feb 2013 and 1.3 percent in Dec 2012 but decreases of 1.3 percent in Mar 2013 and 1.6 percent in Jan 2013. The tertiary activity index fell 5.2 percent in 2009, growing 1.3 percent in 2010, 0.1 percent in 2011 and 1.4 percent in 2012.

Table VB-7, Japan, Tertiary Activity Index, ∆%

	Month ∆% SA	12 Months ∆% NSA
Mar 2013	-1.3	-0.1
Feb	1.2	-1.6
Jan	-1.6	0.1
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 Mar 2013 are provided in Table VB-2. Electricity, gas, heat supply and water decreased 3.9 percent in Mar 2013 and decreased 5.8 percent in the 12 months ending in Mar 2013. Wholesale and retail trade decreased 0.7 percent in the month of Mar and decreased 1.3 percent in 12 months. Information and communications decreased 8.3 percent in Mar and decreased 0.3 percent in 12 months.

Table VB-8, Japan, Tertiary Index and Components, Month and 12-Month Percentage Changes ∆%

Mar 2013	Weight	Month ∆% SA	12 Months ∆% NSA
Tertiary Index	10,000.0	-1.3	-0.1
Electricity, Gas, Heat Supply & Water	372.9	-3.9	-5.8
Information & Communications	951.2	-8.3	-0.3
Wholesale & Retail Trade	2,641.2	-0.7	-1.3
Finance & Insurance	971.1	-0.2	5.0
Real Estate & Goods Rental & Leasing	903.4	1.1	0.5
Scientific Research, Professional & Technical Services	551.3	5.5	-2.9
Accommodations, Eating, Drinking	496.0	0.6	0.6
Living-Related, Personal, Amusement Services	552.7	-1.5	0.3
Learning Support	116.9	-1.5	-0.7
Medical, Health Care, Welfare	921.1	0.9	2.0
Miscellaneous ex Government	626.7	0.0	-1.2

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

VC China. China estimates an index of nonmanufacturing purchasing managers on the basis of a sample of 1200 nonmanufacturing enterprises across the country (http://www.stats.gov.cn/english/pressrelease/t20121009_402841094.htm). Table CIPMNM provides this index and components. 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. The index fell to 54.5 in Apr 2013.

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

	Total Index	New Orders	Interm. Input Prices	Subs Prices	Exp
Apr 2013	54.5	50.9	51.1	47.6	62.5
Mar	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

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

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. The index fell again to 54.5 in Apr 2013.

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

Source: National Bureau of Statistics of China

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

Table CIPMMFG provides the index of purchasing managers of manufacturing seasonally adjusted of the National Bureau of Statistics of China. The general index (IPM) rose from 50.5 in Jan 2012 to 53.3 in Apr and declined to 50.1 in Jul and to the contraction zone at 49.2 in Aug and 49.8 in Sep, climbing above 50.0 to 50.2 in Oct, 50.6 in Nov-Dec 2012, 50.9 in Mar 2013 and 50.6 in Apr 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, 52.3 in Mar 2013 and 51.7 in Apr 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, 49.8 in Mar 2013 and 49.0 in Apr 2013.

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

	IPM	PI	NOI	INV	EMP	SDEL
Apr 2013	50.6	52.6	51.7	47.5	49.0	50.8
Mar	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

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

China estimates the manufacturing index of purchasing managers on the basis of a sample of 820 enterprises (http://www.stats.gov.cn/english/pressrelease/t20121009_402841094.htm). Chart CIPMMFG provides the manufacturing index of purchasing managers. 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, 50.9 in Mar 2013 and 50.6 in Apr 2013 above the neutral zone of 50.0.

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

Source: National Bureau of Statistics of China

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

Growth of China’s GDP in IQ2013 relative to the same period in 2012 was 7.7 percent, as shown in Table VC-GDP. Secondary industry accounts for 45.9 percent of GDP of which industry alone for 41.1 percent in IQ2013 and construction with the remaining 4.8 percent in the first three quarters of 2012. Tertiary industry accounts for 47.8 percent of GDP in the IQ2013 and primary industry for 6.3 percent. China’s growth strategy consisted of rapid increases in productivity in industry to absorb population from agriculture where incomes are lower (Pelaez and Pelaez, The Global Recession Risk (2007), 56-80). The bottom block of Table VC-1 provides quarter-on-quarter growth rates of GDP and their annual equivalent. China’s GDP growth decelerated significantly from annual equivalent 9.9 percent in IIQ2011 to 7.4 percent in IVQ2011 and 6.6 percent in IQ2012, rebounding to 7.8 percent in IIQ2012, 8.7 percent in IIIQ2012 and 8.2 percent in IVQ2012. Annual equivalent growth in IQ2013 fell to 6.6 percent.

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

Cumulative GDP IQ2013	Value Current CNY 100 Million	2013 Year-on-Year ∆%
GDP	118855	7.7
Primary Industry	7427	3.4
Farming	7427	3.4
Secondary Industry	54569	7.8
Industry	48832	7.5
Construction	5737	9.8
Tertiary Industry	56859	8.3
Transport, Storage, Post	6563	7.0
Wholesale, Retail Trades	11914	10.5
Hotel & Catering Services	2419	4.5
Financial Intermediation	8099	11.5
Real Estate	8383	7.8
Other	19481	6.8
Growth in Quarter Relative to Prior Quarter	∆% on Prior Quarter	∆% Annual Equivalent
2012
IQ2013	1.6	6.6
IVQ2012	2.0	8.2
IIIQ2012	2.1	8.7
IIQ2012	1.9	7.8
IQ2012	1.6	6.6
2011
IVQ2011	1.8	7.4
IIIQ2011	2.3	9.6
IIQ2011	2.4	9.9
IQ2011	2.3	9.5

Source: National Bureau of Statistics of China

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

Growth of China’s GDP in IQ2013 relative to the same period in 2012 was 7.7 percent, as shown in Table VC-GDPA. Secondary industry accounts for 45.9 percent of GDP of which industry alone for 41.1 percent in IQ2013 and construction with the remaining 4.8 percent in the first three quarters of 2012. Tertiary industry accounts for 47.8 percent of GDP in the IQ2013 and primary industry for 6.3 percent. China’s growth strategy consisted of rapid increases in productivity in industry to absorb population from agriculture where incomes are lower (Pelaez and Pelaez, The Global Recession Risk (2007), 56-80). The bottom block of Table VC-1 provides quarter-on-quarter growth rates of GDP and their annual equivalent. China’s GDP growth decelerated significantly from annual equivalent 9.9 percent in IIQ2011 to 7.4 percent in IVQ2011 and 6.6 percent in IQ2012, rebounding to 7.8 percent in IIQ2012, 8.7 percent in IIIQ2012 and 8.2 percent in IVQ2012. Annual equivalent growth in IQ2013 fell to 6.6 percent.

Table VC-GDPA, China, Growth Rate of GDP, ∆% Relative to a Year Earlier and ∆% Relative to Prior Quarter

	IQ 2013
GDP	7.7
Primary Industry	3.4
Secondary Industry	7.8
Tertiary Industry	8.3
GDP ∆% Relative to a Prior Quarter	1.6
	IQ 2011	IIQ 2011	IIIQ 2011	IVQ 2011	IQ  2012	IIQ 2012	IIIQ 2012	IVQ 2012
GDP	9.7	9.5	9.1	8.9	8.1	7.6	7.4	7.9
Primary Industry	3.5	3.2	3.8	4.5	3.8	4.3	4.2	4.5
Secondary Industry	11.1	11.0	10.8	10.6	9.1	8.3	8.1	8.1
Tertiary Industry	9.1	9.2	9.0	8.9	7.5	7.7	7.9	8.1
GDP ∆% Relative to a Prior Quarter	2.3	2.4	2.3	1.8	1.6	1.9	2.1	2.0
	IQ 2010	IIQ 2010	IIIQ 2010	IVQ 2010
GDP	12.1	11.2	10.7	12.1
Primary Industry	3.8	3.6	4.0	3.8
Secondary Industry	14.5	13.3	12.6	14.5
Tertiary Industry	10.5	9.9	9.7	10.5

Source: National Bureau of Statistics of China

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

Chart VC-GDP of the National Bureau of Statistics of China provides annual value and growth rates of GDP. China’s GDP growth in 2012 is still high at 7.8 percent but at the lowest rhythm in five years.

Chart VC-GDP, China, Gross Domestic Product, Million Yuan and ∆%, 2008-2012

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

The HSBC Flash China Manufacturing Purchasing Managers’ Index^™ (PMI^™) compiled by Markit (http://www.markiteconomics.com/Survey/PressRelease.mvc/6a7e23c1fd0a42c9baa11cf90ebcb9bb) is moving at slower pace. The overall Flash China Manufacturing PMI^™ decreased marginally from 51.6 in Mar to 50.5 in Apr while the Flash China Manufacturing Output Index decreased from 53.0 in Mar to 51.1 in Apr, both in expansion territory above 50.0. Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds that the economy of China is improving toward moderate growth with weak overseas demand (http://www.markiteconomics.com/Survey/PressRelease.mvc/6a7e23c1fd0a42c9baa11cf90ebcb9bb). The HSBC China Services PMI^™, compiled by Markit, shows marginal strength in business activity in China with the HSBC Composite Output, combining manufacturing and services, decreasing from 53.5 in Mar to 51.1 in Apr for the eighth consecutive month of expansion (http://www.markiteconomics.com/Survey/PressRelease.mvc/4ca5cc08062f42678db1318d3b796553). Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds that combined manufacturing and services data suggest effects on growth and employment in IIQ2013 (http://www.markiteconomics.com/Survey/PressRelease.mvc/4ca5cc08062f42678db1318d3b796553). The HSBC Business Activity index decreased from 54.3 in Mar to 51.1 in Apr at the slowest rate since Aug 2011 (http://www.markiteconomics.com/Survey/PressRelease.mvc/4ca5cc08062f42678db1318d3b796553). Hongbin Ku, Chief Economist, China & Co-Head of Asian Economic Research at HSBC, finds concern with growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/4ca5cc08062f42678db1318d3b796553). The HSBC Purchasing Managers’ Index^™ (PMI^™), compiled by Markit, decreased to 50.4 in Apr from 51.6 in Mar, indicating moderate activity in six consecutive months of improvement (http://www.markiteconomics.com/Survey/PressRelease.mvc/38c24b45fc394273bcb70ed19903e633). New export orders decreased in the only month since Dec 2012. Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds deteriorating foreign demand together with adverse effects of domestic deflation (http://www.markiteconomics.com/Survey/PressRelease.mvc/38c24b45fc394273bcb70ed19903e633). Table CNY provides the country data table for China.

Table CNY, China, Economic Indicators

Price Indexes for Industry	Apr 12-month ∆%: minus 2.6 Apr month ∆%: -0.6 Blog 5/12/13
Consumer Price Index	Apr month ∆%: 0.2 Apr 12 months ∆%: 2.4 Blog 5/12/13
Value Added of Industry	Apr month ∆%: 0.87 Jan-Apr 2013/Jan-Apr 2012 ∆%: 9.4 Blog 5/19/13
GDP Growth Rate	Year IQ2013 ∆%: 7.9 Quarter IQ2013 ∆%: 7.7 Blog 4/21/13
Investment in Fixed Assets	Apr month ∆%: 1.63 Total Jan-Apr 2012 ∆%: 20.6 Real estate development: 21.2 Blog 5/19/13
Retail Sales	Apr month ∆%: 1.23 Apr 12 month ∆%: 12.8 Jan-Apr ∆%: 12.5 Blog 5/19/13
Trade Balance	Apr balance $18.2 billion Exports 12M ∆% 14.7 Imports 12M ∆% 16.8 Cumulative Apr: $61.27 billion Blog 5/12/13

Links to blog comments in Table CNY:

5/12/13 http://cmpassocregulationblog.blogspot.com/2013/05/recovery-without-hiring-collapse-of.html

4/21/13 http://cmpassocregulationblog.blogspot.com/2013/04/world-inflation-waves-squeeze-of.html

Cumulative and 12-months rates of value added of industry in China are provided in Table VC-3. Value added in total industry in Jan-Apr 2013 increased 9.4 percent relative to a year earlier. Heavy industry had been the driver of growth with a cumulative rate of 11.0 percent relative to a year earlier in Jan-Mar 2012 that declined to 10.5 percent in Jan-Apr 2012 relative to the same period a year earlier and further down to 10.1 percent in Jan-Jun 2012, 9.9 percent in Jan-Jul 2012, 9.8 percent in Jan-Aug 2012, 9.7 percent in Jan-Sep 2012, 9.7 percent in Jan-Oct 2012, 9.8 percent in Jan-Nov 2012, 9.9 percent in Jan-Dec 2012, 10.2 percent in Jan-Feb 2013, 9.8 percent in Jan-Mar 2013 and 9.7 percent in Jan-Apr 2013. Light industry grew 8.6 percent in Jan-Apr 2013 relative to a year earlier. Growth of total industry decelerated from cumulative 14.4 percent in Jan-Mar 2011 to 9.4 percent in Jan-Apr 2013.

Table VC-3, China, Growth Rate of Value Added of Industry ∆%

	Industry	Light Industry	Heavy Industry	State Owned	Joint-Stock
2013
Jan-Apr	9.4	8.6	9.7	4.9	11.1
12 M Apr	9.3	8.5	9.6	4.3	10.9
Jan-Mar	9.5	8.7	9.8	5.2	11.3
12 M Mar	8.9	8.2	9.1	4.3	11.0
Jan-Feb	9.9	9.1	10.2	5.8	11.4
2012
Jan-Dec 2012	10.0	10.1	9.9	6.4	11.8
12 M Dec	10.3	9.6	10.6	8.0	12.1
Jan-Nov	10.0	10.2	9.8	6.3	11.8
12 M Nov	10.1	9.2	10.5	7.2	11.8
Jan-Oct	10.0	10.3	9.7	6.4	11.8
12 M Oct	9.6	9.1	9.7	7.0	11.7
Jan-Sep	10.0	10.4	9.7	6.3	11.8
12 M  Sep	9.2	9.0	9.3	6.3	11.0
Jan-Aug	10.1	10.5	9.8	6.3	15.4
12 M Aug	8.9	8.6	9.0	5.3	14.3
Jan-Jul	10.3	10.8	9.9	6.6	12.1
12 M Jul	9.2	10.1	8.8	4.8	10.9
Jan-Jun	10.5	11.1	10.1	7.0	12.4
12 M Jun	9.5	9.0	9.6	6.5	11.5
Jan-May	10.7	11.5	10.3	6.7	12.4
12 M May	9.6	9.1	9.8	6.6	11.0
Jan-Apr	11.0	12.3	10.5	6.6	12.9
12 M Apr	9.3	10.3	8.9	4.3	10.7
Jan-Mar	11.6	13.2	11.0	7.2	13.8
12 M Mar	11.9	13.9	11.2	8.0	13.7
Jan-Feb	11.4	12.7	10.9	7.3	13.9
2011
Jan-Dec	13.9	13.0	14.3	9.9	15.8
12 M Dec	12.8	12.6	13.0	9.2	14.7
Jan-Nov	14.0	13.0	14.4	9.9	16.0
12 M Nov	12.4	12.4	12.4	7.8	14.4
Jan-Oct	14.1	13.0	14.5	10.1	9.1
12 M Oct	13.2	12.1	13.7	8.9	15.1
Jan-Sep	14.2	13.1	14.6	10.4	16.1
12 M Sep	13.8	12.8	14.3	9.9	16.0
Jan-Aug	14.2	13.1	14.6	10.4	16.1
12 M Aug	13.5	13.4	13.5	9.4	15.5
Jan-Jul	14.3
12 M Jul	14.0	12.8	14.5	9.5
Jan-Jun	14.3	13.1	14.7	10.7	19.7
12 M Jun	15.1	13.9	15.6	10.7	20.8
Jan-May	14.0	12.9	14.4	10.7	19.3
12 M May	13.3	12.9	13.5	8.9	18.7
Jan-Apr	14.2	12.9	14.7	11.2	19.5
12 M Apr	13.4	11.9	14.0	10.4	18.0
Jan-Mar	14.4	13.1	14.9	11.4	19.8
12 M Mar	14.8	12.8	15.6	12.9	19.2
12 M Feb	14.9	13.1	15.6	10.5	21.7
Jan-Feb	14.1	13.3	14.4	10.6	20.3

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

Chart VC-1 provides 12-month percentage changes of value added of industry in 2011 and from Jan to Dec 2012. Growth rates of value added of industry in the first five months of 2010 were higher than in 2011 as would be expected in an earlier phase of recovery from the global recession. Growth rates have converged in the second half of 2011 to lower percentages with further decline into 2012 to single digit percentage changes, 10.3 percent in Dec 2012, 8.9 percent in Mar 2013 and 9.3 percent in Apr 2013.

Chart VC-1, China, Growth Rate of Total Value Added of Industry, 12-Month ∆%

Source: National Bureau of Statistics of China

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

Yearly rates of growth for the past 12 months and cumulative relative to the earlier year of various segments of industrial production in China are provided in Table VC-4. Rates from Jan to Dec 2011 relative to the same period a year earlier fluctuated but remained mostly above 10 percent with the exception of motor vehicles and crude oil. There is deceleration in Jan-Dec 2012 of percentage change with no segment showing growth exceeding 10 percent with exception of 12-month growth of 13.5 percent for pig iron and 16.7 percent for nonferrous metals. In Jan-Apr 2013, all segments grew at rates exceeding 10 percent with exception of electricity at 3.8 percent, crude oil at 3.2 percent and cement at 8.4 percent. Electricity fell from growth of 16.2 percent in the 12 months ending in Jun 2011 to 0.0 percent in the 12 months ending in Jun 2012, rebounding to 4.8 percent in Aug 2012 but declining to 1.5 percent in Sep 2012, increasing to 3.9 percent in Oct 2012, 7.9 percent in Nov 2012 and 7.6 percent in Dec 2012. Electricity grew 3.8 percent in Jan-Apr 2013 relative to a year earlier.

Table VC-4, China, Industrial Production Operation ∆%

	Elec- tricity	Pig Iron	Cement	Crude Oil	Non- ferrous Metals	Autos
2013
Jan-Apr	3.8	10.5	8.4	3.2	11.4	15.4
12 M Apr	6.2	8.1	8.7	2.5	10.3	18.3
Jan-Mar	2.9	12.3	8.2	4.3	10.6	13.5
12 M Mar	2.1	9.2	6.9	5.5	9.9	12.4
Jan-Feb	3.4	14.2	10.8	3.0	13.5	12.4
2012
Jan-Dec	4.7	7.7	7.4	3.7	9.3	6.3
12 M Dec	7.6	13.5	5.4	8.4	16.7	5.3
Jan-Nov	4.4	7.2	7.5	3.2	8.4	6.5
12 M Nov	7.9	16.5	9.4	9.1	15.2	3.9
Jan-Oct	3.9	6.3	6.7	2.6	7.7	6.9
12 M Oct	6.4	11.7	11.5	6.7	14.0	3.8
Jan-Sep	3.6	5.7	6.7	2.2	7.1	7.3
12 M Sep	1.5	4.9	12.0	7.0	7.1	6.3
Jan-Aug	3.8	-0.5	8.7	2.5	13.8	10.4
12 M Aug	4.8	2.6	5.9	-0.4	13.8	9.7
Jan-Jul	3.8	6.1	5.3	1.6	6.7	7.4
12M Jul	2.1	6.5	6.1	1.1	4.1	12.3
Jan-Jun	3.7	6.1	5.5	1.7	6.7	6.7
12 M Jun	0.0	6.7	6.5	-0.6	5.8	13.8
Jan-May	4.7	6.3	5.0	2.2	5.1	6.2
12 M May	2.7	6.3	4.3	0.7	6.6	18.5
Jan-Apr	5.0	6.2	5.5	2.9	4.6	3.1
12 M Apr	0.7	7.9	4.9	-0.3	2.3	10.7
Jan-Mar	7.1	6.5	7.3	3.1	5.8	0.0
12 M Mar	7.2	10.2	7.9	2.0	3.3	5.1
Jan-Feb	7.1	4.6	4.8	4.0	8.4	-1.8
2011
Jan-Dec	12.0	8.4	16.1	4.9	10.6	3.0
12 M Dec	9.7	3.7	7.0	4.0	13.2	-6.5
Jan-Nov	12.0	13.1	17.2	5.3	10.2	3.9
12 M Nov	8.5	7.8	11.2	3.2	8.2	-1.3
Jan-Oct	12.3	13.7	18.0	5.4	10.4	5.2
12 M Oct	9.3	13.4	16.5	-0.9	3.7	1.3
Jan-Sep	12.7	13.9	18.1	6.0	11.2	5.5
12 M Sep	11.5	18.8	15.7	1.5	13.9	2.5
Jan-Aug	13.0	13.1	18.4	6.6		4.7
12 M Aug	10.0	12.9	12.8	4.5	15.6	9.5
Jan-Jul	13.3	13.0	19.2	6.9	9.9	4.0
12 M Jul	13.2	14.9	16.8	5.9	9.8	-1.3
12 M Jun	16.2	14.8	19.9	-0.7	9.8	3.6
12 M May	12.1	10.6	19.2	6.0	14.2	-1.9
12 M Apr	11.7	8.3	22.4	6.8	6.1	-1.6
12 M Mar	14.8	13.7	29.8	8.0	11.6	9.9
12 M Feb	11.7	14.5	9.1	10.9	14.4	10.3
12 M Jan	5.1	3.5	16.4	12.2	1.4	23.9
12 M Dec 2010	5.6	4.6	17.3	10.3	-1.9	27.6

M: month

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

Monthly growth rates of industrial production in China are provided in Table VC-5. Monthly rates have fluctuated around 1 percent. Jan and Feb 2012 are somewhat weaker but there was improvement to 1.25 percent in Mar 2012. The rate of 0.33 percent in Apr 2012 is the lowest in the monthly series from Feb 2011 to Apr 2013. Monthly sales growth remained below 1 percent in all the fourteen months from Jan 2012 to Apr 2013 with the exception of Mar 2012.

Table VC-5, China, Industrial Production Operation, Month ∆%

2011	Month ∆%
Feb	0.93
Mar	0.99
Apr	1.32
May	0.79
Jun	1.30
Jul	0.82
Aug	0.85
Sep	0.95
Oct	0.71
Nov	0.68
Dec	0.94
Jan 2012	0.50
Feb	0.61
Mar	1.25
Apr	0.33
May	0.90
Jun	0.77
Jul	0.70
Aug	0.73
Sep	0.80
Oct	0.79
Nov	0.80
Dec	0.82
Jan 2013	0.59
Feb	0.79
Mar	0.67
Apr	0.87

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

Table VC-6 provides cumulative growth of investment in fixed assets in China in 2011 relative to 2010, Jan-Dec 2012 and Jan-Apr 2013 relative to a year earlier. Total fixed investment had grown at a high rate fluctuating around 25 percent and fixed investment in real estate development has grown at rates in excess of 30 percent but rates have declined significantly to still quite high percentages. In Jan-Apr 2013 investment in fixed assets in China grew 20.6 percent relative to a year earlier and 21.1 percent in real estate development. There was slight deceleration in the final two months of 2011 that continued into Jan-Apr 2013.

Table VC-6, China, Investment in Fixed Assets ∆% Relative to a Year Earlier

	Total	State	Real Estate Development
Jan-Apr 2013	20.6	18.1	21.1
Jan-Mar	20.9	18.7	20.2
Jan-Feb	21.2	16.9	22.8
Jan-Dec 2012	20.6	14.7	16.2
Jan-Nov	20.7	14.5	16.7
Jan-Oct	20.7	14.2	15.4
Jan-Sep	20.5	13.6	15.4
Jan-Aug	20.2	12.9	15.6
Jan-Jul	20.4	12.6	15.4
Jan-Jun	20.4	13.8	16.6
Jan-May	20.1	10.0	18.5
Jan-Apr	20.2	9.5	18.7
Jan-Mar	20.9	9.0	23.5
Jan-Feb	21.5	8.8	27.8
Jan-Dec 2011	23.8	11.1	27.9
Jan-Nov	24.5	11.7	29.9
Jan-Oct	24.9	12.4	31.1
Jan-Sep	24.9	12.7	32.0
Jan-Aug	25.0	12.1	33.2
Jan-Jul	25.4	13.6	33.6
Jan-Jun	25.6	14.6	32.9
Jan-May	25.8	14.9	34.6
Jan-Apr	25.4	16.6	34.3
Jan-Mar	25.0	17.0	34.1
Jan-Feb	24.9	15.6	35.2

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

Chart VC-2 provides cumulative fixed asset investment in China relative to a year earlier in all months for 2011 and 2012. Growth rose to 25.8 percent in Jan-May 2011 and then fell back to 24.9 percent in Sep and Oct 2011, declining further to 24.5 percent in Nov and 23.8 percent in Dec 2011 with deeper drop in Jan-Feb 2012 to 21.5 percent, 20.9 percent in Jan-Mar, 20.2 percent in Jan-Apr 2012, 20.1 percent in Jan-Apr 2012, 20.4 percent in both Jan-Jun 2012 and Jan-Jul 2012, 20.2 percent in Jan-Aug 2012, 20.5 percent in Jan-Sep 2012, 20.7 percent in Jan-Oct 2012, 20.7 percent in Jan-Nov 2012, 20.6 percent in Jan-Dec 2012, 21.2 percent in Jan-Feb 2013, 20.9 percent in Jan-Mar 2013 and 20.6 in Jan-Apr 2013. Rates in 2012 and 2012 have fallen from higher gains in 2011.

Chart VC-2, China, Investment in Fixed Assets, ∆% Cumulative over Year Earlier

Source: National Bureau of Statistics of China

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

Monetary policy has been used in China in the form of increases in interest rates and required reserves of banks to moderate real estate investment. These policies have been reversed because of lower inflation and weakening economic growth. Chart VC-3 shows decline of fluctuating cumulative growth rates of investment in real estate development relative to a year earlier from 35.2 percent in Jan-Feb 2011 to 31.1 percent in Jan-Oct 2011, 29.9 percent in Jan-Nov 2011, 27.9 percent in Jan-Dec 2011, 27.8 percent in Jan-Feb 2012 and sharper decline to 23.5 percent in Jan-Mar 2012, 18.7 percent in Jan-Apr 2012 and 18.5 percent in Jan-May 2012. The trend of decline continued with 16.6 percent in Jan-Jun 2012, 15.4 percent in Jan-Jul 2012, 15.6 percent in Jan-Aug 2012, 15.4 percent in Jan-Sep 2012, 16.7 percent in Jan-Oct 2012, 16.7 percent in Jan-Nov 2012, 16.2 percent in Jan-Dec 2012, 22.8 percent in Jan-Feb 2013, 20.2 percent in Jan-Mar 2013 and 21.1 percent in Jan-Apr 2013.

Chart VC-3, China, Investment in Real Estate Development, ∆% Cumulative over Year Earlier

Source: National Bureau of Statistics of China

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

Table VC-7 provides monthly growth rates of investment in fixed assets in China from Feb 2011 to Jan 2013. Rates increased moderately after Apr 2012. The celebrations of the New Year affect sales in the first two months of the year. Monthly investment rebounded in Mar and Apr 2013.

Table VC-7, China, Investment in Fixed Assets, Month ∆%

	Month ∆%
Feb 2011	-0.23
Mar	2.45
Apr	2.22
May	1.68
Jun	1.48
Jul	1.58
Aug	1.62
Sep	1.88
Oct	1.42
Nov	1.43
Dec	1.52
Jan 2012	1.70
Feb	1.84
Mar	1.16
Apr	1.01
May	1.82
Jun	1.76
Jul	1.48
Aug	1.45
Sep	1.65
Oct	1.83
Nov	1.38
Dec	1.60
Jan 2013	1.86
Feb	0.79
Mar	1.91
Apr	1.63

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

Growth rates of retail sales in 12 months and cumulative relative to a year earlier are in Table VC-8. There is decline of growth rates to cumulative 14.7 percent in Feb 2012, 14.8 percent in Mar, 14.7 percent in Apr, 14.5 percent in May, 14.4 percent in Jun, 14.2 percent in Jul, 14.1 percent in Aug to Oct 2012, 14.2 percent in Nov 2012 and 14.3 percent in Dec 2012. Percentage growth rates have declined in Jan-Dec 2012 relative to earlier months in 2011. The rate of retail sales growth was even lower at 12.3 percent in Feb 2013 with influence from the celebration of the New Year followed by 12.4 percent in Mar 2013 and 12.5 percent in Apr 2013.

Table VC-8, China, Total Retail Sales of Consumer Goods ∆%

	12-Month ∆%	Cumulative ∆%/ Cumulative Year Earlier
2013
Apr	12.8	12.5
Mar	12.6	12.4
Feb	12.3	12.3
2012
Dec	15.2	14.3
Nov	14.9	14.2
Oct	14.5	14.1
Sep	14.2	14.1
Aug	13.2	14.1
Jul	13.1	14.2
Jun	13.7	14.4
May	13.8	14.5
Apr	14.1	14.7
Mar	15.2	14.8
Feb	14.7	14.7
Jan
2011
Dec	18.1	17.1
Nov	17.3	17.0
Oct	17.2	17.0
Sep	17.7	17.0
Aug	17.0	16.9
Jul	17.2	16.8
Jun	17.7	16.8
May	16.9	16.6
Apr	17.1	16.5
Mar	17.4	17.4
Feb	11.6	15.8
Jan	19.9	19.9

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

Chart VC-4 of the National Bureau of Statistics of China provides 12-month rates of growth of retail sales in 2011 and 2012. There is again a drop into 2013 with the lowest percentages in Chart VC-4 followed by moderate increases.

Chart VC-4, China, Total Retail Sales of Consumer Goods 12-Month ∆%

Source: National Bureau of Statistics of China

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

Table VC-7 provides monthly percentage changes of retail sales in China. Although the rate of 0.19 percent in Jan 2012 is the lowest in Table VC-9, the rate of 1.39 percent in Sep 2012 is relatively high and 1.28 percent in Dec 2012 is closer to rates in 2011. Sales are lower in Jan-Feb 2013 because of the New Year celebrations, rebounding in Mar and Apr 2013.

Table VC-9, China, Retail Sales, Month ∆%

2011	Month ∆%
Feb	1.35
Mar	1.26
Apr	1.30
May	1.39
Jun	1.49
Jul	1.57
Aug	1.50
Sep	1.33
Oct	1.36
Nov	1.26
Dec	1.41
2012
Jan	0.19
Feb	0.99
Mar	1.21
Apr	0.93
May	1.10
Jun	1.23
Jul	1.03
Aug	1.08
Sep	1.39
Oct	1.15
Nov	1.18
Dec	1.28
Jan 2013	0.19
Feb	0.99
Mar	1.29
Apr	1.23

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

VD Euro Area. Table VD-EUR provides yearly growth rates of the combined GDP of the members of the European Monetary Union (EMU) or euro area since 1996. Growth was very strong at 3.2 percent in 2006 and 3.0 percent in 2007. The global recession had strong impact with growth of only 0.4 percent in 2008 and decline of 4.4 percent in 2009. Recovery was at lower growth rates of 2.0 percent in 2010 and 1.4 percent in 2011. EUROSTAT forecasts growth of GDP of the euro area of minus 0.6 percent in 2012 and minus 0.4 percent in 2013 but 1.2 percent in 2014.

Table VD-EUR, Euro Area, Yearly Percentage Change of Harmonized Index of Consumer Prices, Unemployment and GDP ∆%

Year	HICP ∆%	Unemployment %	GDP ∆%
1999	1.2	9.6	2.9
2000	2.2	8.7	3.8
2001	2.4	8.1	2.0
2002	2.3	8.5	0.9
2003	2.1	9.0	0.7
2004	2.2	9.3	2.2
2005	2.2	9.2	1.7
2006	2.2	8.5	3.2
2007	2.1	7.6	3.0
2008	3.3	7.6	0.4
2009	0.3	9.6	-4.4
2010	1.6	10.1	2.0
2011	2.7	10.2	1.4
2012*	2.5	11.4	-0.6
2013*			-0.4
2014*			1.2

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

The GDP of the euro area in 2011 in current US dollars in the dataset of the World Economic Outlook (WEO) of the International Monetary Fund (IMF) is $13,114.4 billion (http://www.imf.org/external/pubs/ft/weo/2012/02/weodata/index.aspx). The sum of the GDP of France is $2778.1 billion with the GDP of Germany of $3607.4 billion, Italy of $2198.7 billion and Spain $1479.6 billion is $10,063.8 billion or 76.7 percent of total euro area GDP. The four largest economies account for slightly more than three quarters of economic activity of the euro area. Table VD-EUR1 is constructed with the dataset of EUROSTAT, providing growth rates of the euro area as a whole and of the largest four economies of Germany, France, Italy and Spain annually from 1996 to 2011 with the estimate of 2012 and forecasts for 2013 and 2014 by EUROSTAT. The impact of the global recession on the overall euro area economy and on the four largest economies was quite strong. There was sharp contraction in 2009 and growth rates have not rebounded to earlier growth with exception of Germany in 2010 and 2011.

Table VD-EUR1, Euro Area, Real GDP Growth Rate, ∆%

	Euro Area	Germany	France	Italy	Spain
2014*	1.2	1.8	1.1	0.7	0.9
2013*	-0.4	0.4	-0.1	-1.3	-1.5
2012	-0.6	0.7	0.0*	-2.4	-1.4*
2011	1.4	3.0	2.0	0.4	0.4
2010	2.0	4.2	1.7	1.7	-0.3
2009	-4.4	-5.1	-3.1	-5.5	-3.7
2008	0.4	1.1	-0.1	-1.2	0.9
2007	3.0	3.3	2.3	1.7	3.5
2006	3.2	3.7	2.5	2.2	4.1
2005	1.7	0.7	1.8	0.9	3.6
2004	2.2	1.2	2.5	1.7	3.3
2003	0.7	-0.4	0.9	0.0	3.1
2002	0.9	0.0	0.9	0.5	2.7
2001	2.0	1.5	1.8	1.9	3.7
2000	3.8	3.1	3.7	3.7	5.0
1999	2.9	1.9	3.3	1.5	4.7
1998	2.8	1.9	3.4	1.4	4.5
1997	2.6	1.7	2.2	1.9	3.9
1996	1.5	0.8	1.1	1.1	2.5

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

The Flash Eurozone PMI Composite Output Index of the Markit Flash Eurozone PMI^®, combining activity in manufacturing and services, was unchanged from 46.5 in Mar to 46.5 in Apr, for fifteen consecutive declines and seventeen drops in nineteen months with acceleration of the rate of contraction (http://www.markiteconomics.com/Survey/PressRelease.mvc/8fdf9fdbced5421badae119e01f41b55). Chris Williamson, Chief Economist at Markit, finds that the Markit Flash Eurozone PMI index is consistent with GDP declining at a rate around 0.4 percent in IIQ2013 and the PMI is consistent with decline of 0.2 to 0.3 percent in IQ2013, which would be lower than the decline of 0.6 percent in IVQ2012 in EUROSTAT estimates (http://www.markiteconomics.com/Survey/PressRelease.mvc/8fdf9fdbced5421badae119e01f41b55). The Markit Eurozone PMI^® Composite Output Index, combining services and manufacturing activity with close association with GDP, increased from 46.5 in Mar to 46.9 in Apr with aggregate output declining during 15 months (http://www.markiteconomics.com/Survey/PressRelease.mvc/d4a49d09f9a842b0a8b89e2c92b75525). Chris Williamson, Chief Economist at Markit, finds that the data are consistent GDP falling in Apr at a quarterly rate of 0.4 to 0.5 percent (http://www.markiteconomics.com/Survey/PressRelease.mvc/d4a49d09f9a842b0a8b89e2c92b75525). The Markit Eurozone Services Business Activity Index increased from 46.4 in Mar to 47.0 in Apr, indicating contraction (http://www.markiteconomics.com/Survey/PressRelease.mvc/d4a49d09f9a842b0a8b89e2c92b75525). The Markit Eurozone Manufacturing PMI^® decreased marginally to 46.7 in Apr from 46.8 in Mar, which indicates contraction for the twenty-first consecutive month (http://www.markiteconomics.com/Survey/PressRelease.mvc/5f81202a24254223bcbe39032fa15a56). Total orders contracted for the twenty-third consecutive month with difficult competition abroad. Chris Williamson, Chief Economist at Markit, finds the survey data consistent with contraction of industry in Apr at the quarterly rate of 0.5 percent (http://www.markiteconomics.com/Survey/PressRelease.mvc/5f81202a24254223bcbe39032fa15a56).

Table EUR, Euro Area Economic Indicators

GDP	IQ2013 ∆% -0.2; IQ2013/IQ2012 ∆% -1.0 Blog 5/19/13
Unemployment	Mar 2013: 12.1% unemployment rate Mar 2013: 19.211 million unemployed Blog 5/5/13
HICP	Apr month ∆%: -0.1 12 months Apr ∆%: 1.2 Blog 5/19/13
Producer Prices	Euro Zone industrial producer prices Mar ∆%: -0.2 Mar 12-month ∆%: 0.7 Blog 5/5/13
Industrial Production	Mar month ∆%: 1.0; Mar 12 months ∆%: -1.7 Blog 5/19/13
Retail Sales	Mar month ∆%: -0.1 Mar 12 months ∆%: minus 2.4 Blog 5/12/13
Confidence and Economic Sentiment Indicator	Sentiment 88.6 Apr 2013 Consumer minus 22.2 Apr 2013 Blog 5/5/13
Trade	Jan-Mar 2013/Jan-Mar 2012 Exports ∆%: 1.3 Imports ∆%: -5.2 Mar 2013 12-month Exports ∆% 0.1 Imports ∆% -9.9 Blog 5/19/13

Links to blog comments in Table EUR:

5/12/13 http://cmpassocregulationblog.blogspot.com/2013/05/recovery-without-hiring-collapse-of.html

5/5/13 http://cmpassocregulationblog.blogspot.com/2013/05/twenty-nine-million-unemployed-or.html

Table VD-1 provides percentage changes of euro area real GDP in a quarter relative to the prior quarter. Real GDP fell 0.3 percent in IVQ2011, fell 0.1 IQ2012 and fell in the final three quarters of 2012: 0.2 percent in IIQ2012, 0.1 percent in IIIQ2012 and 0.6 percent in IVQ2012. GDP fell 0.2 percent in IIIQ2013. The global recession manifested in the euro area in five consecutive quarterly declines from IIQ2008 to IIQ2009. The strongest impact was contraction of 2.8 percent in IQ2009. Recovery began in IIIQ2009 with cumulative growth of 3.7 percent to IQ2011 or at the annual equivalent rate of 2.1 percent. Growth was much more vigorous from IVQ2003 to IQ2008.

Table VD-1, Euro Area, Real GDP, Percentage Change from Prior Quarter, Calendar and Seasonally Adjusted ∆%

	IQ	IIQ	IIIQ	IVQ
2013	-0.2
2012	-0.1	-0.2	-0.1	-0.6
2011	0.6	0.2	0.1	-0.3
2010	0.4	1.0	0.4	0.4
2009	-2.8	-0.3	0.4	0.4
2008	0.5	-0.4	-0.6	-1.7
2007	0.8	0.4	0.6	0.4
2006	0.9	1.1	0.7	1.0
2005	0.2	0.7	0.6	0.7
2004	0.5	0.5	0.4	0.3
2003	0.0	0.1	0.5	0.7
2002	0.2	0.6	0.3	0.0
2001	0.9	0.1	0.1	0.1
2000	1.3	0.8	0.4	0.6

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

Table VD-2 provides percentage change in real GDP in the euro area in a quarter relative to the same quarter a year earlier. Growth rates were quite strong from 2004 to 2007. There were five consecutive quarters of sharp declines in GDP in a quarter relative to the same quarter a year earlier from IVQ2008 to IVQ2009 with sharp contractions of 5.4 percent in IQ2009, 5.3 percent in IIQ2009 and 4.3 percent in IIIQ2009. Growth rates decline in magnitude with 1.3 percent in IIIQ2011, 0.6 percent in IVQ211 and -0.1 percent in IQ2012 followed by contractions of 0.5 percent in IIQ2012, 0.7 percent in IIIQ2012 and 0.9 percent in IVQ2012. GDP contracted 1.0 percent in IQ2013 relative to a year earlier.

Table VD-2, Euro Area, Real GDP Percentage Change in a Quarter Relative to Same Quarter a Year Earlier, Not Seasonally Adjusted ∆%

	IQ	IIQ	IIIQ	IV
2013	-1.0
2012	-0.1	-0.5	-0.7	-0.9
2011	2.4	1.6	1.3	0.6
2010	1.0	2.3	2.3	2.2
2009	-5.4	-5.3	-4.3	-2.3
2008	2.1	1.2	0.0	-2.1
2007	3.7	3.0	3.0	2.4
2006	3.0	3.3	3.4	3.8
2005	1.5	1.6	1.9	2.2
2004	1.8	2.2	2.2	1.8
2003	0.9	0.4	0.5	1.2
2002	0.5	1.0	1.2	1.1
2001	2.9	2.1	1.7	1.2
2000	4.3	4.4	3.7	3.3

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

Table VD-3 provides GDP growth in IVQ2012 and relative to the same quarter a year earlier for the euro zone, European Union, Japan and the US. The GDP of the euro zone fell 0.2 percent in IQ2013 and declined 1.0 percent relative to a year earlier while the GDP of the European Union decreased 0.1 percent in IQ2013 and decreased 0.7 percent relative to a year earlier. Growth in IVQ2012 was weak worldwide with somewhat stronger performance by the US but still insufficient to reduce unemployment and underemployment (http://cmpassocregulationblog.blogspot.com/2013/04/mediocre-and-decelerating-united-states_28.html) and motivate hiring (http://cmpassocregulationblog.blogspot.com/2013/05/recovery-without-hiring-collapse-of.html).

Table VD-3, Euro Zone, European Union, Japan and USA, Real GDP Growth

	∆% IQ2013/ IVQ2012	∆% IQ2013/ IQ2012
Euro Zone	-0.2	-1.0
European Union	-0.1	-0.7
Germany	0.1	-0.3
France	-0.2	-0.4
Netherlands*	-0.1	-1.3
Finland	-0.1	-2.0
Belgium	0.1	-0.5
Portugal	-0.3	-3.9
Ireland	NA	NA
Italy	-0.5	-2.3
Greece	NA	-5.3
Spain	-0.5	-2.0
United Kingdom	0.3	0.6
Japan	NA	NA
USA	0.6	1.8

*Working-day adjusted

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

Industrial production in the euro area increased 1.0 percent in Mar 2013, declining 1.7 percent in 12 months, as shown in Table VD-4 with revised estimates by EUROSTAT. The global recession caused sharp contraction of euro area industrial production with declines of 12.6 percent in the 12 months ending in Dec 2008, 3.9 percent in the 12 months ending in Dec 2009, 1.9 percent in the 12 months ending in Dec 2011 and 2.1 percent in the 12 months ending in Dec 2012.

Table VD-4, Euro Zone, Industrial Production, ∆%

	Month ∆%	12-Month ∆%
Mar 2013	1.0	-1.7
Feb	0.3	-3.2
Jan	-0.6	-2.5
Dec 2012	0.7	-2.1
Nov	-0.7	-4.0
Oct	-0.7	-3.1
Sep	-2.1	-2.6
Aug	0.8	-1.4
Jul	0.5	-2.4
Jun	-0.7	-1.8
May	0.6	-2.4
Apr	-0.6	-2.5
Mar	-0.4	-2.0
Feb	0.7	-1.8
Jan	-0.2	-1.8
Dec 2011		-1.9
Dec 2010		9.1
Dec 2009		-3.9
Dec 2008		-12.6
Dec 2007		1.5
Dec 2006		5.3
Dec 2005		3.0
Dec 2004		0.9
Dec 2003		2.1
Dec 2002		-0.1
Dec 2001		-4.3
Dec 2000		5.7
Dec 1999		4.7

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

Table VD-5 provides monthly industrial production percentage changes for total production and major segments. Total production increased 1.0 percent in Mar 2013 with growth in all segments except decline of 0.1 percent in intermediate goods and 0.7 percent in nondurable goods. All segments increased in Feb 2013 with exception of decline of 0.2 in intermediate goods and 1.5 percent in nondurable goods. All segments declined in Jan 2013 with exception of growth of 0.1 percent in energy and 0.2 percent for nondurable goods. There was recovery in Dec 2012 with growth of capital goods of 0.8 percent, durables goods of 1.9 percent and nondurable goods of 2.0 percent.

Table VD-5, Euro Zone, Industrial Production Month ∆%

	Total	INT	ENE	CG	DUR	NDUR
Mar 2013	1.0	-0.1	3.8	1.2	1.9	-0.7
Feb	0.3	-0.2	1.9	0.9	0.7	-1.5
Jan	-0.6	-0.1	0.1	-1.7	-1.8	0.2
Dec 2012	0.7	0.2	-1.4	0.8	1.9	2.0
Nov	-0.7	-0.9	-0.4	0.2	-1.3	-1.4
Oct	-0.7	-0.7	-1.0	-1.9	-1.7	0.9

Notes: INT: Intermediate; ENE: Energy; CG: Capital Goods; DUR: Durable Consumer Goods; NDUR: Nondurable Consumer Goods Source: EUROSTAT http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/

Table VD-6 provides monthly and 12-month percentage changes of industrial production and major industrial categories in the euro zone. All 12-month percentage changes in Table VD-6 are negative in the 12 months ending in Mar 2013. Industrial production increased 1.0 percent in the month of Mar 2013 and fell 1.7 percent in the 12 months ending in Mar 2013.

Table VD-6, Euro Zone, Industrial Production 12-Month ∆%

2013	Mar Month ∆%	Mar 12-Month ∆%
Total	1.0	-1.7
Intermediate Goods	-0.1	-4.6
Energy	3.8	9.2
Capital Goods	1.2	-3.1
Durable Consumer Goods	1.9	-2.2
Nondurable Consumer Goods	-0.7	-3.1

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

There has been significant decline in percentage changes of industrial production and major categories in 12-month rates into 2012 and 2013 as shown in Table VD-7. Negative percentage changes moderated from the high rates in Oct-Nov 2012 but are still high. There is only growth of 9.2 percent for energy in the 12 months ending in Mar 2013.

Table VD-7, Euro Zone, Industrial Production 12-Month ∆%

	Total	INT	ENE	CG	DUR	NDUR
Mar 2013	-1.7	-4.6	9.2	-3.1	-2.2	-3.1
Feb	-3.2	-3.1	-6.5	-3.8	-5.1	0.6
Jan	-2.5	-4.1	-1.1	-3.9	-7.3	1.8
Dec 2012	-2.1	-4.8	-0.3	-1.8	-2.7	-0.3
Nov	-4.0	-5.6	-0.3	-4.4	-6.5	-2.3
Oct	-3.1	-4.2	-0.3	-3.6	-5.3	-1.9

Notes: INT: Intermediate; ENE: Energy; CG: Capital Goods; DUR: Durable Consumer Goods; NDUR: Nondurable Consumer Goods

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

Table VD-8 provides industrial production of member countries of the euro zone, the UK and the European Union. Twelve-month percentage changes in Mar 2013 are negative for all countries and regions in Table VD-8 with exception of the Netherlands, Finland and Portugal with zero growth in the UK.

Table VD-8, Euro Zone, Industrial Production by Member Countries, ∆%

Mar 2013	Month ∆%	12-Month ∆%
Euro Zone	1.0	-1.7
Germany	1.7	-1.5
France	-0.9	-1.6
Netherlands	4.5	11.1
Finland	3.8	0.7
Belgium	NA	NA
Portugal	5.3	0.7
Ireland	-2.2	-4.1
Italy	-0.8	-5.2
Greece	1.4	-0.6
Spain	2.1	-0.6
UK	0.7	0.0
European Union	0.9	-1.1

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

Euro zone trade growth continues to be relatively strong as shown in Table VD-9 but with deceleration at the margin. Exports grew at 1.3 percent and imports fell 5.2 percent in Jan-Mar 2013 relative to Jan-Mar 2012. The 12-month rate of growth of exports was 0.1 percent in Mar 2013 while imports decreased 9.9 percent. In Feb 2013, exports decreased 0.1 percent in 12 months and imports decreased 7.0 percent. At the margin, rates of growth of trade are declining in part because of moderation of commodity prices.

Table VD-9, Euro Zone, Exports, Imports and Trade Balance, Billions of Euros and Percent, NSA

	Exports	Imports
Jan-Mar 2013	460.8	432.7
Jan-Mar 2012	454.9	456.2
∆%	1.3	-5.2
Mar 2013	165.8	142.9
Mar 2012	165.6	158.7
∆%	0.1	-9.9
Feb 2013	148.6	138.5
Feb 2012	150.2	149.0
∆%	-1.1	-7.0
Trade Balance	Jan-Mar 2013	Jan-Mar 2012
€ Billions	28.1	-1.3

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

The structure of trade of the euro zone in Jan-Feb 2013 is provided in Table VD-10. Data are still not available for trade structure for Mar 2013. Manufactured exports increased 1.1 percent in Jan-Feb 2013 relative to Jan-Feb 2012 while imports decreased 2.3 percent. The trade surplus in manufactured products was marginally higher than the trade deficit in primary products in Jan-Feb 2013 but lower in Jan-Feb 2012 largely because of the commodity shock caused by carry trades.

Table VD-10, Euro Zone, Structure of Exports, Imports and Trade Balance, € Billions, NSA, ∆%

	Primary	Manufactured	Other	Total
Exports
Jan-Feb 2013 € B	48.2	237.3	9.4	295.0
Jan-Feb 2012 € B	46.0	234.7	8.5	289.3
∆%	4.8	1.1	10.6	2.0
Imports
Jan-Feb 2013 € B	108.0	176.3	5.4	289.7
Jan-Feb 2012  € B	111.1	180.5	5.9	297.5
∆%	-2.8	-2.3	-8.5	-2.6
Trade Balance € B
Jan-Feb 2013	-59.8	61.0	1.9	5.2
Jan-Feb 2012	-65.1	54.2	1.2	-8.2

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

VE Germany. Table VE-DE provides yearly growth rates of the German economy from 1992 to 2012, price adjusted chain-linked and price and calendar-adjusted chain-linked. Germany’s GDP fell 5.1 percent in 2009 after growing below trend at 1.1 percent in 2008. Recovery has been robust in contrast with other advanced economies. The German economy grew at 4.2 percent in 2010, 3.0 percent in 2011 and 0.7 percent in 2012.

The Federal Statistical Agency of Germany analyzes the fall and recovery of the German economy (http://www.destatis.de/jetspeed/portal/cms/Sites/destatis/Internet/EN/Content/Statistics/VolkswirtschaftlicheGesamtrechnungen/Inlandsprodukt/Aktuell,templateId=renderPrint.psml):

“The German economy again grew strongly in 2011. The price-adjusted gross domestic product (GDP) increased by 3.0% compared with the previous year. Accordingly, the catching-up process of the German economy continued during the second year after the economic crisis. In the course of 2011, the price-adjusted GDP again exceeded its pre-crisis level. The economic recovery occurred mainly in the first half of 2011. In 2009, Germany experienced the most serious post-war recession, when GDP suffered a historic decline of 5.1%. The year 2010 was characterised by a rapid economic recovery (+3.7%).”

Table VE-DE, Germany, GDP Year ∆%

	Price Adjusted Chain-Linked	Price- and Calendar-Adjusted Chain Linked
2012	0.7	0.9
2011	3.0	3.1
2010	4.2	4.0
2009	-5.1	-5.1
2008	1.1	0.8
2007	3.3	3.4
2006	3.7	3.9
2005	0.7	0.8
2004	1.2	0.7
2003	-0.4	-0.4
2002	0.0	0.0
2001	1.5	1.6
2000	3.1	3.3
1999	1.9	1.8
1998	1.9	1.7
1997	1.7	1.8
1996	0.8	0.8
1995	1.7	1.8
1994	2.5	2.5
1993	-1.0	-1.0
1992	1.9	1.5

Source: Statistisches Bundesamt Deutschland (Destatis) https://www.destatis.de/EN/PressServices/Press/pr/2013/02/PE13_066_811.html;jsessionid=59DE7E440F9F7393B12C16FDA63BEB66.cae1

The Flash Germany Composite Output Index of the Markit Flash Germany PMI^®, combining manufacturing and services, decreased from 50.6 in Mar to 48.8 in Apr, which indicates moderate contraction (http://www.markiteconomics.com/Survey/PressRelease.mvc/403f548dda24421facaee99f64821d5b). New export orders for manufacturing decreased at the fastest rate in 2013. Tim Moore, Senior Economist at Markit and author of the report, finds weakening in Germany’s private sector with accelerated decline in new orders for both manufacturing and services (http://www.markiteconomics.com/Survey/PressRelease.mvc/403f548dda24421facaee99f64821d5b). The Markit Germany Composite Output Index of the Markit Germany Services PMI^®, combining manufacturing and services with close association with Germany’s GDP, decreased from 50.6 in Mar to 49.2 in Apr (http://www.markiteconomics.com/Survey/PressRelease.mvc/87059b95df854202afbb0fc45ee9900e). Tim Moore, Senior Economist at Markit and author of the report, finds risks of standstill in the economy of Germany (http://www.markiteconomics.com/Survey/PressRelease.mvc/87059b95df854202afbb0fc45ee9900e). The Germany Services Business Activity Index decreased from 50.9 in Mar to 49.6 in Apr (http://www.markiteconomics.com/Survey/PressRelease.mvc/87059b95df854202afbb0fc45ee9900e). The Markit/BME Germany Purchasing Managers’ Index^® (PMI^®), showing close association with Germany’s manufacturing conditions, decreased from 49.0 in Mar to 48.1 in Apr, in contraction territory below 50.0 (http://www.markiteconomics.com/Survey/PressRelease.mvc/40e3836803c0428d83b2f6aa8da5c5ee). New export orders decreased moderately in Apr with declining business within the euro zone offsetting demand from emerging countries. Tim Moore, Senior Economist at Markit and author of the report, finds moderately deteriorating conditions in German manufacturing with lower volumes of new orders and job reductions (http://www.markiteconomics.com/Survey/PressRelease.mvc/40e3836803c0428d83b2f6aa8da5c5ee).Table DE provides the country data table for Germany.

Table DE, Germany, Economic Indicators

GDP	IQ2013 0.1 ∆%; I/Q2013/IQ2012 ∆% -1.4 2012/2011: 0.7% GDP ∆% 1992-2012 Blog 8/26/12 5/27/12 11/25/12 2/24/13 5/19/13
Consumer Price Index	Apr month NSA ∆%: -0.5 Apr 12-month NSA ∆%: 1.2 Blog 5/19/13
Producer Price Index	Mar month ∆%: -0.3 CSA, -0.2 NSA 12-month NSA ∆%: 0.4 Blog 4/21/13
Industrial Production	MFG Mar month CSA ∆%: 1.4 12-month NSA: -8.2 Blog 5/12/13
Machine Orders	MFG Mar month ∆%: 2.2 Mar 12-month ∆%: -6.0 Blog 5/12/13
Retail Sales	Mar Month ∆% -0.3 12-Month ∆% -2.7 Blog 5/5/13
Employment Report	Unemployment Rate SA Mar 5.4% Blog 5/5/13
Trade Balance	Exports Mar 12-month NSA ∆%: -4.2 Imports Mar 12 months NSA ∆%: -6.9 Exports Mar month CSA ∆%: 0.5; Imports Mar month SA 0.8 Blog 5/12/13

Links to blog comments in Table DE:

5/12/13 http://cmpassocregulationblog.blogspot.com/2013/05/recovery-without-hiring-collapse-of.html

5/5/13 http://cmpassocregulationblog.blogspot.com/2013/05/twenty-nine-million-unemployed-or.html

4/21/13 http://cmpassocregulationblog.blogspot.com/2013/04/world-inflation-waves-squeeze-of.html

2/24/13 http://cmpassocregulationblog.blogspot.com/2013/02/world-inflation-waves-united-states.html

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

Table VE-1 provides percentage change of Germany’s GDP in one quarter relative to the prior quarter from 2003 to 2013. Germany’s GDP contracted during four consecutive quarters from IIQ2008 to IQ2009. The deepest contraction was 4.1 percent in IQ2009. Growth was quite strong from IIIQ2009 to IQ2011 for cumulative growth of 7.3 percent in seven quarters or at the average rate of 1.0 percent per quarter, which is equivalent to 4.1 percent per year. Economic growth decelerated in IIQ2011 to 0.5 percent and 0.4 percent in IIIQ2011. The economy contracted mildly by 0.1 percent in IVQ2011 and grew 0.6 percent in IQ2012 and 0.2 percent in IIQ2012. GDP growth in IIIQ2012 was 0.4 percent relative to IIQ2012. Germany’s GDP contracted 0.7 percent in IVQ2012 relative to IIIQ2012. GDP increased 0.1 percent in IQ2013.

Table VE-1, Germany Quarter GDP ∆% Relative to Prior Quarter, Seasonally and Calendar Adjusted 

	IQ	IIQ	IIIQ	IV
2013	0.1
2012	0.6	0.2	0.2	-0.7
2011	1.2	0.5	0.4	-0.1
2010	0.7	2.2	0.7	0.6
2009	-4.1	0.2	0.8	0.9
2008	1.0	-0.4	-0.4	-2.0
2007	0.6	0.5	0.9	0.4
2006	1.1	1.5	1.0	1.3
2005	-0.1	0.6	0.8	0.3
2004	0.0	0.3	-0.2	0.0
2003	-0.8	-0.1	0.5	0.4
2002	-0.4	0.3	0.4	-0.2
2001	1.5	0.1	-0.3	0.2

Seasonal and calendar adjusted

Source: Statistisches Bundesamt Deutschland (Destatis) https://www.destatis.de/EN/PressServices/Press/pr/2013/05/PE13_163_811.html

Table VE-2 provides percentage changes of Germany’s GDP in a quarter relative to the same quarter a year earlier. Growth was weak in the recovery from the recession of 2001 through 2005, as in most of the euro area (see Pelaez and Pelaez, The Global Recession Risk (2007), 116-46). Germany’s economy then grew robustly in 2006 and 2007 until the global recession after 2007. Germany recovered with strong growth in 2010 and vigorous 5.2 percent in IQ2011. The economy decelerated in the final three quarters of 2011, growing 1.8 percent in IQ2012 relative to IQ2011. Growth decelerated further to 0.5 percent in IIQ2012 without calendar adjustment and 1.0 percent with calendar adjustment and to 0.4 percent in IIIQ2012. Growth in IVQ2012 relative to IVQ2011 was 0.0 percent. GDP fell 1.4 percent in IQ2013 relative to a year earlier.

Table VE-2, Germany, Quarter GDP ∆% Relative to Same Quarter a Year Earlier, Price Adjusted NCSA 

	IQ	IIQ	IIIQ	IV
2013	-1.4
2012	1.8	0.5	0.4	0.0
2011	5.2	3.1	2.6	1.4
2010	2.8	5.0	4.5	4.2
2009	-6.5	-7.4	-5.0	-1.6
2008	2.1	3.1	1.1	-1.9
2007	4.3	3.4	3.3	2.2
2006	4.3	2.4	3.5	4.6
2005	-0.8	1.2	1.2	1.0
2004	1.5	1.6	0.6	0.9
2003	0.0	-1.1	-0.5	0.1

Price adjusted NSA Source: Statistisches Bundesamt Deutschland (Destatis) https://www.destatis.de/EN/PressServices/Press/pr/2013/05/PE13_163_811.html

There are strong calendar effects in economic activity in Germany. Table VE-3 provides Germany’s percentage change in a quarter relative to the same quarter a year earlier adjusting for price changes and calendar effects. Germany’s GDP increased 1.0 percent in IIQ2012 calendar-adjusted in contrast with only 0.5 percent without calendar adjustment. GDP growth adjusting for calendar effects was 0.9 percent in IIIQ2012 relative to IIIQ2011 and 0.4 percent without calendar adjustment. Growth in IVQ2012 was 0.3 percent calendar and price adjusted in contrast with 0.0 percent without calendar adjustment. Growth in IQ2013 was minus 0.2 percent relative to a year earlier with adjustment for calendar effects and minus 1.4 percent without adjustment.

Table VE-3, Germany, Quarter GDP ∆% Relative to Same Quarter a Year Earlier, Calendar and Price Adjusted NSA 

	IQ	IIQ	IIIQ	IV
2013	-0.2
2012	1.3	1.0	0.9	0.3
2011	4.9	3.0	2.7	1.9
2010	2.7	4.6	4.5	4.2
2009	-6.7	-6.2	-5.1	-2.3

Source: Statistisches Bundesamt Deutschland (Destatis) https://www.destatis.de/EN/PressServices/Press/pr/2013/05/PE13_163_811.html

Table VE-4 provides annual growth rates of the German economy from 1992 to 2012, price adjusted chain-linked and price and calendar-adjusted chain-linked. Germany’s GDP fell 5.1 percent in 2009 after growing below trend at 1.1 percent in 2008. Recovery has been robust in contrast with other advanced economies. The German economy grew at 4.2 percent in 2010, 3.0 percent in 2011 and 0.7 percent in 2012.

Table VE-4, Germany, GDP Year ∆%

	Price Adjusted Chain-Linked	Price- and Calendar-Adjusted Chain Linked
2012	0.7	0.9
2011	3.0	3.1
2010	4.2	4.0
2009	-5.1	-5.1
2008	1.1	0.8
2007	3.3	3.4
2006	3.7	3.9
2005	0.7	0.8
2004	1.2	0.7
2003	-0.4	-0.4
2002	0.0	0.0
2001	1.5	1.6
2000	3.1	3.3
1999	1.9	1.8
1998	1.9	1.7
1997	1.7	1.8
1996	0.8	0.8
1995	1.7	1.8
1994	2.5	2.5
1993	-1.0	-1.0
1992	1.9	1.5

Source: Statistisches Bundesamt Deutschland (Destatis) https://www.destatis.de/EN/PressServices/Press/pr/2013/05/PE13_163_811.html

VF France. Table VF-FR provides growth rates of GDP of France with the estimates of Institut National de la Statistique et des Études Économiques (INSEE). The long-term rate of GDP growth of France from IVQ1949 to IVQ2012 is quite high at 3.2 percent. France’s growth rates were quite high in the four decades of the 1950s, 1960, 1970s and 1980s with an average growth rate of 4.1 percent compounding the average rates in the decades and discounting to one decade. The growth impulse diminished with 1.9 percent in the 1990s and 1.7 percent from 2000 to 2007. The average growth rate from 2000 to 2012, using fourth quarter data, is 1.0 percent because of the sharp impact of the global recession from IVQ2007 to IIQ2009. Cobet and Wilson (2002) provide estimates of output per hour and unit labor costs in national currency and US dollars for the US, Japan and Germany from 1950 to 2000 (see Pelaez and Pelaez, The Global Recession Risk (2007), 137-44). The average yearly rate of productivity change from 1950 to 2000 was 2.9 percent in the US, 6.3 percent for Japan and 4.7 percent for Germany while unit labor costs in USD increased at 2.6 percent in the US, 4.7 percent in Japan and 4.3 percent in Germany. From 1995 to 2000, output per hour increased at the average yearly rate of 4.6 percent in the US, 3.9 percent in Japan and 2.6 percent in Germany while unit labor costs in US fell at minus 0.7 percent in the US, 4.3 percent in Japan and 7.5 percent in Germany. There was increase in productivity growth in the G7 in Japan and France in the second half of the 1990s but significantly lower than the acceleration of 1.3 percentage points per year in the US. Lucas (2011May) compares growth of the G7 economies (US, UK, Japan, Germany, France, Italy and Canada) and Spain, finding that catch-up growth with earlier rates for the US and UK stalled in the 1970s.

Table VF-FR, France, Average Growth Rates of GDP Fourth Quarter, 1949-2012

Period	Average ∆%
1949-2012	3.2
2000-2012	1.0
2000-2011	1.1
2000-2007	1.7
1990-1999	1.9
1980-1989	2.6
1970-1979	3.8
1960-1969	5.7
1950-1959	4.2

Source: Institut National de la Statistique et des Études Économiques http://www.insee.fr/en/themes/info-rapide.asp?id=28&date=20130327

The Markit Flash France Composite Output Index increased from 41.9 in Mar, which was the lowest reading in four years, to 44.2 in Apr (http://www.markiteconomics.com/Survey/PressRelease.mvc/6dafcd8352ea42db99a917747050e63b). Jack Kennedy, Senior Economist at Markit and author of the report, finds that the data suggest the index in Apr improved the sharpest decline of overall output in about four years since IQ2009 conditions of the private sector in France continue struggling (http://www.markiteconomics.com/Survey/PressRelease.mvc/6dafcd8352ea42db99a917747050e63b).

The Markit France Composite Output Index, combining services and manufacturing with close association with French GDP, increased from 41.9 in Mar to 44.3 in Apr, indicating of private sector activity at the slowest rate of deterioration in 2013 (http://www.markiteconomics.com/Survey/PressRelease.mvc/e36516ccd4cb42b980b63e9370857958). Jack Kennedy, Senior Economist at Markit and author of the France Services PMI^®, finds that composite data for manufacturing and services indicate weak expectations of business activity (http://www.markiteconomics.com/Survey/PressRelease.mvc/e36516ccd4cb42b980b63e9370857958). The Markit France Services Activity index increased from 41.3 in Mar to 44.3 in Apr (http://www.markiteconomics.com/Survey/PressRelease.mvc/e36516ccd4cb42b980b63e9370857958). The Markit France Manufacturing Purchasing Managers’ Index^® increased marginally to 44.4 in Apr from 44.0 in Mar, for the highest reading since Dec 2012 but remaining deeply below the neutral level of 50.0 (http://www.markiteconomics.com/Survey/PressRelease.mvc/6991f050ab1b42e497b80087c06ada32). Jack Kennedy, Senior Economist at Markit and author of the France Manufacturing PMI^®, finds continuing weakness in manufacturing with favorable decline in input costs (http://www.markiteconomics.com/Survey/PressRelease.mvc/6991f050ab1b42e497b80087c06ada32). Table FR provides the country data table for France.

Table FR, France, Economic Indicators

CPI	Apr month ∆% -0.1 12 months ∆%: 0.7 5/19/13
PPI	Mar month ∆%: 0.0 Mar 12 months ∆%: 1.9 Blog 5/5/13
GDP Growth	IQ2013/IQ2012 ∆%: -0.2 IVQ2012/IVQ2011 ∆%: -0.4 Blog 3/31/13 5/19/12
Industrial Production	Mar ∆%: Manufacturing -1.0 12-Month ∆%: Manufacturing minus 4.9 Blog 5/12/13
Consumer Spending	Manufactured Goods Mar ∆%: 1.2 Feb 12-Month Manufactured Goods ∆%: -0.6 Blog 5/5/13
Employment	IVQ2012 Unemployed 2.944 million Unemployment Rate: 10.2% Employment Rate: 64.1% Blog 3/10/13
Trade Balance	Mar Exports ∆%: month 1.4, 12 months -0.4 Mar Imports ∆%: month -1.1, 12 months -3.1 Blog 5/12/13
Confidence Indicators	Historical averages 100 Apr Mfg Business Climate 88 Blog 4/28/13

Links to blog comments in Table FR:

5/12/13 http://cmpassocregulationblog.blogspot.com/2013/05/recovery-without-hiring-collapse-of.html

5/5/13 http://cmpassocregulationblog.blogspot.com/2013/05/twenty-nine-million-unemployed-or.html

4/28/13 http://cmpassocregulationblog.blogspot.com/2013/04/mediocre-and-decelerating-united-states_28.html

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

Growth of GDP in a quarter relative to the prior quarter is provided for France in Table VF-1. GDP fell 0.2 percent in IVQ201 and fell 0.2 percent in IQ2013. The French economy grew 0.1 percent in IVQ2011, stagnating in IQ2012, contracting 0.2 percent in IIQ2011 and growing 0.1 percent in IIIQ2012. In the four quarters of 2012 and the first quarter of 2013, France’s GDP contracted 0.5 percent. Growth in the ten quarters of expansion from IIIQ2009 to IVQ2011 accumulated 4.1 percent at the annual equivalent rate of 1.6 percent.. Recovery has been much weaker than the cumulative 2.6 percent in the four quarters of 2006. Weak recoveries in advanced economies have prevented full utilization of labor, capital and productive resources.

Table VF-1, France, Quarterly Real GDP Growth, Quarter on Prior Quarter ∆%

	IQ	IIQ	IIIQ	IVQ
2013	-0.2
2012	0.0	-0.2	0.1	-0.2
2011	1.1	0.0	0.2	0.1
2010	0.2	0.6	0.5	0.5
2009	-1.7	0.0	0.1	0.7
2008	0.4	-0.7	-0.4	-1.6
2007	0.7	0.5	0.4	0.3
2006	0.7	1.1	0.0	0.8
2005	0.2	0.3	0.6	0.8
2004	0.5	0.7	0.4	0.8
2003	0.2	0.0	0.6	0.7
2002	0.6	0.5	0.1	0.0
2001	0.6	0.1	0.3	-0.3
2000	1.1	0.7	0.5	0.9
1999	0.5	0.9	1.1	1.3

Source: Institut National de la Statistique et des Études Économiques http://www.insee.fr/en/themes/info-rapide.asp?id=26&date=20130515

Growth rates of France’s real GDP in a quarter relative to the same quarter a year earlier are shown in Table VF-2. France has not recovered the rates of growth in excess of 2 percent prior to the global recession. GDP fell 4.3 percent in IQ2009, 3.7 percent in IIQ2009, 3.2 percent in IIIQ2009 and 1.0 percent in IVQ2009. Growth in IVQ2011 relative to IVQ2010 was 1.4 percent and GDP growth declined to 0.3 percent in IQ2012, 0.1 percent in IIQ2012 relative to the same quarter a year earlier, 0.0 percent in IIIQ2012 relative to a year earlier and minus 0.3 percent in IVQ2012 relative to a year earlier. Growth in 2013 relative to a year earlier was minus 0.4 percent.

Table VF-2, France, Real GDP Growth Current Quarter Relative to Same Quarter Year Earlier ∆%

	IQ	IIQ	IIIQ	IVQ
2013	-0.4
2012	0.3	0.1	0.0	-0.3
2011	2.7	2.1	1.8	1.4
2010	1.0	1.7	2.1	1.9
2009	-4.3	-3.7	-3.2	-1.0
2008	1.6	0.5	-0.5	-2.3
2007	2.6	2.1	2.4	1.8
2006	2.3	3.2	2.6	2.7
2005	2.1	1.6	1.9	1.8
2004	1.9	2.6	2.4	2.4
2003	0.8	0.3	0.8	1.6
2002	0.6	1.0	0.9	1.2
2001	2.7	2.1	1.9	0.6
2000	4.4	4.2	3.6	3.2
1999	2.9	2.8	3.2	3.7

Source: Institut National de la Statistique et des Études Économiques http://www.insee.fr/en/themes/info-rapide.asp?id=26&date=20130515

Chart VF-1 of the Institut National de la Statistique et des Études Économiques provides France’s quarterly real GDP from IQ1949 to IQ2013. France’s economy has grown dynamically over decades. Recovery from the global recession in 2008-2009 has flattened.

Chart VF-1, France, Quarterly Real GDP, IQ1949-IQ2013

Source: Institut National de la Statistique et des Études Économiques http://www.insee.fr/en/themes/info-rapide.asp?id=26&date=20130515

Percentage changes and contributions of segments of GDP in France are provided in Table VF-3. Internal demand deducted 0.1 percentage points from GDP growth in IQ2013, 0.1 percentage points in IVQ2012 and 0.2 percentage points in IIQ2012. Net foreign trade deducted 0.2 percentage from growth in IQ2013, added 0.2 percentage points in IVQ2012, 0.1 percentage points in IIIQ2012 and 0.2 percentage points in IIQ2012.

Table VF-3, France, Contributions to GDP Growth, Calendar and Seasonally Adjusted, %

∆% from Prior Period	IIQ 2012	IIIQ 2012	IVQ 2012	IQ 2013	2012	2013
GDP	-0.2	0.1	-0.2	-0.2	0.0	-0.3
Imports	0.2	0.1	-1.3	0.1	-0.9	-0.7
Household Consump.	-0.4	0.0	0.0	-0.1	-0.4	-0.2
Govt. Consump.	0.5	0.3	0.3	0.3	1.4	0.8
GFCF	-0.2	-0.7	-0.8	-0.9	-1.2	-1.8
Exports	0.9	0.5	-0.7	-0.5	2.5	-0.6
% Point Contribs.
Internal Demand ex Inventory Changes	-0.2	0.0	-0.1	-0.1	-0.1	-0.2
Inventory Changes	-0.2	0.0	-0.3	0.1	-0.8	-0.1
Net Foreign Trade	0.2	0.1	0.2	-0.2	1.0	0.1

Notes: Consump.: Consumption; Gvt.: Government; GFCF: Gross Fixed Capital Formation; Contribus.: Contributions

Source:  Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=26&date=20130515

Chart VF-1 of France’s Institut National de la Statistique et des Études Économiques provides percentage point contributions to GDP growth. The economy was driven in IQ2013 by changes in inventories with net trade and gross fixed capital formation (GFCF) deducting from growth.

Chart VF-2, France, Percentage Point Contributions to GDP Growth

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=26&date=20130515

VG Italy. Table VG-IT provides percentage changes in a quarter relative to the same quarter a year earlier of Italy’s expenditure components in chained volume measures. GDP has been declining at sharper rates from minus 0.5 percent in IVQ2011 to minus 2.8 percent in IIIQ2012. The aggregate demand components of consumption and gross fixed capital formation (GFCF) have been declining at faster rates.

Table VG-IT, Italy, GDP and Expenditure Components, Chained Volume Measures, Quarter ∆% on Same Quarter Year Earlier

	GDP	Imports	Consumption	GFCF	Exports
2012
IVQ	-2.8	-6.6	-3.9	-7.6	1.9
IIIQ	-2.6	-8.0	-4.3	-8.5	2.5
IIQ	-2.6	-7.5	-4.1	-8.6	2.5
IQ	-2.6	-9.0	-3.4	-7.2	1.9
2011
IVQ	-0.5	-6.8	-1.9	-3.2	3.2
IIIQ	0.4	0.1	-0.6	-2.2	5.7
IIQ	0.9	3.1	0.6	-0.3	7.0
IQ	1.2	8.8	1.0	0.3	10.8
2010
IVQ	1.9	15.4	1.0	0.9	13.3
IIIQ	1.7	13.2	1.2	2.7	12.1
IIQ	1.9	13.5	0.9	0.8	12.0
IQ	1.2	7.1	0.9	-2.1	7.1
2009
IVQ	-3.4	-6.4	0.2	-7.8	-9.3
IIIQ	-4.9	-12.2	-0.8	-12.6	-16.4
IIQ	-6.6	-17.9	-1.5	-13.6	-21.4
IQ	-7.0	-17.2	-1.7	-12.6	-22.8
2008
IVQ	-3.0	-8.2	-0.9	-8.3	-10.3
IIIQ	-1.9	-5.0	-0.8	-4.5	-3.9
IIQ	-0.2	-0.1	-0.3	-1.5	0.4
IQ	0.5	1.7	0.1	-1.0	2.9

GFCF: Gross Fixed Capital Formation

Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/84408

The Markit/ADACI Business Activity Index increased from 45.5 in Mar to 47.0 in Apr, indicating contraction of output of Italy’s services sector for 23 consecutive months of decline since Jun 2011 but at a high in 20 months and above the average for the period of contraction (http://www.markiteconomics.com/Survey/PressRelease.mvc/48355ce5432a42259bbb65b5397deb81). Phil Smith, economist at Markit and author of the Italy Services PMI^®, finds that the index suggests a bottom for the contraction in Italy (http://www.markiteconomics.com/Survey/PressRelease.mvc/48355ce5432a42259bbb65b5397deb81). The Markit/ADACI Purchasing Managers’ Index^® (PMI^®), increased from 44.5 in Mar to 45.5 in Apr for 21 consecutive months of contraction of Italy’s manufacturing below 50.0 with the Apr reading marginally below the average in
IQ2013 (http://www.markiteconomics.com/Survey/PressRelease.mvc/51837a55ad9c42eeb4bed079157e67bd). Phil Smith, economist at Markit and author of the Italian Manufacturing PMI^®, finds renewed deterioration with continuing decline in new orders and the contraction extending in a longer period than during the global recession in 2008 to 2009 (http://www.markiteconomics.com/Survey/PressRelease.mvc/51837a55ad9c42eeb4bed079157e67bd). Table IT provides the country data table for Italy.

Table IT, Italy, Economic Indicators

Consumer Price Index	Apr month ∆%: 0.0 Apr 12-month ∆%: 1.1 Blog 5/19/13
Producer Price Index	Mar month ∆%: 0.0 Mar 12-month ∆%: 0.0 Blog 5/5/13
GDP Growth	IQ2013/IVQ2012 SA ∆%: minus 0.5 IQ2013/IQ2012 NSA ∆%: minus 2.3 Blog 3/17/13 5/19/13
Labor Report	Nov 2012 Participation rate 63.9% Employment ratio 56.8% Unemployment rate 11.1% Blog 1/13/13
Industrial Production	Mar month ∆%: -0.8 12 months CA ∆%: -5.2 Blog 5/12/13
Retail Sales	Feb month ∆%: -0.2 Feb 12-month ∆%: -4.8 Blog 4/28/13
Business Confidence	Mfg Apr 87.6, Dec 89.0 Construction Apr 78.2, Dec 79.4 Blog 5/5/13
Trade Balance	Balance Mar SA €2384 million versus Feb €2067 Exports Mar month SA ∆%: 1.2; Imports Mar month ∆%: 0.2 Exports 12 months Mar NSA ∆%: -6.0 Imports 12 months NSA ∆%: -10.6 Blog 5/19/13

Links to blog comments in Table IT:

5/12/13 http://cmpassocregulationblog.blogspot.com/2013/05/recovery-without-hiring-collapse-of.html

5/5/13 http://cmpassocregulationblog.blogspot.com/2013/05/twenty-nine-million-unemployed-or.html

4/28/13 http://cmpassocregulationblog.blogspot.com/2013/04/mediocre-and-decelerating-united-states_28.html

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

1/13/13 http://cmpassocregulationblog.blogspot.com/2013/01/peaking-valuation-of-risk-financial.html

Table VG-1 provides revised percentage changes of GDP in Italy of quarter on prior quarter and quarter on same quarter a year earlier. Italy’s GDP fell 0.5 percent in IQ2013 and declined 2.3 percent relative to IQ2012. GDP had been growing during six consecutive quarters but at very low rates from IQ2010 to IIQ2011. Italy’s GDP has fallen in seven consecutive quarters from IIIQ2011 to IQ2013 at increasingly higher rates of contraction from 0.1 percent in IIIQ2011 to 0.7 percent in IVQ2011, 1.0 percent in IQ2012 and 0.6 percent in IIQ2012 but at lower 0.2 percent in IIIQ2012. The pace of decline accelerated to minus 0.9 percent in IVQ2012 and 0.5 percent in IQ2013. GDP contracted cumulatively 3.9 percent in seven consecutive quarterly contractions from IIIQ2011 to IQ2013 at the annual equivalent rate of 2.3 percent. The yearly rate has fallen from 2.0 percent in IVQ2010 to minus 2.3 percent in IQ2013. The fiscal adjustment of Italy is significantly more difficult with the economy not growing especially on the prospects of increasing government revenue. The strategy is for reforms to improve productivity, facilitating future fiscal consolidation.

Table VG-1, Italy, GDP ∆%

	Quarter ∆% Relative to Preceding Quarter	Quarter ∆% Relative to Same Quarter Year Earlier
IQ2013	-0.5	-2.3
IVQ2012	-0.9	-2.8
IIIQ2012	-0.2	-2.6
IIQ2012	-0.6	-2.5
IQ2012	-1.0	-1.7
IVQ2011	-0.7	-0.5
IIIQ2011	-0.1	0.3
IIQ2011	0.2	0.9
IQ2011	0.1	1.3
IVQ2010	0.1	2.0
IIIQ2010	0.4	1.8
IIQ2010	0.6	1.9
IQ2010	0.8	1.1
IVQ2009	0.0	-3.4
IIIQ2009	0.5	-4.9
IIQ2009	-0.2	-6.6
IQ2009	-3.6	-7.0
IVQ2008	-1.6	-3.0
IIIQ2008	-1.3	-1.9
IIQ2008	-0.5	-0.2
IQ2008	0.5	0.5
IV2007	-0.4	0.1
IIIQ2007	0.3	1.7
IIQ2007	0.2	2.0
IQ2007	0.0	2.4

Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/90094

Exports and imports of Italy and monthly growth rates SA are provided in Table VG-2. There have been significant fluctuations. Seasonally adjusted exports increased 1.2 percent in Mar 2013 while imports increased 0.2 percent. The SA trade balance improved from surplus of €2067 million in Feb 2013 to surplus of €2384 million in Mar 2013.

Table VG-2, Italy, Exports, Imports and Trade Balance SA Million Euros and Month SA ∆%

	Exports	∆%	Imports	∆%	Balance
2011
Mar	31,141	1.6	35,199	5.9	-4,058
Apr	31,485	1.1	34,338	-2.4	-2,853
May	32,205	2.3	34,834	1.4	-2,629
Jun	31,408	-2.5	33,329	-4.3	-1,921
Jul	31,620	0.7	33,942	1.8	-2,322
Aug	31,642	0.1	34,270	1.0	-2,628
Sep	31,886	0.8	33,266	-2.9	-1,380
Oct	31,063	-2.6	32,612	-2.0	-1,549
Nov	31,536	1.5	32,951	1.0	-1,415
Dec	32,692	3.7	31,967	-3.0	725
2012
Jan	31,805	-2.7	32,215	0.8	-410
Feb	32,057	0.8	32,538	1.0	-481
Mar	32,394	1.1	31,842	-2.1	552
Apr	32,403	0.0	32,394	1.7	9
May	32,787	1.2	32,568	0.5	219
Jun	32,353	-1.3	30,642	-5.9	1,711
Jul	32,654	0.9	31,714	3.5	940
Aug	33,471	2.5	32,647	2.9	824
Sep	32,756	-2.1	31,197	-4.4	1,559
Oct	32,700	-0.2	31,259	0.2	1,441
Nov	32,784	0.3	30,480	-2.5	2,304
Dec	32,654	-0.4	30,973	1.6	1,681
2013
Jan	33,108	1.4	30,986	0.0	2,122
Feb	32,135	-2.9	30,068	-3.0	2,067
Mar	32,506	1.2	30,122	0.2	2,384

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/90206

Italy’s trade account not seasonally adjusted is provided in Table VG-3. Values are different because the data are original and not adjusted. Exports decreased 6.0 percent in the 12 months ending in Mar 2013 while imports decreased 10.6 percent with actual trade surplus of €3237 million. Twelve-month rates of growth picked up again in Aug 2011 with 15.2 percent for exports and 12.6 percent for imports. In Sep 2011, exports grew 10.2 percent relative to a year earlier while imports grew only 3.6 percent. In Oct 2011, exports grew 4.5 percent while imports fell 0.2 percent. In Nov 2011, exports grew 6.5 percent in 12 months while imports grew 0.5 percent. Exports continued to growth of 7.2 percent in the 12 months ending in Aug 2012 while imports fell 2.7 percent. The actual or not seasonally adjusted trade balance deficit fell from €2948 million in Aug 2011 to surplus of €1407 million in Dec 2011 but turned into deficit of €4574 million in Jan 2012, improving to lower deficit of €1195 million in Feb 2012 and surplus of €1792 million in Mar 2012, returning to deficit of €250 million in Apr and surplus of €867 million in May. In Jun 2012, the actual surplus was €2780 million and then €4733 million in Jul 2012, which was the highest in 2012 but deteriorated to actual deficit of €483 million in Aug 2012. Exports fell 20.9 percent and imports 22.1 percent during the global recession in 2009. Growth of exports of 12.0 percent in the 12 months ending in Oct 2012 while imports increased 1.0 percent increased the trade surplus to €2420 million. The trade surplus was €2105 million in Dec 2012 with growth of exports of minus 3.6 percent in 12 months while imports fell 6.0 percent. The trade balance deteriorated to deficit of €1614 million in Jan 2013 even with growth of exports of 8.7 percent in 12 months while imports fell 1.8 million. The trade balance returned to surplus of €1086 million in Feb 2013 with decline of exports by 2.8 percent and decrease of exports by 9.6 percent. The surplus widened to €3237 million in Mar 2013 with exports declining 6.0 percent and imports falling 10.6 percent.

Table VG-3, Italy, Exports, Imports and Trade Balance NSA Million Euros and 12 Month ∆%

Annual	Exports	∆%	Imports	∆%	Balance
2010	337,346	15.6	367,390	23.4	-30,044
2011	375,904	11.4	401,428	9.3	-25,524
2012	389,725	3.7	378,759	-5.6	10,966
Monthly	Exports	∆%	Imports	∆%	Balance
2011
Mar	34,340	13.8	38,527	20.9	-4,187
Apr	31,079	12.6	33,969	18.4	-2,890
May	33,545	19.9	35,853	18.8	-2,308
Jun	32,649	8.1	34,481	2.1	-1,832
Jul	35,327	6.0	34,058	7.1	1,269
Aug	24,245	15.2	27,193	12.6	-2,948
Sep	32,996	10.2	34,886	3.6	-1,890
Oct	32,131	4.5	33,245	-0.2	-1,114
Nov	32,440	6.5	34,025	0.5	-1,585
Dec	31,364	5.6	29,957	-8.5	1,407
2012
Jan	27,429	4.8	32,003	-1.7	-4,574
Feb	31,787	7.3	32,982	0.9	-1,195
Mar	36,070	5.0	34,278	-11.0	1,792
Apr	30,510	-1.8	30,760	-9.4	-250
May	35,132	4.7	34,265	-4.4	867
Jun	34,358	5.2	31,578	-8.4	2,780
Jul	37,019	4.8	32,286	-5.2	4,733
Aug	25,979	7.2	26,462	-2.7	-483
Sep	31,602	-4.2	31,193	-10.6	409
Oct	35,997	12.0	33,577	1.0	2,420
Nov	33,593	3.6	31,230	-8.2	2,363
Dec	30,250	-3.6	28,145	-6.0	2,105
2013
Jan	29,824	8.7	31,438	-1.8	-1,614
Feb	30,890	-2.8	29,798	-9.7	1,092
Mar	33,890	-6.0	30,653	-10.6	3,237

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/90206

Growth rates of Italy’s trade and major products are provided in Table VG-4 for the period Jan-Mar 2013 relative to Jan-Mar 2012. Growth rates of cumulative imports relative to a year earlier are negative for energy with minus 19.0 percent and minus 13.4 percent for durable goods. The higher rate of growth of exports of minus 0.7 percent in Jan-Mar 2013/Jan-Mar 2012 relative to imports of minus 7.4 percent may reflect weak demand in Italy with GDP declining during seven consecutive quarters from IIIQ2011 through IQ2013 together with softening commodity prices.

Table VG-4, Italy, Exports and Imports % Share of Products in Total and ∆%

	Exports Share %	Exports ∆% Jan-Mar 2013/ Jan-Mar 2012	Imports Share %	Imports ∆% Jan-Mar 2013/ Jan-Mar 2012
Consumer Goods	29.3	5.4	25.6	-0.5
Durable	5.8	0.7	2.9	-13.4
Non-Durable	23.5	6.5	22.7	1.1
Capital Goods	31.6	0.3	19.5	-8.5
Inter- mediate Goods	33.6	-3.9	32.6	-3.7
Energy	5.5	-18.4	22.3	-19.0
Total ex Energy	94.5	0.4	77.7	-3.9
Total	100.0	-0.7	100.0	-7.4

Note: % Share for Jan-Nov 2012.

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/90206

Table VG-5 provides Italy’s trade balance by product categories in Mar 2013 and cumulative Jan-Mar 2013. Italy’s trade balance excluding energy generated surplus of €7473 million in Mar 2013 and €16,976 million cumulative in Jan-Mar 2013 but the energy trade balance created deficit of €4236 million in Mar 2013 and cumulative €14,261 million in Jan-Mar 2013. The overall surplus in Mar 2013 was €3237 million with cumulative surplus of €2716 million in Jan-Mar 2013. Italy has significant competitiveness in various economic activities in contrast with some other countries with debt difficulties.

Table VG-5, Italy, Trade Balance by Product Categories, € Millions

	Mar 2013	Cumulative Jan-Mar 2013
Consumer Goods	2,384	5,048
Durable	1,249	3,041
Nondurable	1,135	2,007
Capital Goods	4,175	10,887
Intermediate Goods	913	1,041
Energy	-4,236	-14,261
Total ex Energy	7,473	16,976
Total	3,237	2,716

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/90206

Professors Ricardo Caballero and Francesco Giavazzi (2012Jan15) find that the resolution of the European sovereign crisis with survival of the euro area would require success in the restructuring of Italy. Growth of the Italian economy would ensure that success. A critical problem is that the common euro currency prevents Italy from devaluing the exchange rate to parity or the exchange rate that would permit export growth to promote internal economic activity, which could generate fiscal revenues for primary fiscal surpluses that ensure creditworthiness. Fiscal consolidation and restructuring are important but of long-term gestation. Immediate growth of the Italian economy would consolidate the resolution of the sovereign debt crisis. Caballero and Giavazzi (2012Jan15) argue that 55 percent of the exports of Italy are to countries outside the euro area such that devaluation of 15 percent would be effective in increasing export revenue. Newly available data in Table VG-6 providing Italy’s trade with regions and countries supports the argument of Caballero and Giavazzi (2012Jan15). Italy’s exports to the European Monetary Union (EMU), or euro area, are only 40.5 percent of the total. Exports to the non-European Union area with share of 46.3 percent in Italy’s total exports are growing at 5.0 percent in Jan-Mar 2013 relative to Jan-Mar 2012 while those to EMU are growing at minus 5.7 percent.

Table VG-6, Italy, Exports and Imports by Regions and Countries, % Share and 12-Month ∆%

Mar 2013	Exports % Share	∆% Jan-Mar 2013/ Jan-Mar 2012	Imports % Share	∆% Jan-Mar 2013/ Jan-Mar 2012
EU	53.7	-5.1	52.9	-4.2
EMU 17	40.5	-5.7	42.7	-4.1
France	11.1	-3.3	8.3	-6.9
Germany	12.5	-6.7	14.6	-6.7
Spain	4.7	-12.5	4.4	-4.7
UK	4.9	-3.1	2.5	-2.6
Non EU	46.3	5.0	47.1	-10.9
Europe non EU	13.9	1.2	11.3	8.7
USA	6.8	4.7	3.3	-22.6
China	2.3	2.3	6.5	-5.8
OPEC	5.7	15.7	10.8	-20.5
Total	100.0	-0.7	100.0	-7.4

Notes: EU: European Union; EMU: European Monetary Union (euro zone)

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/90206

Table VG-7 provides Italy’s trade balance by regions and countries. Italy had trade deficit of €473 million with the 17 countries of the euro zone (EMU 17) in Mar 2013 and cumulative deficit of €1159 million in Jan-Mar 2013. Depreciation to parity could permit greater competitiveness in improving the trade surplus of €1054 million in Jan-Mar 2013 with Europe non European Union, the trade surplus of €3230 million with the US and trade surplus with non-European Union of €1054 million in Jan-Mar 2013. There is significant rigidity in the trade deficits in Jan-Mar of €3792 million with China and €3099 million with members of the Organization of Petroleum Exporting Countries (OPEC). Higher exports could drive economic growth in the economy of Italy that would permit less onerous adjustment of the country’s fiscal imbalances, raising the country’s credit rating.

Table VG-7, Italy, Trade Balance by Regions and Countries, Millions of Euro 

Regions and Countries	Trade Balance Mar 2013 Millions of Euro	Trade Balance Cumulative Jan-Mar 2013 Millions of Euro
EU	607	1,661
EMU 17	-473	-1,159
France	1,085	3,120
Germany	-771	-1,428
Spain	57	308
UK	762	2,031
Non EU	2,630	1,054
Europe non EU	828	1,168
USA	1,340	3,230
China	-946	-3,792
OPEC	-429	-3,099
Total	3,237	2,716

Notes: EU: European Union; EMU: European Monetary Union (euro zone)

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/90206

VH United Kingdom. Annual data in Table VH-UK show the strong impact of the global recession in the UK with decline of GDP of 4.0 percent in 2009 after dropping 1.0 percent in 2008. Recovery of 1.8 percent in 2010 is relatively low compared to annual growth rates in 2007 and earlier years. Growth was only 1.0 percent in 2011 and 0.3 percent in 2012. The bottom part of Table VH-UK provides average growth rates of UK GDP since 1948. The UK economy grew at 2.6 percent on average between 1948 and 2012, which is relatively high for an advanced economy. The growth rate of GDP between 2000 and 2007 is higher at 3.0 percent. Growth in the current cyclical expansion has been only at 1.0 percent as advanced economies struggle with weak internal demand and world trade.

Table VH-UK, UK, Gross Domestic Product, ∆%

	∆% on Prior Year
1998	3.5
1999	3.2
2000	4.2
2001	2.9
2002	2.4
2003	3.8
2004	2.9
2005	2.8
2006	2.6
2007	3.6
2008	-1.0
2009	-4.0
2010	1.8
2011	1.0
2012	0.3
Average ∆% per Year
1948-2012	2.6
1948-1959	2.9
1960-1969	3.3
1970-1979	2.5
1980-1989	3.2
1990-1999	2.6
2000-2012	1.6
2000-2007	3.0
2009-2012	1.0

Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/gva/gross-domestic-product--preliminary-estimate/q1-2013/index.html

The Business Activity Index of the Markit/CIPS UK Services PMI^® increased from 52.4 in Mar to 52.9 in Apr, indicating increase in activity in every month since the beginning of 2013 (http://www.markiteconomics.com/Survey/PressRelease.mvc/adb4686ad34742cf80b3a54f1334b1cb). Chris Williamson, Chief Economist at Markit, finds continuing improvement in the UK’s economy (http://www.markiteconomics.com/Survey/PressRelease.mvc/adb4686ad34742cf80b3a54f1334b1cb). The Markit/CIPS UK Manufacturing Purchasing Managers’ Index^® (PMI^®) increased from 48.6 in Mar to 49.8 in Apr (http://www.markiteconomics.com/Survey/PressRelease.mvc/c442cfc78c0a4267a9b3d10be64598a8). Rob Dobson, Senior Economist at Markit that compiles the Markit/CIPS Manufacturing PMI^®, finds manufacturing may not restrain overall growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/c442cfc78c0a4267a9b3d10be64598a8). Table UK provides the economic indicators for the United Kingdom.

Table UK, UK Economic Indicators

CPI	Mar month ∆%: 0.3 Mar 12-month ∆%: 2.8 Blog 4/21/13
Output/Input Prices	Output Prices: Mar 12-month NSA ∆%: 2.0; excluding food, petroleum ∆%: 1.3 Input Prices: Mar 12-month NSA ∆%: 0.4 Excluding ∆%: 1.6 Blog 4/21/13
GDP Growth	IQ2013 prior quarter ∆% 0.3; year earlier same quarter ∆%: 0.6 Blog 3/31/13 4/28/13
Industrial Production	Mar 2013/Mar 2012 ∆%: Production Industries minus 1.4; Manufacturing minus 1.4 Blog 5/12/13
Retail Sales	Mar month ∆%: -0.7 Mar 12-month ∆%: -0.5 Blog 4/28/13
Labor Market	Jan-Mar Unemployment Rate: 7.8%; Claimant Count 4.5%; Earnings Growth 0.4% Blog 5/19/13
Trade Balance	Balance Mar minus ₤3130 million Exports Mar ∆%: 3.5; Jan-Mar ∆%: -2.0 Imports Mar ∆%: 2.6 Jan-Mar ∆%: -1.0 Blog 5/12/13

Links to blog comments in Table UK:

5/12/13 http://cmpassocregulationblog.blogspot.com/2013/05/recovery-without-hiring-collapse-of.html

4/28/13 http://cmpassocregulationblog.blogspot.com/2013/04/mediocre-and-decelerating-united-states_28.html

4/21/13 http://cmpassocregulationblog.blogspot.com/2013/04/world-inflation-waves-squeeze-of.html

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

The UK Office for National Statistics provides important analysis of the relation of GDP and the labor market (http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2013-q1--may-labour-market-update/index.html

http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2012-q4--january-gdp-update/sum-jan13.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2012-q4--february-labour-market-update/sum-2012-q4---february-labour-update.html). The UK economy grew 0.3 percent in IQ2013 but output is still 2.6 below the level before the global recession (http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2013-q1--may-labour-market-update/sum-may13-labour.html). Chart VH-1 of the UK Office for National Statistics (http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2013-q1--may-labour-market-update/sum-may13-labour.html) shows weakening output but relatively faster increases in employment and hours worked.

Chart VH-1, UK, Employment Level Ages 16 and Over, Total Weekly Hours and GDP, 2008-2012

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2013-q1--may-labour-market-update/index.html

Table VH-1 of the UK Office for national Statistics (http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2013-q1--may-labour-market-update/sum-may13-labour.html) provides total weekly hours, output and employment quarterly from 2008 to 2013. Weakening output has been accompanied recently by improvements in hours worked and employment.

Table VH-1, UK, Indices of Quarterly Employment Ages 16 and Over, Total Hours Worked and GDP, 2008-2012

IQ2008 =100

			Index, 2008 Q1 =100
	Total weekly hours, Aged 16 +	Output, CVM	Employment, Aged 16 +
	YBUS	ABMI	MGRZ
2008 Q1	100.0	100.0	100.0
Q2	98.9	99.1	100.1
Q3	98.9	97.3	99.6
Q4	98.3	95.3	99.4
2009 Q1	96.7	93.9	98.9
Q2	96.3	93.7	97.9
Q3	95.8	94.1	97.8
Q4	95.8	94.5	97.9
2010 Q1	95.7	95.0	97.6
Q2	96.5	95.7	98.2
Q3	97.0	96.3	98.9
Q4	97.4	95.9	98.7
2011 Q1	97.4	96.4	99.0
Q2	96.3	96.4	99.0
Q3	97.1	97.0	98.5
Q4	97.3	96.9	98.8
2012 Q1	98.0	96.8	99.2
Q2	98.5	96.5	99.9
Q3	99.6	97.4	100.2
Q4	99.8	97.1	100.8
2013 Q1	100.1	97.4	100.7

http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2013-q1--may-labour-market-update/index.html

Labor market statistics of the UK for the quarter Jan-Mar 2013 are provided in Table VH-2. The unemployment rate decreased to 7.8 percent and the number unemployed decreased 92,000 in the year, reaching 2.518 million. The employment rate is 71.4 percent. Earnings growth including bonuses was 0.4 percent over the earlier year. The claimant count or those receiving unemployment benefits stands at 4.5 percent, unchanged on the month and down 0.2 on the year.

Table VH-2, UK, Labor Market Statistics

	Quarter Jan-Mar 2013
Unemployment Rate	7.8% +0.1 % points on quarter and down 0.4 from year earlier
Number Unemployed	(1) up 15,000 on quarter and down 92,000 from year earlier to reach 2.518 million (2) Unemployment rate 16 to 24 years of age 20.7% of that age group (3) Unemployed 16 to 24 years excluding those in full-time education 668,000 (290,000 in full-time education) up 36,000 on quarter; unemployment rate 19.1% +0.7 % Points
Number Unemployed > one and two years	(1) Number unemployed over one year: 900,000, up 8,000 on quarter (2) Number unemployed over two years: 463,000, up 28,000 on quarter
Inactivity Rate 16-64 Years of Age (Definition: Not in employment but have not been seeking employment in the past four weeks or are unable to start work in two weeks)	(1) 22.4%, up 0.1 % points on quarter, down 0.6 on year (2) Economically inactive 16-64 years up 47,000 on quarter and down 212,000 on year to 9.003 million
Employment Rate	71.4%, unchanged on quarter, up 0.8 % points on year
Number Employed	(1) Down 43,000 on quarter, +434,000 on year to 29.708 million                              (2) Number of employees up 21,000 on quarter to 25.28 million (3) Self-employed fell 42,000 on quarter to 4.18 million (4) Full-time 21.68 million, up 10,000 on quarter, up 60,000 on year
Earnings Growth Rates Year on Year	(1) Total +0.4% (including bonuses) over year earlier; regular 0.8%; private sector 0.0% on year earlier, public sector rose 1.4% on year earlier   (2) Regular private 0.8 % (excluding bonuses); regular public 1.4% on year earlier
Full-time and Part-time	(1) Number full-time 21.65 million, up 197,000 on quarter (2) Number part-time 8.08 million, down 43,000 on quarter
Claimant Count (Jobseeker’s Allowance, JSA)	(1) Latest estimate: 1.521 million; down 7,300 in month, down 67,800 on year earlier (2) Claimant count 4.5%, unchanged on month and down 0.2 % points on year
Labor Productivity	(1) Output per worker fell 0.8% from IIIQ2012 to IVQ2012 (2) Unit labor costs increased 0.5% from IIIQ2012 to IVQ2012

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/lms/labour-market-statistics/may-2013/index.html

Table VH-2 provides indicators of the labor force survey of the UK for Jan-Feb 2013 and earlier quarters. There has been improvement in UK labor markets with the rate of unemployment decreasing from 8.2 percent in Jan-Mar 2012 to 7.8 percent in Jan-Mar 2013.

Table VH-3, UK, Labor Force Survey Indicators

	LFHP	EMP	PART	UNE	RATE
Jan-Mar 2013	40,231	29,708	71.4	2,518	7.8
Oct-Dec 2012	40,214	29,751	71.6	2,503	7.8
Jul-Sep 2012	40,198	29,576	71.2	2,514	7.8
Apr-Jun 2012	40,186	29,476	71.0	2,564	8.0
Jan-Mar 2012	40,180	29,274	70.6	2,610	8.2
Jan-Mar 2011	40,104	29,229	70.7	2,460	7.8

Notes: LFHP: Labor Force Household Population Ages 16 to 64 in thousands; EMP: Employed Ages 16 and over in thousands; PART: Employment as % of Population Ages 16 to 64; UNE: Unemployed Ages 16 and over in thousands; Rate: Number Unemployed Ages 16 and over as % of Employed plus Unemployed

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/lms/labour-market-statistics/may-2013/index.html

© Carlos M. Pelaez, 2010, 2011, 2012, 2013