Recovery without Hiring, Seven Million Fewer Full-time Jobs while Population Increased Thirteen Million, Record Youth and Middle Age Unemployment, Destruction of Household Wealth for Inflation Adjusted Loss, Unresolved US Balance of Payments Deficits and Fiscal Imbalance Threatening Risk Premium on Debt, Peaking Valuations of Risk Financial Assets, World Economic Slowdown and Global Recession Risk: Part III

 

Recovery without Hiring, Seven Million Fewer Full-time Jobs while Population Increased Thirteen Million, Record Youth and Middle Age Unemployment, Destruction of Household Wealth for Inflation Adjusted Loss, Unresolved US Balance of Payments Deficits and Fiscal Imbalance Threatening Risk Premium on Debt, Peaking Valuations of Risk Financial Assets, World Economic Slowdown and Global Recession Risk

Carlos M. Pelaez

© Carlos M. Pelaez, 2009, 2010, 2011, 2012, 2013

Executive Summary

I Recovery without Hiring

IA1 Hiring Collapse

IA2 Labor Underutilization

IA3 Ten Million Fewer Full-time Job

IA4 Youth and Middle-Aged Unemployment

IIA Destruction of Household Wealth for Inflation Adjusted Loss

IIB Unresolved US Balance of Payments Deficits and Fiscal Imbalance Threatening Risk

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 1.2 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 0.6 percent, which is much lower than 4.8 percent in IQ2012. Growth of 3.9 percent in IIQ2012 in Japan relative to IIQ2011 has effects of the low level of output because of Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Japan’s GDP contracted 0.9 percent in IIIQ2012 at the SAAR of minus 3.6 percent and increased 0.2 percent relative to a year earlier. Japan’s GDP grew 0.3 percent in IVQ2012 at the SAAR of 1.2 percent and increased 0.4 percent relative to a year earlier. Japan grew 1.0 percent in IQ2013 at the SAAR of 4.1 percent and 0.4 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 1.0 percent relative to a year earlier. In IQ2013, the GDP of the euro area fell 0.2 percent and decreased 1.1 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 2.4 percent SAAR, 0.6 percent relative to the prior quarter and 1.8 percent relative to the same quarter in 2013 (Section) 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 0.3 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 0.6 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: 1.2 SAAR: 4.8	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: -0.6	3.9
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: –3.6	0.2
China	2.1	7.4
Euro Area	-0.1	-0.7
Germany	0.2	0.4
France	0.1	0.0
Italy	-0.3	-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: 1.2	0.4
China	2.0	7.9
Euro Area	-0.6	-1.0
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: 2.4	1.8
Japan	QOQ: 1.0 SAAR: 4.1	0.4
China	1.6	7.7
Euro Area	-0.2	-1.1
Germany	0.1	-1.4
France	-0.2	-0.4
Italy	-0.6	-2.4
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 (Section VB at http://cmpassocregulationblog.blogspot.com/2013/05/united-states-commercial-banks-assets.html and earlier 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 Apr 2013, Japan’s exports grew 3.8 percent in 12 months while imports increased 9.4 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 1.9 percent in the month of Apr 2013 and increased 8.5 percent in the 12 months ending in Apr 2013 while imports increased 2.2 percent in the month of Apr and increased 5.2 percent in the 12 months ending in Apr. Net trade contributed 0.4 percentage points to growth of GDP in IQ2012, contributed 1.3 percentage points in IIQ2012, contributed 1.4 percentage points in IIIQ2012, contributed 0.7 percentage points in IVQ2012 and contributed 1.0 percentage points in 2012. Net trade deducted 0.1 percentage points from Germany’s GDP growth. 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. In IQ2013, net trade deducted 0.1 percentage points from UK’s GDP growth. France’s exports increased 4.1 percent in Apr 2013 while imports increased 3.8 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 0.21 percentage points from US GDP growth. US imports increased 1.2 percent in Apr 2013 and goods imports increased 0.8 percent in Jan-Apr 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	1.2 Apr	0.8 Jan-Apr	2.4 Apr	-1.9 Jan-Apr
Japan		Apr 2013 3.8 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		Apr 2013 9.4 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	1.9 Apr CSA	8.5 Apr	2.3Apr CSA	5.2 Apr
France Apr	4.1	4.1	3.8	-0.6
Italy Mar	1.2	-6.0	0.2	-10.6
UK	-1.3 Apr	0.3 Feb-Apr 13 /Feb-Apr 12	-2.7 Apr	-0.9 Feb-Apr 13/Feb-Apr 12
Net Trade % Points GDP Growth	% Points
USA	IQ2013 -0.21 IVQ2012 +0.33 IIIQ2012 +0.38 IIQ2012 +0.23 IQ2012 +0.06
Japan	-1.1 IIQ2012 -2.8 IIIQ2012 -0.6 IVQ2012
Germany	0.4 IQ2012 1.3 IIQ2012 1.4 IIIQ2012 0.7 IVQ2012 1.0 2012 IQ2013 -0.1
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 -0.1 IQ2013

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 Apr 2013. The share of Asia in Japan’s trade is more than one half, 54.5 percent of exports and 43.4 percent of imports. Within Asia, exports to China are 17.3 percent of total exports and imports from China 21.6 percent of total imports. While exports to China increased 0.3 percent in the 12 months ending in Apr 2013, imports from China increased 13.3 percent. The largest export market for Japan in Apr 2013 is the US with share of 19.1 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 9.7 percent in imports. Rates of growth of exports of Japan in Mar 2013 are low or negative for several countries and regions with the exception of growth of 14.8 percent for exports to the US, 12.0 for exports to Mexico, 20.7 percent for exports to Brazil and 16.9 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 3.8 percent in Apr 2013 while imports increased 9.4 percent but higher levels after the earthquake and declining prices may be another factor. Growth rates of imports in the 12 months ending in Apr 2013 are positive for most trading partners. Imports from Asia increased 13.1 percent in the 12 months ending in Apr 2013 while imports from China increased 13.3 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

Apr 2013	Exports Millions Yen	12 months ∆%	Imports Millions Yen	12 months ∆%
Total	5,777,409	3.8	6,657,345	9.4
Asia	3,151,351	4.3	2,888,002	13.1
China	998,409	0.3	1,440,866	13.3
USA	1,101,287	14.8	538,297	0.8
Canada	67,974	-5.1	113,225	42.4
Brazil	47,383	20.7	71,162	-9.3
Mexico	82,091	12.0	34,516	31.7
Western Europe	568,417	-3.5	644,944	11.4
Germany	144,476	-1.3	175,918	18.4
France	59,019	12.5	95,282	12.1
UK	82,661	-5.9	50,925	1.0
Middle East	196,158	6.1	1,341,440	1.6
Australia	147,004	16.9	397,067	8.4

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 to 53.1 in May from 51.9 in Apr, indicating expansion at a moderate rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/e1cd4b422e4142abb5b7cc388ed55e52).This index has remained above the contraction territory of 50.0 during 46 consecutive months. The employment index remained unchanged at 50.4 in May relative to 50.4 in Apr with input prices rising at slower rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/e1cd4b422e4142abb5b7cc388ed55e52). The JP Morgan Global Manufacturing PMI^™, produced by JP Morgan and Markit in association with ISM and IFPSM, increased marginally to 50.6 in May from 50.4 in Apr, which is the fifth consecutive reading above 50 (http://www.markiteconomics.com/Survey/PressRelease.mvc/29fc067a0d4342edb2b0ba45b77a9bee). New export business is near stagnation and total new orders increased from 50.8 in Apr to 51.4 in May. The HSBC Brazil Composite Output Index, compiled by Markit, decreased marginally from 51.5 in Apr to 51.2 in May, indicating moderate increase in private sector activity (http://www.markiteconomics.com/Survey/PressRelease.mvc/de8a2ffef594427487be825fd917927c). The HSBC Brazil Services Business Activity index, compiled by Markit, decreased from 51.3 in Apr to 51.0 in May (http://www.markiteconomics.com/Survey/PressRelease.mvc/de8a2ffef594427487be825fd917927c). Andre Loes, Chief Economist, Brazil, at HSBC, finds slower rate of increase in input prices but moderate growth of the private sector (http://www.markiteconomics.com/Survey/PressRelease.mvc/de8a2ffef594427487be825fd917927c). The HSBC Brazil Purchasing Managers’ Index^TM (PMI^™) decreased from 50.8 in Apr to 50.4 in May (http://www.markiteconomics.com/Survey/PressRelease.mvc/08d8ebe4ce0c4273aab97f69e1210b58). Andre Loes, Chief Economist, Brazil at HSBC, finds that companies may have time to improve profit margins because of increases in prices of output relative to prices of inputs (http://www.markiteconomics.com/Survey/PressRelease.mvc/08d8ebe4ce0c4273aab97f69e1210b58).

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^™) increased to 52.3 in May from 52.1 in Apr (http://www.markiteconomics.com/Survey/PressRelease.mvc/1b6c8066bfa54224abb1ec66117c8e38). The index of new exports orders fell from 51.8 in Apr t0 49.8 in May while total new orders increased from 51.5 in Apr to 53.3 in May. Chris Williamson, Chief Economist at Markit, finds moderate growth in all segments of the index, suggesting risk of standstill (http://www.markiteconomics.com/Survey/PressRelease.mvc/1b6c8066bfa54224abb1ec66117c8e38). The purchasing managers’ index (PMI) of the Institute for Supply Management (ISM) Report on Business^® decreased 1.7 percentage points from 50.7 in Apr to 49.0 in May, which is the lowest reading since Jul 2009 that stood at 45.8 (http://www.ism.ws/ISMReport/MfgROB.cfm?navItemNumber=12942). The index of new orders decreased 3.5 percentage points from 52.3 in Apr to 48.8 in May. The index of exports decreased 3.0 percentage points from 54.0 in Apr to 51.0 in May, remaining in expansion territory. The Non-Manufacturing ISM Report on Business^® PMI increased 0.6 percentage points from 53.1 in Apr to 53.7 in May, indicating growth of business activity/production during 46 consecutive months, while the index of new orders increased 1.5 percentage points from 54.5 in A[t to 56.0 in May (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	Apr 12-month NSA ∆%: headline 0.7; ex food and energy ∆% 1.1 Blog 6/2/13
Employment Situation	Household Survey: May Unemployment Rate SA 7.6% Blog calculation People in Job Stress May: 27.8 million NSA, 17.1% of Labor Force Establishment Survey: Nov Nonfarm Jobs +175,000; Private +178,000 jobs created  Apr 12-month Average Hourly Earnings Inflation Adjusted ∆%: 0.2 Blog 6/9/13
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 Apr 2013 4.076 million lower by 0.886 million than 4.962 million in Apr 2007 Blog 6/16/13
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 2.4 Blog 6/2/13
Real Private Fixed Investment	SAAR IQ2013 4.1 ∆% IVQ2007 to IIIQ2012: minus 8.8% Blog 6/2/13
Personal Income and Consumption	Apr month ∆% SA Real Disposable Personal Income (RDPI) SA ∆% 0.1 Real Personal Consumption Expenditures (RPCE): 0.1 12-month Apr NSA ∆%: RDPI: 1.0; RPCE ∆%: 2.1 Blog 6/2/13
Quarterly Services Report	IQ13/IQ12 SA ∆%: Information 4.3 Financial & Insurance 1.8 Blog 6/9/13
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 0.5; IQ2013/IQ2012 ∆% 0.9; Unit Labor Costs SAAE IQ2013 ∆% -4.3; IQ2013/IQ2012 ∆%: 1.1 Blog 6/9/2013
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 Apr ∆% 1.0 Ex Transport -0.1 Jan-Apr NSA New Orders 0.2 Ex transport 0.2 Blog 6/9/13
Durable Goods	Apr New Orders SA ∆%: minus 3.3; ex transport ∆%: 1.3 Jan-Apr 13/Jan-Apr 12 New Orders NSA ∆%: 0.7; ex transport ∆% 0.7 Blog 5/26/13
Sales of New Motor Vehicles	Jan-May 2013 6,424,707; Jan-May 2012 5,986,605. May 13 SAAR 15.31 million, Apr 13 SAAR 14.92 million, May 2012 SAAR 13.95 million Blog 6/9/13
Sales of Merchant Wholesalers	Jan-Apr 2013/Jan-Apr 2012 NSA ∆%: Total 1.9; Durable Goods: 2.4; Nondurable Goods: 1.5 Blog 6/16/13
Sales and Inventories of Manufacturers, Retailers and Merchant Wholesalers	Apr 13/Apr 12 NSA ∆%: Sales Total Business 3.1; Manufacturers 1.6 Retailers 4.3; Merchant Wholesalers 4.0 Blog 6/16/13
Sales for Retail and Food Services	Jan-May 2013/Jan-May 2012 ∆%: Retail and Food Services 3.7; Retail ∆% 3.7 Blog 6/16/13
Value of Construction Put in Place	Apr SAAR month SA ∆%: -0.4 Apr 12-month NSA: 4.3 Jan-Apr 2013 ∆% 4.5 Blog 6/9/13
Case-Shiller Home Prices	Mar 2013/Mar 2012 ∆% NSA: 10 Cities 10.3; 20 Cities: 10.9 ∆% Mar SA: 10 Cities 1.4 ; 20 Cities: 1.1 Blog 6/2/13
FHFA House Price Index Purchases Only	Mar SA ∆% 1.3; 12 month NSA ∆%: 7.2 Blog 5/26/13
New House Sales	Apr 2013 month SAAR ∆%: minus 2.3 Jan-Apr 2013/Jan-Apr 2012 NSA ∆%: 26.8 Blog 5/26/13
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 Apr SA -$38,829 million versus Mar -$42,960 million Exports Apr SA ∆%: 1.2 Imports Apr SA ∆%: 2.4 Goods Exports Jan-Apr 2013/2012 NSA ∆%: 0.8 Goods Imports Jan-Apr 2013/2012 NSA ∆%: -1.9 Blog 6/9/13
Export and Import Prices	May 12-month NSA ∆%: Imports -1.9; Exports -0.9 Blog 6/16/13
Consumer Credit	Apr ∆% annual rate: 4.7 Blog 6/9/13
Net Foreign Purchases of Long-term Treasury Securities	Apr Net Foreign Purchases of Long-term US Securities: minus $37.3 billion Major Holders of Treasury Securities: China $1265 billion; Japan $1100 billion; Total Foreign US Treasury Holdings Feb $5671 billion Blog 6/16/13
Treasury Budget	Fiscal Year 2013/2012 ∆% May: Receipts 15.1; Outlays 0.8; Individual Income Taxes 19.5 Deficit Fiscal Year 2011 $1,296 billion Deficit Fiscal Year 2012 $1,087 billion Blog 6/16/2013
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	Apr 2013 SAAR ∆%: Securities 1.0 Loans 5.1 Cash Assets 9.0 Deposits 2.4 Blog 5/26/13
Flow of Funds	IQ2013 ∆ since 2007 Assets +$2612.8 MM Real estate -$2733.8 MM Financial +4799.7 MM Net Worth +$3487.4 MM Blog 6/16/13
Current Account Balance of Payments	IQ2013 -83,219 MM %GDP 2.7 Blog 6/16/13

Links to blog comments in Table USA:

6/9/13 http://cmpassocregulationblog.blogspot.com/2013/06/twenty-eight-million-unemployed-or.html

6/2/13 http://cmpassocregulationblog.blogspot.com/2013/06/mediocre-united-states-economic-growth.html

5/26/13 http://cmpassocregulationblog.blogspot.com/2013/05/united-states-commercial-banks-assets.html

5/19/13 http://cmpassocregulationblog.blogspot.com/2013/05/word-inflation-waves-squeeze-of.html

5/5/13 http://cmpassocregulationblog.blogspot.com/2013/05/twenty-nine-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 0.1 percent in Apr after decreasing 1.2 percent in May and increased 3.1 percent in the 12 months ending in Apr 2013. Sales of manufacturers decreased 0.7 percent in Apr after decreasing 1.5 percent in Mar and increased 1.6 percent in the 12 months ending in May. Retailers’ sales changed 0.0 percent in Apr, decreased 0.4 percent in May and increased 4.0 percent in 12 months ending in Apr. Sales of merchant wholesalers increased 0.5 percent in Apr, decreased 1.4 percent in Mar and increased 4.0 percent in 12 months ending in Apr. 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

	Apr 13/   Mar 13 ∆% SA	Apr 2013 Millions of Dollars NSA	Mar 13/ Feb 13  ∆% SA	Apr 13/ Apr 12 ∆% NSA
Total Business	-0.1	1,281,299	-1.2	3.1
Manufacturers	-0.7	483,249	-1.5	1.6
Retailers	0.0	367,935	-0.4	4.3
Merchant Wholesalers	0.5	430,115	-1.4	4.0

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-Apr 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-Apr 2013

US Census Bureau

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

Businesses added cautiously to inventories to replenish stocks. Retailers added 0.4 percent to inventories in Apr and reduced by 0.6 percent in Mar 2013 with growth of 6.7 percent in 12 months, as shown in Table VA-2. Total business increased inventories by 0.3 percent in Apr, minus 0.1 percent in Mar and 4.2 percent in 12 months. Inventories sales/ratios of total business continued at a level close to 1.30 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	Apr 13 Millions of Dollars NSA	Apr 13/ Mar 13 ∆% SA	Mar 13/  Feb 13 ∆% SA	Apr 13/  Apr 12 ∆% NSA
Total Business	1,662,565	0.3	-0.1	4.2
Manufacturers	632,454	0.2	0.0	2.2
Retailers	525,285	0.4	-0.6	6.7
Merchant Wholesalers	504,826	0.2	0.3	4.1
Inventory/ Sales Ratio NSA	Apr 13 Billions of Dollars NSA	Apr 2013 SA	Mar 2013 SA	Apr 2012 SA
Total Business	1,662,565	1.31	1.30	1.27
Manufacturers	632,454	1.31	1.30	1.29
Retailers	525,285	1.41	1.40	1.37
Merchant Wholesalers	504,826	1.21	1.22	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 Apr 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-Apr 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 Apr 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 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-Apr 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 and inventories of merchant wholesalers except manufacturers’ sales branches and offices are shown in Table VA-3 for Jan-Apr 2013 NSA and percentage changes from the prior month SA and for Jan-Apr 2013 relative to Jan-Apr 2012. These data are volatile aggregating diverse categories of durable and nondurable goods without adjustment for price changes. Total sales for the US rose 1.9 percent in Jan-Apr 2013 relative to Jan-Apr 2012 and increased 0.5 percent in Apr 2013 relative to Mar 2013. The value of total sales is quite high at $1637.1 billion, approaching five trillion dollars in a year. Value in the breakdown is useful in identifying relative importance of individual categories. Sales of durable goods in Jan-Apr 2013 reached $748.8 billion, over two trillion dollars for a year, increasing 1.6 percent in Apr 2013 relative to Mar 2013 and increasing 2.4 percent in Jan-Apr 2013 relative to Jan-Apr 2012. Sales of automotive products reached $132.5 billion in Jan-Apr 2013, increasing 2.9 percent in the month and increasing 4.5 percent relative to a year earlier. There is strong performance of 7.1 percent in machinery but lower of 1.9 percent in electrical products. Sales of nondurable goods rose 1.5 percent over a year earlier. The influence of commodity prices returned as suggested by decrease of 0.7 percent in Apr 2013 and increase of 6.0 percent in Jan-Apr 2013 relative to a year earlier in farm products with decrease of 2.7 percent in petroleum products in Apr 2013 and decrease of 2.1 percent relative to a year earlier. The final three columns in Table VA-13 provide the value of inventories and percentage changes from the prior month and relative to the same month a year earlier. US total inventories of wholesalers increased 0.2 percent in Apr 2013 and increased 4.1 percent relative to a year earlier. Inventories of durable goods of $308.3 billion are 61.1 percent of total inventories of $504.8 billion and rose 6.0 percent relative to a year earlier. Automotive inventories decreased 0.1 percent relative to a year earlier. Machinery inventories of $87.9 billion rose 12.1 percent relative to a year earlier. Inventories of nondurable goods of $196.5 billion are 38.9 percent of the total and increased 1.2 percent relative to a year earlier. Inventories of farm products decreased 1.0 percent in Apr relative to Mar and decreased 6.8 percent relative to a year earlier. Inventories of petroleum products decreased 0.1 percent in Apr and decreased 11.6 percent relative to a year earlier.

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

2013	Sales $ Billions Jan-Apr 2013 NSA	Sales Apr ∆% SA	Sales∆% Jan-Apr 2013 from Jan-Apr 2012  NSA	INV $ Billions Apr 2013 NSA	INV  Apr ∆% SA	INV  ∆% Apr 2013 from Apr 2012 NSA
US Total	1637.1	0.5	1.9	504.8	0.2	4.1
Durable	748.8	1.6	2.4	308.3	0.2	6.0
Automotive	132.5	2.9	4.5	48.9	1.9	-0.1
Prof. Equip.	151.1	0.8	1.1	37.2	-0.3	6.7
Computer Equipment	86.2	1.6	-1.4	16.7	0.8	13.4
Electrical	115.4	-0.9	1.9	36.8	0.5	4.9
Machinery	131.1	5.0	7.1	87.9	0.0	12.1
Not Durable	888.3	-0.5	1.5	196.5	0.1	1.2
Drugs	136.5	0.7	0.8	34.6	0.3	-2.8
Apparel	46.5	-6.0	2.4	21.2	-0.5	2.0
Groceries	188.9	0.8	2.4	33.3	0.6	10.0
Farm Products	81.5	-0.7	6.0	24.7	-1.0	-6.8
Petroleum	240.7	-2.7	-2.1	22.7	-0.1	-11.6

Note: INV: inventories

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

Chart VA-6 of the US Census Bureau provides wholesale trade NSA from Jan 1992 to Apr 2013. The jagged curve of wholesale trade sales without adjustment shows strong seasonal variations. There is a strong long-term trend interrupted by sharp drop during the global recession. Growth resumed along a stronger upward trend and the level in Dec 2012 surpasses the peak before the global recession with stability in the final segment.

Chart VA-6, US, Wholesale Trade Sales, Monthly, NSA, Jan 1992-Apr 2013, Millions of Dollars

Source: US Census Bureau

http://www.census.gov/wholesale/index.html

Chart VA-7 of the US Census Bureau provides US wholesale trade sales with seasonal adjustment from Jan 1992 to Apr 2013. The elimination of seasonality permits enhanced comparison of adjacent sales. The final segment identifies another drop followed by increase to a higher level with stability.

Chart VA-7, US, Wholesale Trade Sales, Monthly, SA, Jan 1992-Apr 2013, Millions of Dollars

Source: US Census Bureau

http://www.census.gov/wholesale/index.html

Inventory/sales ratios of merchant wholesalers except manufacturers’ sales branches and offices are shown in Table VA-4. The total for the US has remained almost without change at 1.21 in Apr 2013, 1.22 in Mar 2013 and 1.17 in Apr 2012. Inventory/sales ratios are higher in durable goods industries but remain relatively stable with 1.58 in Apr 2013, 1.60 in Mar 2013 and 1.56 in Apr 2012. Computer equipment operates with low inventory/sales ratios of 0.73 in Apr 2013, 0.74 in Mar 2013 and 0.64 in Apr 2012 because of the capacity to fill orders on demand. As expected because of perishable nature, nondurable inventory/sales ratios are quite low with 0.89 in Apr 2013 and 0.88 in Mar 2013, which are almost equal to 0.86 in Apr 2012. There are exceptions such as 1.96 in Apr 2013 in apparel that is higher than 1.86 in Mar 2013 and lower than 1.80 in Apr 2012.

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

	Apr 2013	Mar 2013	Apr 2012
US Total	1.21	1.22	1.17
Durable	1.58	1.60	1.56
Automotive	1.43	1.44	1.54
Prof. Equip.	0.94	0.95	0.90
Comp. Equip.	0.73	0.74	0.64
Electrical	1.24	1.23	1.21
Machinery	2.55	2.67	2.55
Not Durable	0.89	0.88	0.86
Drugs	1.02	1.02	0.99
Apparel	1.96	1.86	1.80
Groceries	0.71	0.71	0.67
Farm Products	1.29	1.29	1.36
Petroleum	0.38	0.37	0.38

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

Inventories of merchant wholesalers except manufacturers’ sales branches in millions of dollars SA are provided in Chart VA-8 of the US Census Bureau. There is evident acceleration in inventory building in the final segment at a sharper slope than before the global recession.

Chart VA-8, US, Inventories of Merchant Wholesalers, Millions of Dollars, NSA, Jan 1992-Apr 2013

Source: US Census Bureau

http://www.census.gov/wholesale/index.html

Inventories of merchant wholesalers except manufacturers’ sales branches in millions of dollars SA are provided in Chart VA-9 of the US Census Bureau. There is evident acceleration in inventory building in the final segment at a sharper slope than before the global recession.

Chart VA-9, US, Inventories of Merchant Wholesalers, Millions of Dollars, SA, Jan 1992-Mar 2013

Source: US Census Bureau

http://www.census.gov/wholesale/index.html

Chart VA-10 provides the chart of the US Census Bureau with inventories/sales ratios of merchant wholesalers from 2004 to 2013 seasonally adjusted. Inventory/sales ratios rise during contractions as merchants are caught with increasing inventories because of weak sales and fall during expansions as merchants attempt to fill sales with existing stocks. There is an increase in the inventory/sales ratio in 2012 but not yet significantly higher with declining trend in the final segment followed by an increase.

Chart VA-10, US, Monthly Inventories/Sales Ratios of Merchant Wholesalers, SA, 2004-2013

Source: US Census Bureau

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

Sales of retail and food services increased 0.6 percent in May 2013 after increasing 0.1 percent in Apr 2013 seasonally adjusted (SA), growing 3.7 percent in Jan-May 2013 relative to Jan-May 2012 not seasonally adjusted (NSA), as shown in Table VA-5. Excluding motor vehicles and parts, retail sales increased 0.3 percent in May 2013, changing 0.0 percent in Apr 2013 SA and increasing 3.0 percent NSA in Jan-May 2013 relative to a year earlier. Sales of motor vehicles and parts increased 1.8 percent in May 2013 after increasing 0.7 percent in Apr 2013 SA and increasing 7.1 percent NSA in Jan-May 2013 relative to a year earlier. Gasoline station sales decreased 0.2 percent SA in May 2013 after decreasing 3.1 percent in Apr 2013 in oscillating prices of gasoline that are moderating, decreasing 0.9 percent in Jan-May 2013 relative to a year earlier.

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

	May/ Apr ∆% SA	Apr/Mar ∆% SA	Jan-May 2013 Million Dollars NSA	Jan-May 2013 from Jan-May 2012 ∆% NSA
Retail and Food Services	0.6	0.1	2,046.9	3.7
Excluding Motor Vehicles and Parts	0.3	0.0	1,654.3	3.0
Motor Vehicles & Parts	1.8	0.7	392.7	7.1
Retail	0.7	0.0	1,819.5	3.7
Building Materials	0.9	3.6	127.2	4.8
Food and Beverage	0.7	-0.6	263.9	2.7
Grocery	0.7	-0.6	237.1	2.3
Health & Personal Care Stores	0.2	0.0	116.7	0.1
Clothing & Clothing Accessories Stores	-0.2	1.0	94.8	3.3
Gasoline Stations	-0.2	-3.1	224.7	-0.9
General Merchandise Stores	0.5	-0.3	258.2	0.4
Food Services & Drinking Places	-0.4	1.1	227.4	4.3

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

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

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

Source: US Census Bureau

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

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

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

Source: US Census Bureau

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

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

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

Source: US Census Bureau

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

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 1.9 percent in the 12 months ending in May 2013, export prices decreased 0.9 percent and prices of nonagricultural exports fell 1.6 percent. Imports excluding fuel fell 1.1 percent in the 12 months ending in May 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
May 2013	-1.9	-1.1	-0.9	-1.6
May 2012	-0.8	0.9	-0.2	0.0
May 2011	12.9	4.5	9.1	7.0
May 2010	8.5	3.5	5.6	5.8
May 2009	-17.3	-4.1	-6.6	-5.6
May 2008	19.1	6.0	8.1	5.7
May 2007	1.2	2.4	4.6	3.6
May 2006	8.6	1.5	3.5	3.9
May 2005	5.9	2.0	2.5	3.7
May 2004	6.9	2.8	4.4	2.9
May 2003	1.0	0.2	1.7	1.0
May 2002	-3.7	NA	-1.6	-1.7
May 2001	-0.8	NA	-0.6	-0.6

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	-2.1	-2.7	-1.9

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 (http://cmpassocregulationblog.blogspot.com/2013/05/word-inflation-waves-squeeze-of.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 0.1 percent in Mar 2013, 0.7 percent in Apr 2013 and 0.6 percent in May 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	-0.1	-0.7	-0.6

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

Table VA-7 provides additional information required for understanding the deficit/debt situation of the United States. The table is divided into four parts: Treasury budget in the 2013 fiscal year to May 2013; federal fiscal data for the years from 2009 to 2012; federal fiscal data for the years from 2005 to 2008; and Treasury debt held by the public from 2005 to 2012. Receipts increased 15.1 percent in the cumulative fiscal year 2013 for May 2013 relative to the cumulative in fiscal year 2012. Individual income taxes increased 19.5 percent relative to the same period a year earlier. Outlays increased 0.8 percent relative to a year earlier. Total revenues of the US from 2009 to 2012 accumulate to $9020 billion, or $9.0 trillion, while expenditures or outlays accumulate to $14,109 billion, or $14.1 trillion, with the deficit accumulating to $5089 billion, or $5.1 trillion. Revenues decreased 6.6 percent from $9653 billion in the four years from 2005 to 2008 to $9020 billion in the years from 2009 to 2012. Decreasing revenues were caused by the global recession from IVQ2007 (Dec) to IIQ2009 (Jun) and by growth of only 2.1 percent on average in the cyclical expansion from IIIQ2009 to IVQ2012 (http://cmpassocregulationblog.blogspot.com/2013/06/mediocre-united-states-economic-growth.html). There is extraordinary contrast between the mediocre average annual equivalent growth rate of 2.1 percent of the US economy in the fifteen quarters of the current cyclical expansion from IIIQ2009 to IQ2013 and the average of 5.7 percent in the first thirteen quarters of expansion from IQ1983 to IQ1986 and 5.3 percent in the first fifteen quarters of expansion from IQ1983 to IIIQ1986 (http://cmpassocregulationblog.blogspot.com/2013/06/mediocre-united-states-economic-growth.html). The average growth rate of 7.8 percent is derived from 7.9 percent from IIIQ1954 to IIQ1955, 9.5 percent from IIIQ1958 to IIQ1959, 6.1 percent from IIIQ1975 to IIQ1976 and 7.7 percent from IQ1983 to IVQ1983. The United States missed this opportunity of high growth in the initial phase of recovery. Boskin (2010Sep) measures that the US economy grew at 6.2 percent in the first four quarters and 4.5 percent in the first 12 quarters after the trough in the second quarter of 1975; and at 7.7 percent in the first four quarters and 5.8 percent in the first 12 quarters after the trough in the first quarter of 1983 (Professor Michael J. Boskin, Summer of Discontent, Wall Street Journal, Sep 2, 2010 http://professional.wsj.com/article/SB10001424052748703882304575465462926649950.html). The average of 7.8 percent in the first four quarters of major cyclical expansions is more than twice higher than the rate of growth in the first four quarters of the expansion from IIIQ2009 to IIQ2010 of only 3.2 percent obtained by diving GDP of $13,103.5 billion in IIIQ2010 by GDP of $12,701.0 billion in IIQ2009 {[$13.103.5/$12,701.0 -1]100 = 3.2%], or accumulating the quarter on quarter growth rates. As a result, there are 27.8 million unemployed or underemployed in the United States for an effective unemployment rate of 17.1 percent (http://cmpassocregulationblog.blogspot.com/2013/06/twenty-eight-million-unemployed-or.html). BEA data show the US economy in standstill with annual growth of 2.4 percent in 2010 decelerating to 1.8 percent annual growth in 2011 and 2.2 percent in 2012. The US missed the opportunity to recover employment as in past cyclical expansions from contractions. In contrast with the decline of revenue, outlays or expenditures increased 30.2 percent from $10,839 billion, or $10.8 trillion, in the four years from 2005 to 2008, to $14,109 billion, or $14.1 trillion, in the four years from 2009 to 2012. Increase in expenditures by 30.2 percent while revenue declined by 6.6 percent caused the increase in the federal deficit from $1186 billion in 2005-2008 to $5089 billion in 2009-2012. Federal revenue was 15.4 percent of GDP on average in the years from 2009 to 2012, which is well below 18.0 percent of GDP on average from 1970 to 2010. Federal outlays were 24.0 percent of GDP on average from 2009 to 2012, which is well above 21.9 percent of GDP on average from 1970 to 2010. The lower part of Table IIB-4 shows that debt held by the public swelled from $5803 billion in 2008 to $11,280 billion in 2012, by $5477 billion or 94.3 percent. Debt held by the public as percent of GDP or economic activity jumped from 40.5 percent in 2008 to 72.6 percent in 2012, which is well above the average of 37.0 percent from 1970 to 2010. The United States faces tough adjustment because growth is unlikely to recover, creating limits on what can be obtained by increasing revenues, while continuing stress of social programs restricts what can be obtained by reducing expenditures.

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

May 2013	Fiscal Year 2013	Fiscal Year 2012	∆%
Receipts	1,800,515	1,563,904	15.1
Outlays	2,426,842	2,408,399	0.8
Deficit	-626,327	-844,495	NA
Individual Income Taxes	873,862	731,282	19.5
Social Insurance	439,239	379,248	15.8
	Receipts	Outlays	Deficit (-), Surplus (+)
$ Billions
2012	2,450	3,537	-1,087
Fiscal Year 2011	2,302	3,598	-1,296
Fiscal Year 2010	2,163	3,456	-1,293
Fiscal Year 2009	2,105	3,518	-1,413
Total 2009-2012	9,020	14,109	-5,089
Average % GDP 2009-2012	15.4	24.0	-8.7
Fiscal Year 2008	2,524	2,983	-459
Fiscal Year 2007	2,568	2,729	-161
Fiscal Year 2006	2,407	2,655	-248
Fiscal Year 2005	2,154	2,472	-318
Total 2005-2008	9,653	10,839	-1,186
Average % GDP 2005-2008	17.9	20.1	-2.2
Debt Held by the Public	Billions of Dollars	Percent of GDP
2005	4,592	36.9
2006	4,829	36.6
2007	5,035	36.3
2008	5,803	40.5
2009	7,545	54.0
2010	9,019	62.9
2011	10,128	67.8
2012	11,280	72.6

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

VB Japan. Table VB-BOJF provides the forecasts of economic activity and inflation in Japan by the majority of members of the Policy Board of the Bank of Japan, which is part of their Outlook for Economic Activity and Prices (http://www.boj.or.jp/en/mopo/outlook/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 with the Markit Composite Output PMI^™ Index increasing from 51.8 in Apr to 54.1 in May, which is a new high of the series (http://www.markiteconomics.com/Survey/PressRelease.mvc/eddc14aea9794212a1b77033f0ffae45). Paul Smith, economist at Markit and author of the report, finds that the survey data suggest continuing growth of the economy of Japan with performance that could exceed the annual rate of 3.5 percent in IQ2013 (http://www.markiteconomics.com/Survey/PressRelease.mvc/eddc14aea9794212a1b77033f0ffae45). The Markit Business Activity Index of Services increased from 51.7 in Apr, to 54.8 in May (http://www.markiteconomics.com/Survey/PressRelease.mvc/eddc14aea9794212a1b77033f0ffae45). Paul Smith, Senior Economist at Markit and author of the report, finds continuing confidence in demand for services that is generating record creation of jobs (http://www.markiteconomics.com/Survey/PressRelease.mvc/eddc14aea9794212a1b77033f0ffae45). Markit/JMMA Purchasing Managers’ Index^™ (PMI™), seasonally adjusted, increased from 51.1 in Apr to 51.5 in May, which is the highest reading in 21 months, indicating modest growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/be0802fd0033425db2b840bfd36d068e). 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 that output increased at the fastest rhythm in 19 months (http://www.markiteconomics.com/Survey/PressRelease.mvc/be0802fd0033425db2b840bfd36d068e).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	May ∆% +0.1 12 months ∆% 0.6 Blog 6/16/13
Consumer Price Index	Apr NSA ∆% 0.3; Apr 12 months NSA ∆% -0.7 Blog 6/2/13
Real GDP Growth	IQ2013 ∆%: 1.0 on IVQ2012;  IQ2013 SAAR 4.1; ∆% from quarter a year earlier: 0.4 % Blog 6/16/13
Employment Report	Apr Unemployed 2.91 million Change in unemployed since last year: minus 240 thousand Unemployment rate: 4.1% Blog 6/2/13
All Industry Indices	Mar month SA ∆% -0.3 12-month NSA ∆% -1.0 Blog 5/26/13
Industrial Production	Apr SA month ∆%: 1.7 12-month NSA ∆% -2.3 Blog 6/2/13
Machine Orders	Total Apr ∆% -14.2 Private ∆%: -12.4 Apr ∆% Excluding Volatile Orders -8.8 Blog 6/16/13
Tertiary Index	Mar month SA ∆% -1.3 Mar 12 months NSA ∆% -0.1 Blog 5/19/13
Wholesale and Retail Sales	Apr 12 months: Total ∆%: -0.2 Wholesale ∆%: -0.2 Retail ∆%: -0.1 Blog 6/2/13
Family Income and Expenditure Survey	Apr 12-month ∆% total nominal consumption 0.8, real 1.5 Blog 6/2/13
Trade Balance	Exports Apr 12 months ∆%: 3.8 Imports Apr 12 months ∆% 9.4 Blog 5/26/13

Links to blog comments in Table JPY:

6/2/13 http://cmpassocregulationblog.blogspot.com/2013/06/mediocre-united-states-economic-growth.html

5/26/13 http://cmpassocregulationblog.blogspot.com/2013/05/united-states-commercial-banks-assets.html

5/19/13 http://cmpassocregulationblog.blogspot.com/2013/05/word-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 1.0 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 1.2 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 2.0 percent in IQ2011 and fell again 0.8 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 3.2 percent in IVQ2008 and 4.1 percent in IQ2009.

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

	IQ	IIQ	IIIQ	IVQ
2013	1.0
2012	1.2	-0.2	-0.9	0.3
2011	-2.0	-0.8	2.7	0.2
2010	1.3	1.0	1.5	-0.3
2009	-4.1	1.7	0.1	1.9
2008	0.6	-1.2	-1.0	-3.2
2007	1.0	0.1	-0.4	0.9
2006	0.4	0.4	-0.1	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 4.1 percent SAAR in IQ2013 driven by contributions of 2.2 percent of personal consumption (PC) and 1.5 percent of net trade. The SAAR of GDP in IVQ2012 was 1.2 percent: 1.1 percentage points from growth of personal consumption expenditures (PC) less 0.3 percentage points of net trade (exports less imports) less 0.2 percentage points of private inventory investment (PINV) plus 0.5 percentage points of government consumption. The SAAR of GDP in IIIQ2011 was revised to a high 11.2 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	4.1	2.2	0.1	1.5	-0.1	0.4
2012
I	4.8	2.0	-0.4	0.3	1.5	1.2
II	-0.6	0.5	1.3	-1.2	-1.3	0.2
III	-3.6	-1.0	-1.0	-2.5	0.5	0.3
IV	1.2	1.1	0.2	-0.3	-0.2	0.5
2011
I	-7.9	-3.7	-0.5	-1.2	-2.5	0.1
II	-3.3	2.2	-0.3	-4.2	-1.5	0.3
III	11.2	3.5	1.4	3.6	2.5	0.2
IV	0.8	1.6	3.7	-2.9	-1.7	0.2
2010
I	5.5	1.2	0.2	2.1	2.4	-0.5
II	4.0	0.1	0.8	0.2	1.8	1.1
III	6.1	3.3	0.9	0.3	1.4	0.2
IV	-1.2	-0.5	-0.7	-0.3	-0.1	0.4
2009
I	-15.2	-2.2	-1.9	-4.4	-7.5	0.8
II	6.9	4.1	-3.3	7.4	-2.1	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	-0.4	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	5.8	0.3
2007
I	3.9	0.8	0.5	1.1	1.2	0.4
II	0.6	0.6	-1.6	0.8	0.1	0.5
III	-1.4	-0.8	-1.7	2.0	-0.7	-0.2
IV	3.5	0.3	0.3	1.4	1.0	0.6

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

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

Long-term economic growth in Japan 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 IQ2012. 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	2.2	-0.6
2012
I	0.3	1.6	-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	4.8	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	-0.2
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 3.9 percent in IIQ2012 is largely caused by the low level in IIQ2011 resulting from the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. GDP increased 0.2 percent in IIIQ2012 relative to a year earlier and 0.4 percent in IVQ2012 relative to a year earlier. GDP grew 0.4 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	0.4
2012	3.4	3.9	0.2	0.4
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 weakened in Apr 2013, declining 14.2 percent seasonally adjusted. Private sector orders decreased 12.4 and 8.8 percent excluding volatile orders. Orders from overseas fell 19.9 percent and manufacturing orders 7.3 percent.

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

2013	Apr 13	Mar 13	Feb 13	Jan 13
Total	-14.2	27.8	0.9	1.1
Private Sector	-12.4	22.3	-2.2	-3.4
Excluding Volatile Orders	-8.8	14.2	4.2	-7.5
Mfg	-7.3	13.3	4.9	-10.0
Non Mfg ex Volatile	-6.0	14.3	0.3	-4.5
Government	-6.3	15.2	15.2	-17.3
From Overseas	-19.9	52.1	1.0	-3.7
Through Agencies	-38.2	35.2	-0.3	-0.6

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 interrupted by decline in Apr 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 1,822,319 million in Apr 2013 are divided between JPY 725,330 million overseas orders, or 39.8 percent of the total, and domestic orders of JPY 1,023,151 million, or 56.1 percent of the total, with orders through agencies of JPY 73,838 million, or 4.1 percent of the total. Orders through agencies are not shown in the table because of the minor value. Twelve-month percentages changes in Apr 2013 are weak with declines of 4.3 percent for total orders, 9.9 percent for domestic orders and 6.2 percent for orders excluding volatile components. Overseas orders rose 6.7 percent in 12 months.

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

	Total	Overseas	Domestic	Private ex Volatile
Value Apr 2013	1,822,319	725,330	1,023,151	659,071
% Total	100.0	39.8	56.1	36.2
Value Apr 2012	1,904,319	679,947	1,135,840	702,262
% Total	100.0	35.7	59.6	36.9
12-month ∆%	-4.3	6.7	-9.9	-6.2
Apr 2013	-4.3	6.7	-9.9	-6.2
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 Apr 2013 were JPY 73,838 million or 4.1 percent of the total and 4.6 percent of the total in Apr 2012, and are not shown in the table. The data are the original numbers without any adjustments and differ from the seasonally adjusted data.

Source: Japan Economic and Social Research Institute, Cabinet Office

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

VC China. China estimates an index of nonmanufacturing purchasing managers on the basis of a sample of 1200 nonmanufacturing enterprises across the country (http://www.stats.gov.cn/english/pressrelease/t20121009_402841094.htm). Table CIPMNM provides this index and components. The index fell from 58.0 in Mar to 55.2 in May but climbed to 56.7 in Jun, which is lower than 58.0 in Mar and 57.3 in Feb but higher than in any other of the months in 2012. In Jul 2012 the index fell marginally to 55.6 and then to 56.3 in Aug and 53.7 in Sep but rebounded to 55.5 in Oct and 55.6 in Nov 2012. Improvement continued with 56.1 in Dec 2012 and 56.2 in Jan 2013, declining marginally to 54.5 in Feb 2013 and 55.6 in Mar 2013. The index fell to 54.5 in Apr 2013 and 54.3 in May 2013.

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

	Total Index	New Orders	Interm. Input Prices	Subs Prices	Exp
May 2013	54.3	50.1	54.4	50.7	62.9
Apr	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 and 54.3 in May 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 increased to 50.8 in May 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 new orders increased to 51.8 in May 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. The index of employment fell to 48.8 in May 2013.

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

	IPM	PI	NOI	INV	EMP	SDEL
May 2013	50.8	53.3	51.8	47.6	48.8	50.8
Apr	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. The index increased to 50.8 in May 2013.

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/b9665c962d7c420095bb66b35eada8a9) is moving at slower pace. The overall Flash China Manufacturing PMI^™ decreased marginally from 50.4 in Apr to 49.6 in May, which is moderately below the contraction frontier of 50.0, while the Flash China Manufacturing Output Index decreased from 51.1 in Apr to 51.0 in May, remaining in moderate expansion territory. Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds that the economy of China is confronting weak internal and external demand, raising doubts on growth in IIQ2013 (http://www.markiteconomics.com/Survey/PressRelease.mvc/b9665c962d7c420095bb66b35eada8a9). 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 51.1 in Apr to 50.9 in May for the seventh consecutive month of expansion (http://www.markiteconomics.com/Survey/PressRelease.mvc/62bd462cd58e42b381bdd4ec852c8efa). Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds that combined manufacturing and services data suggest downward effects on growth and employment in IIQ2013 (http://www.markiteconomics.com/Survey/PressRelease.mvc/62bd462cd58e42b381bdd4ec852c8efa). The HSBC Business Activity index increased from 51.1 in Apr to 51.2 in May at one of the slowest rates in the history of the index (http://www.markiteconomics.com/Survey/PressRelease.mvc/62bd462cd58e42b381bdd4ec852c8efa). Hongbin Ku, Chief Economist, China & Co-Head of Asian Economic Research at HSBC, finds concern with growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/62bd462cd58e42b381bdd4ec852c8efa). The HSBC Purchasing Managers’ Index^™ (PMI^™), compiled by Markit, decreased to 49.2 in May from 50.4 in Apr, indicating moderate contraction in manufacturing for the first time after six consecutive months of improvement (http://www.markiteconomics.com/Survey/PressRelease.mvc/374b1d5a958242508eb6aa9ec226002c). New export orders decreased for the second consecutive month. Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds marginally deteriorating conditions because of weak internal demand (http://www.markiteconomics.com/Survey/PressRelease.mvc/374b1d5a958242508eb6aa9ec226002c). Table CNY provides the country data table for China.

Table CNY, China, Economic Indicators

Price Indexes for Industry	May 12-month ∆%: minus 2.9 May month ∆%: -0.6 Blog 6/16/13
Consumer Price Index	May month ∆%: minus 0.6 May 12 months ∆%: 2.1 Blog 6/16/13
Value Added of Industry	May month ∆%: 0.62 Jan-May 2013/Jan-May 2012 ∆%: 9.4 Blog 6/16/13
GDP Growth Rate	Year IQ2013 ∆%: 7.9 Quarter IQ2013 ∆%: 7.7 Blog 4/21/13
Investment in Fixed Assets	May month ∆%: 1.43 Total Jan-May 2013 ∆%: 20.4 Real estate development: 20.6 Blog 6/16/13
Retail Sales	May month ∆%: 1.17 May 12 month ∆%: 12.9 Jan-May ∆%: 12.5 Blog 6/16/13
Trade Balance	May balance $18.2 billion Exports 12M ∆% 1.0 Imports 12M ∆% -0.3 Cumulative May: $81.42 billion Blog 6/16/13

Links to blog comments in Table CNY:

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-1. Value added in total industry in Jan-May 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, 9.7 percent in Jan-Apr 2013 and 9.7 percent in Jan-May 2013. Light industry grew 8.5 percent in Jan-May 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-May 2013.

Table VC-1, China, Growth Rate of Value Added of Industry ∆%

	Industry	Light Industry	Heavy Industry	State Owned	Joint-Stock
2013
Jan-May	9.4	8.5	9.7	4.9	11.0
12M May	9.2	8.0	9.8	4.4	10.7
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. The growth rate eased to 9.2 percent in May 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-2. 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-May 2013, many segments grew at rates exceeding 10 percent with exception of electricity at 4.0 percent, crude oil at 2.9 percent and cement at 8.9 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 4.0 percent in Jan-May 2013 relative to a year earlier.

Table VC-2, China, Industrial Production Operation ∆%

	Elec- tricity	Pig Iron	Cement	Crude Oil	Non- ferrous Metals	Autos
2013
Jan-May	4.0	10.8	8.9	2.9	10.9	15.4
12 M May	4.1	11.3	8.5	2.4	7.5	15.7
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-3. 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 May 2013. Monthly sales growth remained below 1 percent in all the fourteen months from Jan 2012 to May 2013 with the exception of Mar 2012.

Table VC-3, 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	0.79
Oct	0.79
Nov	0.80
Dec	0.82
Jan 2013	0.59
Feb	0.79
Mar	0.67
Apr	0.87
May	0.62

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

Table VC-4 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-May 2013 investment in fixed assets in China grew 20.4 percent relative to a year earlier and 20.6 percent in real estate development. There was slight deceleration in the final two months of 2011 that continued into Jan-May 2013.

Table VC-4, China, Investment in Fixed Assets ∆% Relative to a Year Earlier

	Total	State	Real Estate Development
Jan-May 2013	20.4	17.7	20.6
Jan-Apr	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. The rate eased to 20.4 percent in Jan-May 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. The rate eased to 20.6 percent in Jan-May 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-5 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-May 2013.

Table VC-5, 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	1.00
May	1.90
Jun	1.71
Jul	1.48
Aug	1.44
Sep	1.64
Oct	1.82
Nov	1.37
Dec	1.59
Jan 2013	1.85
Feb	0.78
Mar	1.90
Apr	1.61
May	1.43

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-6. 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. The rate of retail growth was 12.9 percent in the 12 months ending in May 2013 and 12.6 percent in Jan-May relative to a year earlier.

Table VC-6, China, Total Retail Sales of Consumer Goods ∆%

	12-Month ∆%	Cumulative ∆%/ Cumulative Year Earlier
2013
May	12.9	12.6
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-May 2013.

Table VC-7, 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	1.11
Jun	1.23
Jul	1.03
Aug	1.09
Sep	1.39
Oct	1.15
Nov	1.18
Dec	1.28
Jan 2013	0.19
Feb	0.99
Mar	1.29
Apr	1.25
May	1.17

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

Table VC-8 provides China’s exports, imports, trade balance and percentage changes from Dec 2010 to May 2013. Exports increased 1.0 percent in May 2013 relative to a year earlier while imports fell 0.3 percent with trade surplus of $20.43 billion. Exports increased 14.7 percent in Apr 2013 relative to a year earlier and imports 16.8 percent for trade surplus of $18.16 billion. Exports increased 10.0 percent in Mar 2013 relative to a year earlier and imports increased 14.1 percent for trade deficit of $0.88 billion. Exports increased 18.4 percent in Jan-Mar 2013 relative to a year earlier and imports 8.4 percent for surplus of $43.27 billion. Exports increased 21.8 percent in Feb 2013 relative to a year earlier and imports fell 15.0 percent for trade surplus of $15.25 billion. China’s trade growth was stronger in Jan 2013 with growth of exports of 25.0 percent in 12 months and of imports of 28.8 percent for trade surplus of $29.15 billion. China’s trade growth strengthened in Dec 2012 with growth in 12 months of exports of 14.1 percent and of imports of 6.0 percent. China’s trade growth weakened again in Nov 2012 with growth of exports of 2.9 percent and no change in imports. China’s trade growth rebounded with growth of exports in 12 months of 11.6 percent in Oct 2012 and 9.9 percent in Sep 2012 after 2.7 percent in Aug 2012 and 1.0 percent in Jul 2012 while imports grew 2.4 percent in both Sep and Oct 2012, stagnating in Nov 2012. As a result, the monthly trade surplus increased from $25.2 billion in Jul 2012 to $31.9 billion in Oct 2012, declining to $19.6 billion in Nov 2012 but increasing to $31.67 billion in Dec 2012. China’s trade growth rebounded in Oct 2012 with growth of exports of 11.6 percent in 12 months and 2.4 percent for imports and trade surplus of $31.9 billion. The number that caught attention in financial markets was growth of 1.0 percent in exports in the 12 months ending in Jul 2012. Imports were also weak, growing 4.7 percent in 12 months ending in Jul 2012. Exports increased 11.3 percent in Jun 2012 relative to a year earlier while imports grew 6.3 percent. The rate of growth of exports fell to 4.9 percent in Apr 2012 relative to a year earlier and imports increased 0.3 percent but export growth was 15.3 percent in May and imports increased 12.7 percent. China reversed the large trade deficit of USD 31.48 billion in Feb 2012 with a surplus of $5.35 billion in Mar 2012, $18.42 billion in Apr 2012, $18.7 billion in May 2012, $31.7 billion in Jun 2012, $25.2 billion in Jul 2012, $26.7 billion in Aug 2012, $27.7 billion in Sep 2012, $31.9 billion in Oct 2012 and $19.6 billion in Nov 2012. Exports fell 0.5 percent in the 12 months ending in Jan while imports fell 15.3 percent for a still sizeable trade surplus of $27.3 billion. In Feb, exports increased 18.4 percent while imports jumped 39.6 percent for a sizeable deficit of $31.48 billion. There are distortions from the New Year holidays.

Table VC-8, China, Exports, Imports and Trade Balance USD Billion and ∆%

	Exports USD Billion	∆% Relative Year Earlier	Imports USD Billion	∆% Relative Year Earlier	Balance USD Billion
May 2013	182.77	1.0	162.34	-0.3	20.43
Apr	187.06	14.7	168.90	16.8	18.16
Mar	182.19	10.0	183.07	14.1	-0.88
Feb	139.37	21.8	124.12	-15.2	15.25
Jan	187.37	25.0	158.22	28.8	29.15
Dec 2012	199.23	14.1	167.61	6.0	31.62
Nov	179.38	2.9	159.75	0.0	19.63
Oct	175.57	11.6	143.58	2.4	31.99
Sep	186.35	9.9	158.68	2.4	27.67
Aug	177.97	2.7	151.31	-2.6	26.66
Jul	176.94	1.0	151.79	4.7	25.15
Jun	180.20	11.3	148.48	6.3	31.72
May	181.14	15.3	162.44	12.7	18.70
Apr	163.25	4.9	144.83	0.3	18.42
Mar	165.66	8.9	160.31	5.3	5.35
Feb	114.47	18.4	145.95	39.6	-31.48
Jan	149.94	-0.5	122.66	-15.3	27.28
Dec 2011	174.72	13.4	158.20	11.8	16.52
Nov	174.46	13.8	159.94	22.1	14.53
Oct	157.49	15.9	140.46	28.7	17.03
Sep	169.67	17.1	155.16	20.9	14.51
Aug	173.32	24.5	155.56	30.2	17.76
Jul	175.13	20.4	143.64	22.9	31.48
Jun	161.98	17.9	139.71	19.3	22.27
May	157.16	19.4	144.11	28.4	13.05
Apr	155.69	29.9	144.26	21.8	11.42
Mar	152.20	35.8	152.06	27.3	0.14
Feb	96.74	2.4	104.04	19.4	-7.31
Jan	150.73	37.7	144.27	51.0	6.46
Dec 2010	154.15	17.9	141.07	25.6	13.08

Source: http://english.mofcom.gov.cn/article/statistic/BriefStatistics/

Table VC-2 provides cumulative exports, imports and the trade balance of China together with percentage growth of exports and imports. Exports increased 13.5 percent in Jan-May 2013 relative to a year earlier while imports increased 8.2 percent for cumulative surplus of $81.42 billion. Exports increased 17.3 percent in Jan-Apr 2012 relative to a year earlier while imports increased 10.6 percent for cumulative surplus of $61.27 billion. Exports increased 18.4 percent in Jan-Mar 2013 relative to a year earlier while imports increased 8.4 percent for cumulative surplus of $43.27 billion. Cumulative exports in Jan-Feb 2013 grew 23.6 percent relative to a year earlier and imports 5.1 percent for trade surplus of $44.40 billion. There is strong beginning of 2013 with trade surplus of $29.15 in Jan 2013 and growth of exports of 17.3 percent and imports of 19.6 percent. The trade balance of $231.1 billion in 2012 is stronger than the trade balance of $155.14 billion in 2011. The trade balance in 2011 of $155.14 billion is lower than those from 2008 to 2010. China’s trade balance reached $231.1 billion in Jan-Dec 2012 with cumulative growth of exports of 7.9 percent and 4.3 percent of imports, which is much lower than 20.3 percent for exports and 24.9 percent for imports in 2011 and 31.3 percent for exports and 38.7 percent for imports in 2010. There is a rare cumulative deficit of $4.2 billion in Feb 2012 reversed to a small surplus in Mar 2012 and a higher surplus of $19.3 billion in Apr 2012, increasing to $37.9 billion in May, $68.9 billion in Jun 2012, $94.1 billion in Jul 2012, $120.8 billion in Aug 2012, $148.3 billion in Sep 2012, $180.24 billion in Oct 2012, $199.54 billion in Nov 2012 and $231.1 billion in Dec 2012. More observations are required to detect trends of Chinese trade but available data suggest deceleration that would be expected from the large share of trade with Europe.

Table VC-9, China, Year to Date Exports, Imports and Trade Balance USD Billion and ∆%

	Exports USD Billion	∆% Relative Year Earlier	Imports USD Billion	∆% Relative Year Earlier	Balance USD Billion
May 2013	878.64	13.5	797.22	8.2	81.42
Apr	695.87	17.4	634.88	10.6	60.98
Mar	508.87	18.4	465.80	8.4	43.07
Feb	326.73	23.6	282.58	5.0	44.15
Jan	187.37	25.0	158.22	28.8	29.15
Dec 2012	2048.93	7.9	1817.83	4.3	231.11
Nov	1849.91	7.3	1650.37	4.1	199.54
Oct	1670.90	7.8	1490.67	4.6	180.24
Sep	1495.39	7.4	1347.08	4.8	148.31
Aug	1309.11	7.1	1188.51	5.1	120.61
Jul	1131.24	7.8	1037.14	6.4	94.10
Jun	954.38	9.2	885.46	6.7	68.91
May	774.40	8.7	736.49	6.7	37.92
Apr	593.24	6.9	573.94	5.1	19.3
Mar	430.02	7.6	429.36	6.6	0.66
Feb	264.40	6.9	268.64	7.7	-4.24
Jan	149.94	-0.5	122.66	-15.3	27.28
Dec 2011	1,898.60	20.3	1,743.46	24.9	155.14
Nov	1,724.01	21.1	1585.61	26.4	138.40
Oct	1,549.71	22.0	1,425.68	26.9	124.03
Sep	1,392.27	22.7	1,285.17	26.7	107.10
Aug	1,222.63	23.6	1,129.90	27.5	92.73
Jul	1,049.38	23.4	973.17	26.9	76.21
Jun	874.3	24.0	829.37	27.6	44.93
May	712.37	25.5	689.41	29.4	22.96
Apr	555.30	27.4	545.02	29.6	10.28
Mar	399.64	26.5	400.66	32.6	-1.02
Feb	247.47	21.3	248.36	36.0	-0.89
Jan	150.7	37.7	144.27	51.0	6.46
Dec 2010	1577.93	31.3	1394.83	38.7	183.10

Source: http://english.mofcom.gov.cn/article/statistic/BriefStatistics/

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	1.5
2012*	2.5	11.4	-0.6
2013*			-0.4
2014*			1.2

*EUROSTAT forecast Source: EUROSTAT

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

The Flash Eurozone PMI Composite Output Index of the Markit Flash Eurozone PMI^®, combining activity in manufacturing and services, increased from 46.9 in Apr to 47.7 in May, for sixteen consecutive declines and seventeen drops in twenty months with deceleration of the rate of contraction (http://www.markiteconomics.com/Survey/PressRelease.mvc/e5677351fe634282a0bfa8a3e134b9d9). The reading for May is consistent with the average for IQ2013 when the euro area economy contracted 0.2 percent. Chris Williamson, Chief Economist at Markit, finds that the Markit Flash Eurozone PMI index is consistent with the seventh quarterly contraction of economic across the region (http://www.markiteconomics.com/Survey/PressRelease.mvc/e5677351fe634282a0bfa8a3e134b9d9). The Markit Eurozone PMI^® Composite Output Index, combining services and manufacturing activity with close association with GDP, increased from 46.9 in Apr to 47.7 in May with aggregate output declining during 16 months (http://www.markiteconomics.com/Survey/PressRelease.mvc/f22c0e3f86d7424580bdf50ec8720e90). Chris Williamson, Chief Economist at Markit, finds that the data are consistent GDP falling in IIQ2012 at 0.2 percent (http://www.markiteconomics.com/Survey/PressRelease.mvc/f22c0e3f86d7424580bdf50ec8720e90). The Markit Eurozone Services Business Activity Index increased from 47.0 in Apr to 47.2 in May, indicating contraction (http://www.markiteconomics.com/Survey/PressRelease.mvc/f22c0e3f86d7424580bdf50ec8720e90). The Markit Eurozone Manufacturing PMI^® increased marginally to 48.3 in May from 46.7 in May, which indicates contraction for the twenty-second consecutive month but the slowest rate since Feb 2012 (http://www.markiteconomics.com/Survey/PressRelease.mvc/0df9b459246542d2a1b60332deb37e6a). New orders fell at the slowest rate since Jun 2011 with unchanged export orders and weak internal ordes. Chris Williamson, Chief Economist at Markit, finds the survey data consistent with contraction of GDP at 0.2 percent in IIQ2013 (http://www.markiteconomics.com/Survey/PressRelease.mvc/0df9b459246542d2a1b60332deb37e6a). Table EUR provides the data table for the euro area.

Table EUR, Euro Area Economic Indicators

GDP	IQ2013 ∆% -0.2; IQ2013/IQ2012 ∆% -1.1 Blog 6/9/13
Unemployment	Apr 2013: 12.2% unemployment rate Apr 2013: 19.375 million unemployed Blog 6/2/13
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	Apr month ∆%: 0.4; Apr 12 months ∆%: -0.6 Blog 6/16/13
Retail Sales	Apr month ∆%: -0.5 Mar 12 months ∆%: minus 1.1 Blog 6/9/13
Confidence and Economic Sentiment Indicator	Sentiment 89.4 May 2013 Consumer minus 21.9 Apr 2013 Blog 6/2/13
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:

6/9/13 http://cmpassocregulationblog.blogspot.com/2013/06/twenty-eight-million-unemployed-or.html

6/2/13 http://cmpassocregulationblog.blogspot.com/2013/06/mediocre-united-states-economic-growth.html

5/19/13 http://cmpassocregulationblog.blogspot.com/2013/05/word-inflation-waves-squeeze-of.html

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

Table VD-1 provides monthly industrial production percentage changes for total production and major segments. Total production increased 0.4 percent in Apr 2013 with growth in all segments except decline of 2.7 percent in durable goods and 1.5 percent in energy. All segments increased in Mar 2013 with exception of decline of 0.1 percent in nondurable goods.

Table VD-1, Euro Zone, Industrial Production Month ∆%

	Total	INT	ENE	CG	DUR	NDUR
Apr 2013	0.4	0.0	-1.5	2.7	-2.7	0.7
Mar	0.9	0.2	3.4	1.2	1.7	-0.1
Feb	0.3	-0.1	1.7	0.9	0.7	-1.5
Jan	-0.6	0.0	0.0	-1.8	-1.9	0.0
Dec 2012	0.6	0.2	-1.4	0.9	1.8	2.1
Nov	-0.7	-0.9	-0.4	0.2	-1.3	-1.7

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-2 provides monthly and 12-month percentage changes of industrial production and major industrial categories in the euro zone. Most 12-month percentage changes in Table VD-6 are negative in the 12 months ending in Apr 2013 with exception of growth of 1.6 percent of capital goods and 1.6 percent of nondurable consumer goods. Industrial production increased 0.4 percent in the month of Apr 2013 and fell 0.6 percent in the 12 months ending in Apr 2013.

Table VD-2, Euro Zone, Industrial Production 12-Month ∆%

2013	Apr Month ∆%	Apr 12-Month ∆%
Total	0.4	-0.6
Intermediate Goods	0.0	-2.8
Energy	-1.5	-1.7
Capital Goods	2.7	1.6
Durable Consumer Goods	-2.7	-6.2
Nondurable Consumer Goods	0.7	1.6

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-3. Negative percentage changes moderated from the high rates in Oct-Nov 2012 but are still high. There is only growth of 8.2 percent for energy in the 12 months ending in Mar 2013. Most rates are negative in Apr 2013 with exception of 1.6 percent for capital goods and 1.6 percent for nondurable consumer goods.

Table VD-3, Euro Zone, Industrial Production 12-Month ∆%

	Total	INT	ENE	CG	DUR	NDUR
Apr 2013	-0.6	-2.8	-1.7	1.6	-6.2	1.6
Mar 2013	-1.4	-4.1	8.2	-3.0	-2.0	-2.2
Feb	-3.2	-3.1	-6.8	-3.9	-5.0	0.4
Jan	-2.5	-4.1	-1.1	-3.9	-7.3	2.0
Dec 2012	-2.0	-4.8	-0.3	-1.7	-2.7	-0.4
Nov	-4.0	-5.6	-0.3	-4.4	-6.5	-2.4

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-4 provides industrial production of member countries of the euro zone, the UK and the European Union. Twelve-month percentage changes in Apr 2013 are negative for all countries and regions in Table VD-8 with exception of the Germany, Netherlands, Ireland and Portugal with growth of minus 2.6 percent in the UK. Growth of industry by 2.3 percent in France and 1.2 percent in Germany drove the increase of 0.4 percent in the month of Apr 2013.

Table VD-4, Euro Zone, Industrial Production by Member Countries, ∆%

Apr 2013	Month ∆%	12-Month ∆%
Euro Zone	0.4	-0.6
Germany	1.2	1.2
France	2.3	-0.1
Netherlands	-4.3	0.2
Finland	-5.1	-10.2
Belgium	NA	NA
Portugal	-3.6	1.8
Ireland	3.0	0.4
Italy	-0.3	-4.6
Greece	-0.2	-2.0
Spain	-0.9	-1.8
UK	0.1	-2.6
European Union	0.3	-0.8

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, increased from 49.2 in Apr to 49.9 in May, which is virtually at the contraction frontier of 50.0 (http://www.markiteconomics.com/Survey/PressRelease.mvc/7137bdb920f8427e8ebc20c14407e1ea). New export orders for manufacturing decreased for a third consecutive month. Tim Moore, Senior Economist at Markit and author of the report, finds limited growth impulse in Germany’s manufacturing and services (http://www.markiteconomics.com/Survey/PressRelease.mvc/7137bdb920f8427e8ebc20c14407e1ea). The Markit Germany Composite Output Index of the Markit Germany Services PMI^®, combining manufacturing and services with close association with Germany’s GDP, increased from 49.2 in Apr to 50.2 in May (http://www.markiteconomics.com/Survey/PressRelease.mvc/534dd918be41426f9cbc8ab706af3607). 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/534dd918be41426f9cbc8ab706af3607). The Germany Services Business Activity Index increased from 49.6 in Apr to 49.7 in May (http://www.markiteconomics.com/Survey/PressRelease.mvc/534dd918be41426f9cbc8ab706af3607). The Markit/BME Germany Purchasing Managers’ Index^® (PMI^®), showing close association with Germany’s manufacturing conditions, increased from 48.1 in Apr to 49.4 in May, in very moderate contraction territory below 50.0 (http://www.markiteconomics.com/Survey/PressRelease.mvc/f33b9dcfa04642c781b5b3e9810e06fc). New export orders were unchanged in May with strength in orders from China and the US compensating for weakness in new orders inside the euro area. Tim Moore, Senior Economist at Markit and author of the report, finds improving conditions in German manufacturing with stronger output and new orders (http://www.markiteconomics.com/Survey/PressRelease.mvc/f33b9dcfa04642c781b5b3e9810e06fc).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 5/26/13
Consumer Price Index	May month NSA ∆%: 0.4 May 12-month NSA ∆%: 1.5 Blog 6/16/13
Producer Price Index	Apr month ∆%: -0.2 CSA, -0.2 NSA 12-month NSA ∆%: 0.1 Blog 5/26/13
Industrial Production	MFG Apr month CSA ∆%: 1.5 12-month NSA: 8.9 Blog 6/9/13
Machine Orders	MFG Apr month ∆%: -2.3 Mar 12-month ∆%: 5.6 Blog 6/9/13
Retail Sales	Apr Month ∆% -0.4 12-Month ∆% 1.8 Blog 6/2/13
Employment Report	Unemployment Rate SA Mar 5.4% Blog 6/2/13
Trade Balance	Exports Apr 12-month NSA ∆%: 8.5 Imports Apr 12 months NSA ∆%: 5.2 Exports Apr month CSA ∆%: 1.9; Imports Apr month SA 2.3 Blog 6/9/13

Links to blog comments in Table DE:

6/9/13 http://cmpassocregulationblog.blogspot.com/2013/06/twenty-eight-million-unemployed-or.html

6/2/13 http://cmpassocregulationblog.blogspot.com/2013/06/mediocre-united-states-economic-growth.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 was unchanged from 44.3 in Apr to 44.3 in May (http://www.markiteconomics.com/Survey/PressRelease.mvc/26f7683d6be5424291b20988f0408c51). Jack Kennedy, Senior Economist at Markit and author of the report, finds that the data suggest the index another possible contraction of GDP in IIQ2013 (http://www.markiteconomics.com/Survey/PressRelease.mvc/26f7683d6be5424291b20988f0408c51).

The Markit France Composite Output Index, combining services and manufacturing with close association with French GDP, increased from 44.3 in Apr to 44.6 in May, indicating of private sector activity at the slowest rate of deterioration in 2013 (http://www.markiteconomics.com/Survey/PressRelease.mvc/ee6a106df24542c89bb47f88945390d5). Jack Kennedy, Senior Economist at Markit and author of the France Services PMI^®, finds that composite data for manufacturing and services indicate another quarter of contraction of GDP (http://www.markiteconomics.com/Survey/PressRelease.mvc/ee6a106df24542c89bb47f88945390d5). The Markit France Services Activity index was unchanged from 43.3 in Apr to 44.3 in May (http://www.markiteconomics.com/Survey/PressRelease.mvc/ee6a106df24542c89bb47f88945390d5). The Markit France Manufacturing Purchasing Managers’ Index^® increased to 46.4 in May from 44.4 in Apr, for the highest reading in about a year but remaining deeply below the neutral level of 50.0 (http://www.markiteconomics.com/Survey/PressRelease.mvc/5e6a4fec63424237bab6e6d0f3e8083c). Jack Kennedy, Senior Economist at Markit and author of the France Manufacturing PMI^®, finds slower decline in manufacturing but that the current period of 15 consecutive months of deterioration is the longest since beginning of the survey in 1998 (http://www.markiteconomics.com/Survey/PressRelease.mvc/5e6a4fec63424237bab6e6d0f3e8083c). Table FR provides the country data table for France.

Table FR, France, Economic Indicators

CPI	Apr month ∆% -0.1 12 months ∆%: 0.8 6/16/13
PPI	Apr month ∆%: -0.9 Apr 12 months ∆%: 0.6 Blog 6/2/13
GDP Growth	IQ2013/IQ2012 ∆%: -0.2 IVQ2012/IVQ2011 ∆%: -0.4 Blog 3/31/13 5/19/12
Industrial Production	Apr ∆%: Manufacturing 2.6 12-Month ∆%: Manufacturing minus 0.2 Blog 6/16/13
Consumer Spending	Manufactured Goods Apr ∆%: -0.4 Apr 12-Month Manufactured Goods ∆%: 0.2 Blog 6/2/13
Employment	Unemployment Rate: 10.4% Blog 6/9/13
Trade Balance	Apr Exports ∆%: month 4.1, 12 months 4.1 Apr Imports ∆%: month 3.8, 12 months -0.6 Blog 6/9/13
Confidence Indicators	Historical averages 100 Apr Mfg Business Climate 92 Blog 5/26/13

Links to blog comments in Table FR:

6/9/13 http://cmpassocregulationblog.blogspot.com/2013/06/twenty-eight-million-unemployed-or.html

6/2/13 http://cmpassocregulationblog.blogspot.com/2013/06/mediocre-united-states-economic-growth.html

5/26/13 http://cmpassocregulationblog.blogspot.com/2013/05/united-states-commercial-banks-assets.html

5/19/13 http://cmpassocregulationblog.blogspot.com/2013/05/word-inflation-waves-squeeze-of.html

Table VF-1 provides longer historical perspective of manufacturing in France. Output of manufacturing increased 2.6 percent in Apr 2013 and fell 0.2 percent in the 12 months ending in Apr 2013. Manufacturing fell 0.7 percent in Mar 2013 and 4.4 percent relative to a year earlier. Growth of 1.3 percent in Dec 2012 pulled down the 12-month rate of decline from 6.7 percent in Nov 2012 to 3.8 percent in Dec 2012. Manufacturing in France fell 14.1 percent in Dec 2008 and 4.1 percent in Dec 2009.

Table VF-1, France, Manufacturing, Month and 12-Month ∆%

	Month ∆%	12-Month ∆%
Apr 2013	2.6	-0.2
Mar	-0.7	-4.4
Feb	0.9	-2.3
Jan	-1.4	-5.2
Dec 2012	1.3	-3.8
Nov	-0.9	-6.7
Oct	-1.3	-3.2
Sep	-2.8	-2.2
Aug	1.9	-0.4
Jul	1.5	-2.3
Jun	-0.6	-3.2
May	-0.5	-4.9
Apr	-1.8	-2.7
Mar	1.5	-1.9
Feb	-2.0	-4.7
Jan	0.0	-2.0
Dec 2011	-1.7	-0.1
Nov	2.8	2.3
Oct	-0.2	1.8
Sep	-1.1	1.1
Aug	-0.1	3.5
Jul	0.6	3.3
Jun	-2.3	3.1
May	1.7	4.4
Apr	-1.0	3.6
Mar	-1.4	5.0
Feb	0.8	8.8
Jan	1.9	7.9
Dec 2010	0.6	5.8
Dec 2009		-4.1
Dec 2008		-14.1
Dec 2007		-1.0
Dec 2006		2.7
Dec 2005		0.7
Dec 2004		1.0
Dec 2003		0.1
Dec 2002		-1.0
Dec 2001		-5.5
Dec 2000		4.7

Source:

Institut National de la Statistique et des Études Économique

http://www.insee.fr/en/themes/info-rapide.asp?id=10&date=20130610

Chart VF-1 of the Institut National de la Statistique et des Études Économique provides France’s index of manufacturing, adjusted for working days and seasonal effects, from Jan 1990 to Apr 2013. Growth was robust in the 1990s and in recovery from the 2001 recession. Manufacturing output fell sharply during the global recession followed by recovery and another trend of decline.

Chart VF-1, France, Index of Manufacturing 2010=100, Jan 1990-Apr 2013, Seasonal and Working-Day Adjusted

Source:

Institut National de la Statistique et des Études Économique

http://www.insee.fr/en/themes/info-rapide.asp?id=10&date=20130610

Chart VF-2 of France’s Institut National de la Statistique et des Études Économiques shows indices of manufacturing in France from 2009 to 2013. Manufacturing, which is CZ in Chart VF-2, fell deeply in 2008 and part of 2009. All curves of industrial indices tend to flatten recently with oscillations and declines and marginal improvement followed by renewed decline/stability in the final segment with jump in Mar-Apr 2013.

Chart VF-2, France, Industrial Production Indices 2007-2011

Legend : CZ : Manufacturing - (C1) : Manufacture of food products and beverages - (C3) : Electrical and electronic equipment; machine equipment - (C4) : Manufacture of transport equipment - (C5) : Other manufacturing

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=10&date=20130610

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 IVQ2012 and minus 2.4 percent in IQ2013. 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
2013
IQ	-2.4	-5.2	-2.7	-7.5	-0.2
2012
IVQ	-2.8	-6.7	-4.2	-7.8	1.8
IIIQ	-2.6	-8.1	-4.3	-8.2	2.5
IIQ	-2.5	-7.5	-3.9	-8.3	2.5
IQ	-1.7	-8.9	-3.3	-7.6	2.1
2011
IVQ	-0.5	-6.9	-1.8	-3.3	3.1
IIIQ	0.3	0.1	-0.7	-2.1	5.6
IIQ	0.9	3.1	0.6	-0.6	7.0
IQ	1.3	8.8	0.9	0.6	10.9
2010
IVQ	2.0	15.3	1.1	0.8	13.2
IIIQ	1.8	13.2	1.3	2.4	12.0
IIQ	1.9	13.5	0.8	1.1	12.0
IQ	1.1	7.2	0.8	-2.0	7.3
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/92338

The Markit/ADACI Business Activity Index decreased from 47.0 in Apr to 46.5 in May, indicating contraction of output of Italy’s services sector for 24 consecutive months of decline since Jun 2011 with some respondents experiencing moderately faster rate of contraction than in the first quarter (http://www.markiteconomics.com/Survey/PressRelease.mvc/812d0745b08d42d682b788f614dd7d5b). Phil Smith, economist at Markit and author of the Italy Services PMI^®, finds that the index suggests slower rate of decline of GDP in the second quarter (http://www.markiteconomics.com/Survey/PressRelease.mvc/812d0745b08d42d682b788f614dd7d5b). The Markit/ADACI Purchasing Managers’ Index^® (PMI^®), increased from 45.5 in Apr to 47.3 in May for 22 consecutive months of contraction of Italy’s manufacturing below 50.0 with the May at the highest in four months (http://www.markiteconomics.com/Survey/PressRelease.mvc/c45abc76abab42639cb3813e1c38539e). Phil Smith, economist at Markit and author of the Italian Manufacturing PMI^®, finds that manufacturing has been improving by obtaining foreign orders with internal demand still weak (http://www.markiteconomics.com/Survey/PressRelease.mvc/c45abc76abab42639cb3813e1c38539e). Table IT provides the country data table for Italy.

Table IT, Italy, Economic Indicators

Consumer Price Index	May month ∆%: 0.0 May 12-month ∆%: 1.1 Blog 6/16/13
Producer Price Index	Apr month ∆%: -0.5 Apr 12-month ∆%: -1.1 Blog 6/2/13
GDP Growth	IQ2013/IVQ2012 SA ∆%: minus 0.6 IQ2013/IQ2012 NSA ∆%: minus 2.4 Blog 3/17/13 6/16/13
Labor Report	Apr 2013 Participation rate 63.8% Employment ratio 56.0% Unemployment rate 12.0% Blog 6/2/13
Industrial Production	Apr month ∆%: -0.3 12 months CA ∆%: -4.6 Blog 6/16/13
Retail Sales	Mar month ∆%: -0.3 Mar 12-month ∆%: -3.0 Blog 5/26/13
Business Confidence	Mfg May 88.5, Jan 88.3 Construction May 81.8, Jan 80.4 Blog 6/2/13
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:

6/2/13 http://cmpassocregulationblog.blogspot.com/2013/06/mediocre-united-states-economic-growth.html

5/26/13 http://cmpassocregulationblog.blogspot.com/2013/05/united-states-commercial-banks-assets.html

5/19/13 http://cmpassocregulationblog.blogspot.com/2013/05/word-inflation-waves-squeeze-of.html

3/17/13 http://cmpassocregulationblog.blogspot.com/2013/03/recovery-without-hiring-ten-million.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 0.6 percent in IQ2013 and declined 2.4 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 0.3 percent in IIIQ2012. The pace of decline accelerated to minus 0.9 percent in IVQ2012 and 0.6 percent in IQ2013. GDP contracted cumulatively 4.1 percent in seven consecutive quarterly contractions from IIIQ2011 to IQ2013 at the annual equivalent rate of 2.4 percent. The yearly rate has fallen from 2.0 percent in IVQ2010 to minus 2.4 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	-0.6	-2.4
IVQ2012	-0.9	-2.8
IIIQ2012	-0.3	-2.6
IIQ2012	-0.6	-2.5
IQ2012	-1.0	-1.7
IVQ2011	-0.7	-0.5
IIIQ2011	-0.1	0.3
IIQ2011	0.1	0.9
IQ2011	0.2	1.3
IVQ2010	0.2	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/92338

Table VG-3 provides percentage changes in a quarter relative to the same quarter a year earlier for GDP and value added components. Percentage declines of industry have been sharper from IVQ2011 to IQ2013 than for services.

Table VG-2, Italy, GDP and Valued Added of Components, Chained Volume Measures, Quarter ∆% on Same Quarter Year Earlier

	Agriculture	Industry	Services	VAT and Net Taxes	GDP Market Prices
2013
IQ	0.1	-4.1	-1.4	-5.8	-2.4
% Value Added 2012	2.1	24.1	73.8
2012
IVQ	-6.8	-4.5	-1.6	-5.8	-2.8
IIIQ	-6.2	-3.6	-1.8	-5.0	-2.6
IIQ	-1.5	-4.8	-1.1	-6.1	-2.5
IQ	-3.3	-4.1	-0.4	-4.8	-1.7
2011
IVQ	1.0	-2.0	0.4	-3.7	-0.5
IIIQ	0.3	-0.3	0.8	-1.2	0.3
IIQ	-0.7	1.4	0.9	0.2	0.9
IQ	0.2	3.2	0.7	1.6	1.3
2010
IVQ	-0.2	3.8	1.4	1.8	2.0
IIIQ	-0.9	4.2	1.1	1.5	1.8
IIQ	-0.1	4.8	0.9	2.4	1.9
IQ	0.0	1.3	1.1	0.8	1.1
2009
IVQ	-3.7	-7.3	-2.2	-2.0	-3.4
IIIQ	-1.0	-13.0	-2.2	-4.2	-4.9
IIQ	-4.0	-16.6	-3.1	-5.6	-6.6
IQ	-1.3	-16.7	-3.5	-6.7	-7.0
2008
IVQ	2.2	-8.2	-1.3	-2.1	-3.0
IIIQ	1.0	-3.9	-1.2	-1.7	-1.9
IIQ	2.3	-0.6	0.0	-1.4	-0.2
IQ	0.1	1.0	0.4	-0.1	0.5

Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/92338

Chart VG-1 of the Italian National Institute of Statistics (ISTAT) provides growth of GDP of Italy at market prices. The year on year rate of growth pulled strongly out of the contraction. There is evident trend of deceleration with increasingly sharper contraction and mild moderation in IQ2013.

Chart VG-1, Italy, GDP at Market Prices, ∆% on Same Quarter Year Earlier

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

Italy’s industrial production decreased 0.3 percent in Apr 2013, increasing the decline of the 12-month rate of growth to minus 4.6 percent with calendar adjustment (CA) from 7.5 percent in Dec 2012 with monthly decline of 0.2 percent, as shown in Table VG-1. In the quarter Sep-Nov 2012, industrial production fell cumulative 3.2 percent, at the annual equivalent rate of 12.1 percent. Industrial production recovered with growth of 0.6 percent in May 2012 but growth in the 12 months ending in May 2012 was minus 5.8 percent. Industrial production fell 7.8 percent in the 12 months ending in Nov 2012. There have been negative changes with oscillations in monthly industrial production. Industrial production fell 18.8 percent in 2009 after falling 3.2 percent in 2008.

Table VG-3, Italy, Industrial Production ∆% 

Annual			Index CA	∆% CA	Index	∆%
2011	-	-	101.1	1.1	100.3	0.3
2012	-	-	94.6	-6.4	94.2	-6.1
2012
Quarter	Index SA	Quarter ∆%	Index CA	4Q ∆% CA	Index	12 M ∆%
IIQ2012	95.0	-1.2	98.7	-7.3	98.0	-8.2
IIIQ2012	94.5	-0.5	90.4	-5.1	88.7	-6.1
IVQ2012	92.4	-2.2	92.5	-6.9	92.4	-5.7
2013
IQ2013	91.9	-0.5	92.5	-4.3	91.8	-6.1
2011	Index SA	Month	∆%	12 M ∆%	Index	12 M ∆%
Apr	103.4	0.8	102.7	5.5	101.6	1.5
May	101.6	-1.7	110.3	3.3	111.7	6.6
Jun	101.0	-0.6	106.5	-0.1	106.9	-0.1
Jul	100.4	-0.6	115.0	0.0	110.4	-3.1
Aug	102.4	2.0	64.5	7.1	65.3	7.0
Sep	99.0	-3.3	106.3	-1.8	107.7	-1.8
Oct	98.5	-0.5	107.2	-3.8	102.9	-3.7
Nov	99.0	0.5	103.5	-3.5	103.9	-3.4
Dec	99.1	0.1	87.6	-2.3	87.1	-8.3
2012
Jan	96.5	-2.6	88.9	-4.9	89.2	-2.0
Feb	95.9	-0.6	96.3	-7.2	98.8	-3.6
Mar	96.1	0.2	104.8	-6.9	105.3	-6.9
Apr	94.9	-1.2	93.3	-9.2	89.5	-11.9
May	95.5	0.6	103.9	-5.8	105.2	-5.8
Jun	94.5	-1.0	99.0	-7.0	99.4	-7.0
Jul	94.6	0.1	108.4	-5.7	107.4	-2.7
Aug	95.0	0.4	61.3	-5.0	62.1	-4.9
Sep	94.0	-1.1	101.4	-4.6	96.5	-10.4
Oct	93.1	-1.0	101.0	-5.8	103.2	0.3
Nov	92.1	-1.1	95.4	-7.8	95.8	-7.8
Dec	91.9	-0.2	81.0	-7.5	78.1	-10.3
2013
Jan	92.7	0.9	85.9	-3.4	89.0	-0.2
Feb	91.9	-0.9	92.4	-4.0	91.2	-7.7
Mar	91.1	-0.9	99.2	-5.3	95.1	-9.7
Apr	90.8	-0.3	89.0	-4.6	89.4	-0.1

SA: Seasonally Adjusted; CA: Calendar Adjusted; M: Month; Q: Quarter; 4Q: Four Quarter

Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/92307

There is worsening trend of Italy’s industrial production in Chart VG-1 after Aug 2011, sharply deteriorating after Dec 2011 into 2012 with marginal recovery in May 2012 and further drops in Jun-Jul 2012 followed by marginal improvement in Aug and decline in Sep-Nov 2012 deeper in negative territory with marginal improvement in Jan 2013 followed by declining trend. There is marginal improvement in Apr 2013.

Chart VG-2, Italy, Industrial Production, 12-Month Percentage Changes

Source: Istituto Nazionale di Statistica

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

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 Statistics http://www.ons.gov.uk/ons/rel/naa2/second-estimate-of-gdp/q1-2013/index.html

The Business Activity Index of the Markit/CIPS UK Services PMI^® increased from 52.9 in Apr to 54.9 in May, indicating increase in activity in every month since the beginning of 2013 and at the fastest rate since Mar 2012 (http://www.markiteconomics.com/Survey/PressRelease.mvc/9fbd7a9c2e7042f4b2b9eb9c479673c8). Chris Williamson, Chief Economist at Markit, finds continuing improvement in the UK’s economy that depending on Jun could result in growth of GDP of 0.5 percent in IIQ2013 (http://www.markiteconomics.com/Survey/PressRelease.mvc/9fbd7a9c2e7042f4b2b9eb9c479673c8). The Markit/CIPS UK Manufacturing Purchasing Managers’ Index^® (PMI^®) increased from 50.2 in Apr to 51.3 in May, which is the highest reading since Mar 2012 (http://www.markiteconomics.com/Survey/PressRelease.mvc/ff4aa4ed5e41429c86b62108fe19555d). Rob Dobson, Senior Economist at Markit that compiles the Markit/CIPS Manufacturing PMI^®, finds manufacturing improving throughout all segments with the impulse originating in the internal market but increases in demand from Asia, North America and some countries in the euro area such as Germany (http://www.markiteconomics.com/Survey/PressRelease.mvc/ff4aa4ed5e41429c86b62108fe19555d). Table UK provides the economic indicators for the United Kingdom.

Table UK, UK Economic Indicators

CPI	Apr month ∆%: 0.2 Apr 12-month ∆%: 2.4 Blog 5/26/13
Output/Input Prices	Output Prices: Apr 12-month NSA ∆%: 1.1; excluding food, petroleum ∆%: 0.8 Input Prices: Apr 12-month NSA ∆%: -0.1 Excluding ∆%: 1.1 Blog 5/26/13
GDP Growth	IQ2013 prior quarter ∆% 0.3; year earlier same quarter ∆%: 0.6 Blog 3/31/13 4/28/13 5/26/13
Industrial Production	Apr 2013/Apr 2012 ∆%: Production Industries minus 0.6; Manufacturing minus 0.5 Blog 5/12/13
Retail Sales	Mar month ∆%: -0.7 Mar 12-month ∆%: -0.5 Blog 4/28/13
Labor Market	Feb-Apr Unemployment Rate: 7.8%; Claimant Count 4.5%; Earnings Growth 1.3% Blog 6/16/13
Trade Balance	Balance Apr minus ₤2579 million Exports Apr ∆%: -1.3; Feb-Apr ∆%: 0.3 Imports Apr ∆%: -2.7 Feb-Apr ∆%: -0.9 Blog 6/9/13

Links to blog comments in Table UK:

6/9/13 http://cmpassocregulationblog.blogspot.com/2013/06/twenty-eight-million-unemployed-or.html

5/26/13 http://cmpassocregulationblog.blogspot.com/2013/05/united-states-commercial-banks-assets.html

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

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/sum-may13-labour.html 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-gdp-update/index.html

Table VH-2 of the UK Office for national Statistics (http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2013-q1--may-gdp-update/index.html 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-2, 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 +	GDP, 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

Source: UK Office for National Statistics

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

Labor market statistics of the UK for the quarter Jan-Mar 2013 are provided in Table VH-3. The unemployment rate decreased to 7.8 percent and the number unemployed decreased 88,000 in the year, reaching 2.511 million. The employment rate is 71.5 percent. Earnings growth including bonuses was 1.3 percent over the earlier year. The claimant count or those receiving unemployment benefits stands at 4.5 percent, unchanged on the month and down 0.3 percentage points on the year.

Table VH-3, UK, Labor Market Statistics

	Quarter Feb-Apr 2013
Unemployment Rate	7.8% unchanged on quarter and down 0.4 from year earlier
Number Unemployed	(1) Down 5,000 on quarter and down 88,000 from year earlier to reach 2.511 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 659,000 (291,000 in full-time education) down 13,000 on quarter; unemployment rate 18.7% -0.1 % Points
Number Unemployed > one and two years	(1) Number unemployed over one year: 898,000, up 11,000 on quarter (2) Number unemployed over two years: 458,000, up 7,000 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 0.5 on year (2) Economically inactive 16-64 years up 40,000 on quarter and down 199,000 on year to 8.994 million
Employment Rate	71.5%, down 0.1 on quarter, up 0.7 % points on year
Number Employed	(1) Up 24,000 on quarter, +432,000 on year to 29.756 million                              (2) Number of employees up 6,000 on quarter to 25.29 million (3) Self-employed rose 21,000 on quarter to 4.20 million (4) Full-time 21.69 million, up 15,000 on quarter, up 60,000 on year
Earnings Growth Rates Year on Year	(1) Total +1.3% (including bonuses) over year earlier; regular 0.9%; private sector 1.3% on year earlier, public sector rose 1.2% on year earlier   (2) Regular private 0.9 % (excluding bonuses); regular public 1.2% 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: 1.51 million; down 8,600 in month, down 87,600 on year earlier (2) Claimant count 4.5%, unchanged on month and down 0.3 % 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/june-2013/index.html

Table VH-4 provides indicators of the labor force survey of the UK for Feb-Apr 2013 and earlier quarters. There has been improvement in UK labor markets with the rate of unemployment decreasing from 8.1 percent in Feb-Apr 2012 to 7.8 percent in Feb-Apr 2013.

Table VH-4, UK, Labor Force Survey Indicators

	LFHP	EMP	PART	UNE	RATE
Feb-Apr 2013	40,237	29,756	71.5	2,511	7.8
Nov-Jan 2013	40,220	29,732	71.5	2,516	7.8
Aug-Oct 2012	40,204	29,601	71.2	2,510	7.8
May-Jul 2012	40,187	29,560	71.2	2,592	8.1
Feb-Apr 2012	40,183	29,324	70.7	2,599	8.1
Feb-Apr 2011	40,120	29,228	70.6	2,436	7.7

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/june-2013/index.html

The UK Office for National Statistics provides the output of production industries with revisions. Table VH-5 incorporates the revisions released in Dec, 2011(http://www.ons.gov.uk/ons/rel/iop/index-of-production/november-2012/index.html) and the latest available data for Apr 2013. Manufacturing accounts for 67.0 percent of the production industries of the UK and decreased 0.5 percent in the 12 months ending in Apr 2013. Capital goods industries grew 4.7 percent in the 12 months ending in Apr 2013 and had been growing at very high rates during the current cyclical recovery but falling from the unsustainable high of 12.0 percent in the 12 months ending in Feb 2011. Mining and quarrying fell 3.8 percent in the 12 months ending in Apr 2013. The 12-month rates of growth of the entire index of production industries registered declines for all 12 months from Apr 2011 to Apr 2013. With exception of most months for capital goods and Sep to Dec 2012 for consumer durables, 12-month percentage changes of all segments are mostly negative from Jan to Dec 2012. Energy and mining have been drivers of decline. The upper part of Table VH-1 provides rates of change of yearly values. Manufacturing output fell 9.7 percent in 2009 after falling 2.5 percent in 2008 but grew at 3.8 percent in the initial phase of the recovery in 2010 and 2.2 percent in 2011 but fell 1.5 percent in 2012.

Table VH-5, UK, Output of the Production Industries, Chained Volume Indices of Gross Value Added, 12-Month ∆%

Year	PROD IND	MNG	MFG	CON DUR	CON NDUR	CAP	ENGY
2008	-2.8	-6.2	-2.5	-5.6	-1.6	-3.0	-3.1
2009	-9.1	-9.0	-9.7	-6.7	-0.8	-10.2	-6.6
2010	2.1	-4.3	3.8	-4.1	-0.5	10.2	-3.0
2011	-0.6	-14.3	2.2	1.4	0.6	6.8	-10.2
2012	-2.4	-10.7	-1.5	-2.9	-3.7	2.3	-6.2

	Month	PROD IND	MNG	MFG	CON DUR	CON NDUR	CAP	ENGY
2011	Feb	2.1	-11.3	5.2	1.3	0.8	12.0	-7.1
	Mar	0.3	-15.8	3.7	2.7	0.3	10.3	-10.3
	Apr	-0.8	-14.4	2.7	1.3	3.9	5.5	-11.1
	May	-1.0	-20.4	3.4	2.2	3.1	6.0	-13.0
	Jun	-0.1	-15.4	3.0	8.0	1.2	7.6	-9.6
	Jul	-0.8	-15.8	2.0	3.0	3.0	4.3	-10.3
	Aug	-1.4	-16.0	0.7	-0.2	0.2	4.5	-10.0
	Sep	-1.6	-17.1	0.7	-1.2	-1.6	6.9	-11.5
	Oct	-2.3	-12.9	-0.6	-1.5	-2.0	4.6	-11.0
	Nov	-2.8	-13.2	-1.0	0.9	-1.3	4.8	-11.3
	Dec	-2.5	-14.7	0.9	-3.5	-0.3	6.4	-14.5
2012	Jan	-3.5	-20.0	-0.2	-5.7	0.8	3.4	-14.2
	Feb	-2.1	-8.7	-1.7	-6.6	-0.4	-0.8	-4.0
	Mar	-2.6	-9.0	-1.2	-6.7	-1.5	0.9	-8.4
	Apr	-2.0	-13.7	-1.4	-2.6	-5.2	3.1	-5.6
	May	-1.3	-8.1	-1.0	-4.3	-5.0	3.3	-3.4
	Jun	-3.9	-6.0	-3.9	-9.1	-5.8	1.0	-4.9
	Jul	-0.8	-1.7	-0.8	-2.8	-4.5	5.1	-2.3
	Aug	-1.0	0.8	-1.5	-3.0	-4.4	2.6	-0.8
	Sep	-3.2	-17.2	-1.5	1.8	-2.1	1.2	-10.3
	Oct	-3.1	-21.0	-1.7	4.7	-4.7	2.1	-9.3
	Nov	-2.8	-13.6	-2.1	-0.3	-5.6	1.7	-6.7
	Dec	-2.1	-8.7	-1.6	0.7	-6.2	3.9	-4.3
2013	Jan	-3.1	-7.5	-3.4	-0.8	-5.3	1.9	-3.9
	Feb	-2.5	-8.8	-1.6	-3.3	-4.3	4.3	-7.7
	Mar	-1.4	-9.0	-1.4	1.3	-4.0	3.3	-2.1
	Apr	-0.6	-3.8	-0.5	-2.0	0.6	4.7	-3.0

Notes: PROD IND: Production Industries; MNG: Mining; MFG: Manufacturing; ENGY: Energy; CON DUR: Consumer Durables; CONS NDUR: Consumer Nondurables; CAP: Capital Goods

Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/iop/index-of-production/april-2013/index.html

Percentage changes in the production industries and major components in a month relative to the prior month are shown in Table VH-6. Many segments increased in Apr 2013 with exception of mining and quarrying. All segments fell in Jan 2013 with exception of manufacturing and consumer durables and all segments increased in Mar 2013 with exception of mining and quarrying. Capital goods industries fell 3.3 percent in Jan 2013 and increased 1.9 percent in Mar followed by 0.3 percent in Apr 2013 while manufacturing fell 1.9 percent in Jan but increased 1.1 percent in Mar. Performance was stronger with growth of manufacturing of 1.5 percent and capital goods of 2.5 percent in Dec 2012. Fluctuations of monthly production are quite wide.

Table VH-6, UK, Output of the Production Industries, Chained Volume Indices of Gross Value Added, Latest Month on Previous Month ∆%

		PROD IND	MNG	MFG	CON DUR	CON NDUR	CAP	ENGY
2011	Feb	-1.2	-9.3	0.3	-0.6	0.3	2.5	-6.3
	Mar	0.1	-1.4	0.4	1.0	0.9	1.1	-0.6
	Apr	-1.2	0.5	-0.9	-2.2	0.9	-3.1	-1.9
	May	0.4	-5.2	1.0	1.0	0.1	2.1	-1.2
	Jun	0.2	-0.1	-	1.8	-0.3	0.8	0.5
	Jul	-0.3	0.6	-0.3	-2.2	0.3	-0.8	-0.2
	Aug	-0.3	-0.2	-0.5	-1.9	-0.4	-0.1	-0.2
	Sep	-	-0.8	0.1	-3.6	-2.0	2.0	-0.9
	Oct	-1.0	0.9	-1.1	-0.8	-	-1.3	-1.1
	Nov	-0.2	-1.3	-	1.8	-0.3	1.3	-0.4
	Dec	0.4	-3.6	1.1	-0.9	1.4	0.4	-1.8
2012	Jan	-0.3	-1.7	-0.2	0.8	-	-1.4	-1.0
	Feb	0.2	3.4	-1.2	-1.5	-1.0	-1.7	4.9
	Mar	-0.4	-1.7	0.9	0.8	-0.2	2.9	-5.3
	Apr	-0.7	-4.6	-1.1	2.1	-3.0	-1.0	1.1
	May	1.2	0.9	1.4	-0.7	0.4	2.3	1.2
	Jun	-2.4	2.2	-3.0	-3.3	-1.1	-1.5	-1.0
	Jul	2.9	5.2	3.0	4.6	1.7	3.2	2.5
	Aug	-0.5	2.4	-1.2	-2.1	-0.3	-2.4	1.4
	Sep	-2.3	-18.5	0.1	1.2	0.4	0.5	-10.3
	Oct	-0.8	-3.8	-1.2	2.0	-2.8	-0.4	-
	Nov	0.1	7.9	-0.4	-3.1	-1.2	0.9	2.4
	Dec	1.1	1.9	1.5	0.2	0.7	2.5	0.7
2013	Jan	-1.4	-0.5	-1.9	-0.7	1.0	-3.3	-0.6
	Feb	0.9	2.0	0.7	-4.0	0.1	0.6	0.7
	Mar	0.7	-2.0	1.1	5.7	0.2	1.9	0.5
	Apr	0.1	0.9	-0.2	-1.3	1.6	0.3	0.2

Notes: PROD IND: Production Industries; MNG: Mining; MFG: Manufacturing; ENGY: Energy; CON DUR: Consumer Durables; CONS NDUR: Consumer Nondurables; CAP: Capital Goods

Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/iop/index-of-production/april-2013/index.html

Weights of components of the production index and contributions by components to the monthly and 12-month percentage changes of volume are provided by the UK Office for National Statistics and shown in Table VH-7. The 12-month rate of output of the production industries of minus 0.6 percent was driven by negative contribution of 0.43 percentage points by mining and quarrying with the subcomponent of oil and gas deducting 0.78 percentage points. The second highest source of decline is 0.35 percentage points of manufacturing. The contribution of manufacturing is strong because of its share of 67.0 percent in the production index with growth of minus 0.5 percent in 12 months. The contributions do not add exactly because of rounding. Manufacturing decreased 0.2 percent in Apr 2013, deducting 0.14 percentage points. Mining increased 0.9 percent in Apr 2013, adding 0.09 percentage points. Decrease of electricity by 0.2 percent in Apr deducted 0.02 percentage points.

Table VH-7, UK, Weights of Components, Volume 12-Month and Month ∆% and Percentage Point Contributions of Production Industries by Components

	Weight %	Volume 12-Month ∆% Ending in Apr 2013	% Point Contrib.	Volume Month ∆% Apr 2013	% Point Contrib.
PROD IND	100.0	-0.6	-0.6	0.1	0.1
MNG	15.4	-3.8	-0.43	0.9	0.09
MNG 06	12.6	-9.4	-0.78	0.6	0.04
MFG	67.0	-0.5	-0.35	-0.2	-0.14
ELEC	9.6	1.8	0.18	-0.2	-0.02
WATER & SEW	8.0	-0.4	-0.03	1.5	0.12

Notes: Cont: Contribution; PROD IND: Index of Production; MNG: Mining and Quarrying (of which 14.4 percent of the total weight in oil and gas extraction); MNG 06: Subdivision of Mining including oil and gas extraction; MFG: Manufacturing; ELEC: Electricity, gas, steam and air conditioning; WATER & SEW: water supply, sewerage and waste management

Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/iop/index-of-production/april-2013/index.html

Table VH-8 provides the breakdown of manufacturing 12-month and monthly growth and percentage contributions. Several negative contributions to 12-month growth were by: chemical and chemicals products (CE) deducted 0.39 percentage points with growth in 12 months of minus 6.4 percent; rubber and plastic products (CG) deducted 0.29 percentage points with growth in 12 months of minus 6.4 percent; and manufacture of food products, beverages and tobacco (CA) deducted 0.24 percentage points with 12-month growth of minus 1.9 percent. The highest positive contribution was 0.44 percentage points by transport equipment (CL) with growth of 7.4 percent. Electrical products (CJ) deducted 0.22 percentage points with growth of minus 8.5 percent in 12 months.

Table VH-8, UK, Growth Rates of Manufacturing and Percentage Point Contributions to the Index of Production

Sub-sector	Summary Description	% of production	Month on same month a year ago growth (%)	Contribution to production (% points)
CA	Food, beverages and tobacco	11.9	-1.9	-0.24
CB	Textiles and leather products	2.0	-6.1	-0.13
CC	Wood, paper and printing	5.5	-0.2	-0.01
CD	Coke and petroleum	0.8	-7.8	-0.06
CE	Chemical Products	6.1	-6.4	-0.39
CF	Pharmaceutical Products	6.1	7.0	0.32
CG	Rubber and plastic products	4.7	-6.4	-0.29
CH	Metal products	8.6	1.0	0.10
CI	Computer, electronic & optical	4.3	-1.5	-0.06
CJ	Electrical equipment	2.1	-8.5	-0.22
CK	Machinery and equipment	4.8	-2.3	-0.14
CL	Transport equipment	5.7	5.5	0.44
CM	Other manufacturing & repair	4.5	7.4	0.33

Sub-sector	Summary Description	% of production	Month on previous month growth (%)	Contribution to production (% points)
CA	Food, beverages and tobacco	11.9	-1.0	-0.13
CB	Textiles and leather products	2.0	-1.2	-0.02
CC	Wood, paper and printing	5.5	-3.2	-0.17
CD	Coke and petroleum	0.8	2.2	0.02
CE	Chemical Products	6.1	-0.4	-0.03
CF	Pharmaceutical Products	6.1	13.8	0.60
CG	Rubber and plastic products	4.7	-0.3	-0.01
CH	Metal products	8.6	-1.4	-0.14
CI	Computer, electronic & optical	4.3	-2.4	-0.10
CJ	Electrical equipment	2.1	-2.3	-0.05
CK	Machinery and equipment	4.8	-0.2	-0.01
CL	Transport equipment	5.7	-2.0	-0.18
CM	Other manufacturing & repair	4.5	1.8	0.09

Notes: Cont: Contribution; CA Manufacture of food products, beverages and tobacco; CB Textiles, wearing apparel and le ather products; CC Wood and paper products and printing; CD Coke and refined petroleum products; CE Chemicals and chemical products; CF Basic pharmaceutical products and preparations; CG Rubber and plastic products and nonmetallic mineral products; CH Basic metals and metal products; CI Computer, electronic and optical products; CJ Electrical equipment; CK Machinery and equipment not elsewhere classified; CL Transport equipment; CM Other manufacturing and repair.

Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/iop/index-of-production/april-2013/index.html

© Carlos M. Pelaez, 2009, 2010, 2011, 2012, 2013