Recovery without Hiring, Ten Million Fewer Full-time Jobs, Youth and Middle Age Unemployment, Youth Desisting from Job Searches, Risks of Steepening Yield Curve and Peaking Valuations of Risk Financial Assets, World Economic Slowdown and Global Recession Risk: Part III

 

Recovery without Hiring, Ten Million Fewer Full-time Jobs, Youth and Middle Age Unemployment, Youth Desisting from Job Searches, Risks of Steepening Yield Curve and 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-Age Unemployment

II Collapse of United States Dynamism of Income Growth and Employment Creation

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 IMF provides an update of the macroeconomic forecast of the world (http://www.imf.org/external/pubs/ft/weo/2013/update/02/). The data illustrate the concept often repeated of “two-speed recovery” of the world economy from the global recession that affected the US economy from IVQ2007 (Dec) to IIQ2009 (Jun) (http://www.nber.org/cycles.html). A new fact is slowing growth in emerging and developing economies. The IMF has lowered its forecast of the world economy to 3.1 percent in 2013 but accelerating to 3.8 percent in 2014 with the unmodified earlier forecasts of 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, 1.2 percent in 2013 and 2.1 percent in 2014 and 2.1 on average from 2013 to 2016 in contrast with 3.9 percent for the world as a whole. While the world would grow 16.8 percent in the four years from 2013 to 2016, the G7 as a whole would grow 8.6 percent. The difference in dollars of 2012 is rather high: growing by 16.8 percent would add $12.0 trillion of output to the world economy, or roughly, two times the output of the economy of Japan of $5,964 but growing by 8.6 percent would add $6.2 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 24.5 percent or at the average yearly rate of 5.6 percent, contributing $6.7 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.

The IMF explains the major factors of the change in forecast (http://www.imf.org/external/pubs/ft/weo/2013/update/02/):

“Global growth is projected to remain subdued at slightly above 3 percent in 2013, the same as in 2012. This is less than forecast in the April 2013 World Economic Outlook (WEO), driven to a large extent by appreciably weaker domestic demand and slower growth in several key emerging market economies, as well as a more protracted recession in the euro area. Downside risks to global growth prospects still dominate: while old risks remain, new risks have emerged, including the possibility of a longer growth slowdown in emerging market economies, especially given risks of lower potential growth, slowing credit, and possibly tighter financial conditions if the anticipated unwinding of monetary policy stimulus in the United States leads to sustained capital flow reversals. Stronger global growth will require additional policy action. Specifically, major advanced economies should maintain a supportive macroeconomic policy mix, combined with credible plans for reaching medium-term debt sustainability and reforms to restore balance sheets and credit channels. Many emerging market and developing economies face a tradeoff between macroeconomic policies to support weak activity and those to contain capital outflows. Macroprudential and structural reforms can help make this tradeoff less stark.”

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	3.1	3.8	4.4	4.5
G7	33,932	1.2	2.1	2.5	2.5
Canada	1,819	1.7	2.2	2.5	2.4
France	2,609	-0.2	0.8	1.5	1.7
DE	3,401	0.3	1.3	1.3	1.3
Italy	2,014	-1.8	0.7	1.2	1.4
Japan	5,964	2.0	1.2	1.1	1.2
UK	2,441	0.9	1.5	1.8	1.9
US	15,685	1.7	2.7	3.6	3.4
Euro Area	12,198	-0.3	1.1	1.4	1.6
DE	3,401	0.3	1.3	1.3	1.3
France	2,609	-0.2	0.8	1.5	1.7
Italy	2,014	-1.8	0.7	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	5.0	5.4	6.0	6.1
Brazil	2,396	2.5	3.2	4.1	4.2
Russia	2,022	2.5	3.3	3.7	3.6
India	1,825	5.6	6.3	6.6	6.9
China	8,227	7.8	7.7	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 http://www.imf.org/external/pubs/ft/weo/2013/update/02/

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 V-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 IIQ2013 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 0.3 percent in IIQ2012 at the seasonally adjusted annual rate (SAAR) of minus 1.2 percent, which is much lower than 5.0 percent in IQ2012. Growth of 3.8 percent in IIQ2012 in Japan relative to IIQ2011 has effects of the low level of output because of Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Japan’s GDP contracted 0.9 percent in IIIQ2012 at the SAAR of minus 3.5 percent and increased 0.3 percent relative to a year earlier. Japan’s GDP grew 0.3 percent in IVQ2012 at the SAAR of 1.1 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 0.3 percent relative to a year earlier. Japan’s GDP increased 0.9 percent in IIQ2013 at the SAAR of 3.8 percent and increased 1.2 percent relative to a year earlier. China grew at 2.1 percent in IIQ2012, which annualizes to 8.7 percent and 7.6 percent relative to a year earlier. China grew at 2.0 percent in IIIQ2012, which annualizes at 8.2 percent and 7.4 percent relative to a year earlier. In IVQ2012, China grew at 1.9 percent, which annualizes at 7.8 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. In IIQ2013, China grew at 1.7 percent, which annualizes at 7.0 percent and 7.5 percent relative to a year earlier. There is decennial change in leadership in China (http://www.xinhuanet.com/english/special/18cpcnc/index.htm). Growth rates of GDP of China in a quarter relative to the same quarter a year earlier have been declining from 2011 to 2013. GDP fell 0.1 percent in the euro area in IQ2012 and decreased 0.2 in IQ2012 relative to a year earlier. Euro area GDP contracted 0.3 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 0.5 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 1.0 percent relative to a year earlier. The GDP of the euro area increased 0.3 percent in IIQ2013 and fell 0.5 percent relative to a year earlier. Germany’s GDP increased 0.7 percent in IQ2012 and 1.8 percent relative to a year earlier. In IIQ2012, Germany’s GDP decreased 0.1 percent and increased 0.6 percent relative to a year earlier but 1.1 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 0.5 percent in IVQ2012 and increased 0.0 percent relative to a year earlier. In IQ2013, Germany’s GDP increased 0.0 percent and fell 1.6 percent relative to a year earlier. In IIQ2013, Germany’s GDP increased 0.7 percent and 0.9 percent relative to a year earlier. Growth of US GDP in IQ2012 was 0.9 percent, at SAAR of 3.7 percent and higher by 3.3 percent relative to IQ2011. US GDP increased 0.3 percent in IIQ2012, 1.2 percent at SAAR and 2.8 percent relative to a year earlier. In IIIQ2012, GDP grew 0.7 percent, 2.8 percent at SAAR and 3.1 percent relative to IIIQ2011. In IVQ2012, GDP grew 0.0 percent, 0.1 percent at SAAR and 2.0 percent relative to IVQ2011. In IQ2013, US GDP grew at 1.1 percent SAAR, 0.3 percent relative to the prior quarter and 1.3 percent relative to the same quarter in 2013. In IIQ2013, US GDP grew at 2.5 percent in SAAR, 0.6 percent relative to the prior quarter and 1.6 percent relative to IIQ2012 (http://cmpassocregulationblog.blogspot.com/2013/09/increasing-interest-rate-risk.html and earlier http://cmpassocregulationblog.blogspot.com/2013/08/risks-of-steepening-yield-curve-and.html) with weak hiring (http://cmpassocregulationblog.blogspot.com/2013/08/recovery-without-hiring-loss-of-full.html and earlier http://cmpassocregulationblog.blogspot.com/2013/07/recovery-without-hiring-tapering.htm). In IQ2012, UK GDP changed 0.0 percent, increasing 0.6 percent relative to a year earlier. UK GDP fell 0.5 percent in IIQ2012 and changed 0.0 percent relative to a year earlier. UK GDP increased 0.7 percent in IIIQ2012 and increased 0.1 percent relative to a year earlier. UK GDP fell 0.2 percent in IVQ2012 relative to IIIQ2012 and changed 0.0 percent relative to a year earlier. UK GDP increased 0.3 percent in IQ2013 and 0.3 percent relative to a year earlier. UK GDP increased 0.7 percent in IIQ2013 and 1.5 percent relative to a year earlier. Italy has experienced decline of GDP in eight consecutive quarters from IIIQ2011 to IIQ2013. 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 2.4 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 2.4 percent relative to a year earlier. Italy’s GDP fell 0.3 percent in IIQ2013 and 2.1 percent relative to a year earlier. France’s GDP changed 0.0 percent in IQ2012 and increased 0.4 percent relative to a year earlier. France’s GDP decreased 0.3 percent in IIQ2012 and increased 0.1 percent relative to a year earlier. In IIIQ2012, France’s GDP increased 0.2 percent and increased 0.0 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 0.5 percent relative to a year earlier. The GDP of France increased 0.5 percent in IIQ2013 and 0.3 percent relative to a year earlier.

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

	IQ2012/IVQ2011	IQ2012/IQ2011
United States	QOQ: 0.9        SAAR: 3.7	3.3
Japan	QOQ: 1.2 SAAR: 5.0	3.4
China	1.5	8.1
Euro Area	-0.1	-0.2
Germany	0.7	1.8
France	0.0	0.4
Italy	-1.0	-1.7
United Kingdom	0.0	0.6
	IIQ2012/IQ2012	IIQ2012/IIQ2011
United States	QOQ: 0.3         SAAR: 1.2	2.8
Japan	QOQ: -0.3 SAAR: -1.2	3.8
China	2.1	7.6
Euro Area	-0.3	-0.5
Germany	-0.1	0.6 1.1 CA
France	-0.3	0.1
Italy	-0.6	-2.4
United Kingdom	-0.5	0.0
	IIIQ2012/ IIQ2012	IIIQ2012/ IIIQ2011
United States	QOQ: 0.7  SAAR: 2.8	3.1
Japan	QOQ: –0.9 SAAR: –3.5	0.3
China	2.0	7.4
Euro Area	-0.1	-0.7
Germany	0.2	0.4
France	0.2	0.0
Italy	-0.3	-2.6
United Kingdom	0.7	0.1
	IVQ2012/IIIQ2012	IVQ2012/IVQ2011
United States	QOQ: 0.0 SAAR: 0.1	2.0
Japan	QOQ: 0.3 SAAR: 1.1	0.4
China	1.9	7.9
Euro Area	-0.5	-1.0
Germany	-0.5	0.0
France	-0.2	-0.3
Italy	-0.9	-2.8
United Kingdom	-0.2	0.0
	IQ2013/IVQ2012	IQ2013/IQ2012
United States	QOQ: 0.3 SAAR: 1.1	1.3
Japan	QOQ: 1.0 SAAR: 4.1	0.3
China	1.6	7.7
Euro Area	-0.2	-1.0
Germany	0.0	-1.6
France	-0.2	-0.5
Italy	-0.6	-2.4
UK	0.3	0.3
	IIQ2013/IQ2013	IIQ2013/IIQ2012
United States	QOQ: 0.6 SAAR: 2.5	1.6
Japan	QOQ: 0.9 SAAR: 3.8	1.2
China	1.7	7.5
Euro Area	0.3	-0.5
Germany	0.7	0.9
France	0.5	0.3
Italy	-0.3	-2.1
UK	0.7	1.5

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

Source: Country Statistical Agencies http://www.bea.gov/national/index.htm#gdp

There is evidence of deceleration of growth of world trade and even contraction in recent data. Table V-4 provides two types of data: growth of exports and imports in the latest available months and in the past 12 months; and contributions of net trade (exports less imports) to growth of real GDP. Japan provides the most worrisome data (http://cmpassocregulationblog.blogspot.com/2013/08/interest-rate-risks-duration-dumping.html and earlier http://cmpassocregulationblog.blogspot.com/2013/07/duration-dumping-steepening-yield-curve.html and earlier http://cmpassocregulationblog.blogspot.com/2013/06/paring-quantitative-easing-policy-and_4699.html and earlier 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 http://cmpassocregulationblog.blogspot.com/2013/08/duration-dumping-and-peaking-valuations.html and earlier http://cmpassocregulationblog.blogspot.com/2013/02/recovery-without-hiring-united-states.html). In Jul 2013, Japan’s exports grew 12.2 percent in 12 months while imports increased 19.6 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 2.7 percentage points from GDP growth in IIIQ2012 and deducted 0.2 percentage points from GDP growth in IVQ2012. Net trade added 0.2 percentage points to GDP growth in IQ2012, 1.6 percentage points in IQ2013 and 0.7 percentage points in IIQ2013. In Aug 2013, China exports increased 7.2 percent relative to a year earlier and imports increased 7.1 percent. Germany’s exports decreased 1.1 percent in the month of Jul 2013 and changed 0.0 percent in the 12 months ending in Jul 2013 while imports increased 0.5 percent in the month of Jul and increased 0.9 percent in the 12 months ending in Jul. Net trade contributed 0.8 percentage points to growth of GDP in IQ2012, contributed 0.4 percentage points in IIQ2012, contributed 0.3 percentage points in IIIQ2012, deducted 0.5 percentage points in IVQ2012, deducted 0.2 percentage points in IQ2012 and added 0.2 percentage points in IIQ2013. 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 0.7 percentage points in IIQ2012, added 0.4 percentage points in IIIQ2012 and subtracted 0.3 percentage points in IVQ2012. In IQ2013, net trade added 0.6 percentage points to UK’s growth of value added and added 0.3 percentage points in IIQ2013. France’s exports increased 1.3 percent in Jul 2013 while imports increased 2.7 percent and net trade added 0.10 percentage points to GDP growth in IIQ2012, 0.10 percentage points in IIIQ2012 and 0.1 percentage points in IVQ2012. Net trade deducted 0.2 percentage points from France’s GDP growth in IQ2013 and was neutral in IIQ2013. US exports increased 2.2 percent in Jun 2013 and goods exports increased 0.9 percent in Jan-Jun 2013 relative to a year earlier but net trade deducted 0.03 percentage points to GDP growth in IIIQ2012 and added 0.68 percentage points in IVQ2012. Net trade deducted 0.28 percentage points from US GDP growth in IQ2013 and contributed 0.00 percentage points in IIQ2013. US imports decreased 2.5 percent in Jun 2013 and goods imports decreased 1.7 percent in Jan-Jun 2013 relative to a year earlier. Industrial production increased 0.3 percent in Jun 2013 after changing 0.0 percent in May 2013 and falling 0.3 percent in Apr 2013, as shown in Table II-1, with all data seasonally adjusted. The report of the Board of Governors of the Federal Reserve System states (http://www.federalreserve.gov/releases/g17/Current/default.htm):

“Industrial production was unchanged in July after having gained 0.2 percent in June. In July, manufacturing production declined 0.1 percent. The output of mines advanced 2.1 percent, its fourth consecutive monthly increase, and the production of utilities fell 2.1 percent, its fourth consecutive monthly decrease. At 98.9 percent of its 2007 average, total industrial production in July was 1.4 percent above its year-earlier level.”

In the six months ending in Jul 2013, United States national industrial production accumulated increase of 0.7 percent at the annual equivalent rate of 1.4 percent, which is equal to growth of 1.4 percent in 12 months. Excluding growth of 0.7 in Feb 2013, growth in the remaining five months from Mar 2012 to Jul 2013 accumulated to 0.0 percent or 0.0 percent annual equivalent. Industrial production stagnated in two of the past six months and fell in one. Business equipment accumulated growth of 2.0 percent in the six months from Feb to Jul 2013 at the annual equivalent rate of 1.8 percent, which is much higher than growth of 2.1 percent in 12 months. Growth of business equipment accumulated 0.1 percent from Mar to July 2013 at the annual equivalent rate of 0.2 percent. The Fed analyzes capacity utilization of total industry in its report (http://www.federalreserve.gov/releases/g17/Current/default.htm): “Capacity utilization for total industry edged down 0.1 percentage point to 77.6 percent in July, a rate 0.3 percentage point below its level of a year earlier and 2.6 percentage points below its long-run (1972-2012) average.” United States industry is apparently decelerating. Manufacturing decreased 0.1 percent in Jul 2013 after increasing 0.2 percent in Jun 2013 and 0.3 percent in May 2013 seasonally adjusted, increasing 1.4 percent not seasonally adjusted in 12 months ending in Jul 2013. Manufacturing grew cumulatively 0.3 percent in the six months ending in Jul 2013 or at the annual equivalent rate of 0.6 percent. Excluding the increase of 0.6 percent in Feb 2012, manufacturing accumulated growth of minus 0.3 percent from Mar 2013 to Jul 2013 or at the annual equivalent rate of minus 0.7 percent.

Table V-4, Growth of Trade and Contributions of Net Trade to GDP Growth, ∆% and % Points

	Exports M ∆%	Exports 12 M ∆%	Imports M ∆%	Imports 12 M ∆%
USA	-0.6 Jul	1.6 Jan-Jul	1.6 Jul	-1.4 Jan-Jul
Japan		Jul 2013 12.2 Jun 2013 7.4 May 2013 10.1 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		Jul 2013 19.6 Jun 2013 11.8 May 2013 10.0 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		7.2 Aug 5.1 Jul -3.1 Jun 1.0 May 14.7 Apr 10.0 Mar 21.8 Feb		7.1 Aug 10.9 Jul -0.7 Jun -0.3 May 16.8 Apr 14.1 Mar -15.2 Feb
Euro Area	-2.5 12-M Jun	1.6 Jan-Jun	-5.8 12-M Jun	-4.2 Jan-Jun
Germany	-1.1 Jul CSA	0.0 Jul	0.5 Jul CSA	0.9 Jul
France Jul	1.3	-0.6	2.7	1.1
Italy Jun	1.2	4.4	1.6	-2.6
UK	-4.6 Jul	1.1 May-Jul 13 /May-Jul 12	-0.4 Jul	0.7 May-Jul 13/May-Jul 12
Net Trade % Points GDP Growth	% Points
USA	IIQ2013 0.0 IQ2013 -0.28 IVQ2012 +0.68 IIIQ2012 -0.03 IIQ2012 +0.10 IQ2012 +0.44
Japan	0.3 IQ2012 -1.0 IIQ2012 -2.7 IIIQ2012 -0.2 IVQ2012 1.6 IQ2013 0.7 IIQ2013
Germany	IQ2012 0.8 IIQ2012 0.4 IIIQ2012 0.3 IVQ2012 -0.5 IQ2013 -0.2 IIQ2013 0.2
France	0.1 IIIQ2012 0.2 IVQ2012 -0.2 IQ2013 0.0 IIQ2013
UK	-0.7 IQ2012 -0.7 IIQ2012 +0.4 IIIQ2012 -0.3 IVQ2012 0.6 IQ2013 0.3 IIQ2013

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 Jul 2013. The share of Asia in Japan’s trade is more than one-half for 54.1 percent of exports and 44.7 percent of imports. Within Asia, exports to China are 18.5 percent of total exports and imports from China 21.3 percent of total imports. While exports to China increased 9.5 percent in the 12 months ending in Jul 2013, imports from China increased 18.3 percent. The second largest export market for Japan in Jul 2013 is the US with share of 18.5 percent of total exports, which is almost equal to that of China, and share of imports from the US of 8.7 percent in total imports. Western Europe has share of 9.8 percent in Japan’s exports and of 10.5 percent in imports. Rates of growth of exports of Japan in Jul 2013 are relatively high for several countries and regions with growth of 18.4 percent for exports to the US, 24.4 for exports to Mexico, 36.4 percent for exports to Brazil and 30.8 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. Growth rates of imports in the 12 months ending in Jul 2013 are positive for all trading partners. Imports from Asia increased 18.5 percent in the 12 months ending in Jul 2013 while imports from China increased 18.3 percent. Data are in millions of yen, which may have 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

Jul 2013	Exports Millions Yen	12 months ∆%	Imports Millions Yen	12 months ∆%
Total	5.962,031	12.2	6,985,990	19.6
Asia	3,223,106	9.1	3,120,670	18.5
China	1,104,485	9.5	1,490,877	18.3
USA	1,105,866	18.4	605,890	18.2
Canada	66,302	4.0	112,292	19.8
Brazil	52,567	36.4	93,169	30.1
Mexico	86,036	24.4	40,103	33.7
Western Europe	585,031	14.4	736,306	15.1
Germany	159,224	15.6	200,542	17.9
France	54,097	41.1	101,758	7.6
UK	93,899	33.7	54,786	14.7
Middle East	207,473	12.3	1,251,104	26.4
Australia	144,951	30.8	463,196	15.8

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 revised 3.1 percent in 2013 and 5.4 percent in 2014 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)	3.1	5.4	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	1.4	4.3	4.7	4.3
EMDE	6.0	7.3	7.9	7.5
Exports Goods & Services
G7	2.4	4.7	4.9	4.5
EMDE	4.3	6.3	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 http://www.imf.org/external/pubs/ft/weo/2013/update/02/

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 55.2 in Aug from 54.0 in Jul, indicating expansion at a higher rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/3dfe42c71a6748fe820a89f97aa15696). This index has remained above the contraction territory of 50.0 during 49 consecutive months and reached in Aug 2013 the highest reading since Feb 2011. The employment index increased from 51.0 in Jul to 52.2 in Aug with input prices rising at a slower rate and new orders and output increasing at higher rates (http://www.markiteconomics.com/Survey/PressRelease.mvc/3dfe42c71a6748fe820a89f97aa15696). David Hensley, Director of Global Economics at JP Morgan, finds growth through all sectors (http://www.markiteconomics.com/Survey/PressRelease.mvc/3dfe42c71a6748fe820a89f97aa15696). The JP Morgan Global Manufacturing PMI^™, produced by JP Morgan and Markit in association with ISM and IFPSM, was higher at 51.7 in Aug from 50.8 in Jul, which is the highest reading Jun 2011 and the eighth consecutive reading above 50 (http://www.markiteconomics.com/Survey/PressRelease.mvc/b34defd79f914b46b82892783a0205ec). David Hensley, Director of Global Economic Coordination at JP Morgan, finds support of acceleration of manufacturing output. The HSBC Brazil Composite Output Index, compiled by Markit, increased marginally from 49.6 in Jul to 49.7 in Aug, indicating moderate contraction in private sector activity (http://www.markiteconomics.com/Survey/PressRelease.mvc/ab0a590fd2d74b81992c35c544121896). The HSBC Brazil Services Business Activity index, compiled by Markit fell marginally from 50.3 in Jul to 49.7 in Aug, which is the first reading below 50.0 in 12 months (http://www.markiteconomics.com/Survey/PressRelease.mvc/ab0a590fd2d74b81992c35c544121896). Andre Loes, Chief Economist, Brazil, at HSBC, finds that the survey data suggest weaker economy and increasing costs of inputs at a higher rate than in Jul (http://www.markiteconomics.com/Survey/PressRelease.mvc/ab0a590fd2d74b81992c35c544121896). The HSBC Brazil Purchasing Managers’ Index^TM (PMI^™) increased from 48.5 in Jul to 49.4 in Aug with another decline in foreign business (http://www.markiteconomics.com/Survey/PressRelease.mvc/027b440eefc443ada76581bbbfe4ed7c). Andre Loes, Chief Economist, Brazil at HSBC, finds mild contraction of manufacturing at slower pace (http://www.markiteconomics.com/Survey/PressRelease.mvc/027b440eefc443ada76581bbbfe4ed7c).

VA United States. The Markit Flash US Manufacturing Purchasing Managers’ Index^™ (PMI^™) seasonally adjusted increased to 53.9 in Aug from 53.7 in Jul, indicating moderate growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/3098549eef6c47e6a5fafaa84ae66cd8). New export orders registered 52.0 in Aug down from 52.5 in Jul, indicating expansion at slower rate. Chris Williamson, Chief Economist at Markit, finds that the survey data are consistent with continuing moderate growth in IIQ2013 (http://www.markiteconomics.com/Survey/PressRelease.mvc/3098549eef6c47e6a5fafaa84ae66cd8). The Markit US Manufacturing Purchasing Managers’ Index^™ (PMI^™) decreased to 53.1 in Aug from 53.7 in Jul (http://www.markiteconomics.com/Survey/PressRelease.mvc/2d624187f3e9463196a640620bd19b4c). The index of new exports orders decreased from 52.5 in Jul to 52.0 in Aug while total new orders increased from 55.4 in Jul to 55.7 in Aug. Chris Williamson, Chief Economist at Markit, finds that the index suggests possible deceleration (http://www.markiteconomics.com/Survey/PressRelease.mvc/2d624187f3e9463196a640620bd19b4c). The purchasing managers’ index (PMI) of the Institute for Supply Management (ISM) Report on Business^® increased 0.3 percentage points from 55.4 in Jul to 55.7 in Aug, which indicates growth at a higher rate (http://www.ism.ws/ISMReport/MfgROB.cfm?navItemNumber=12942). The index of new orders increased 4.9 percentage points from 58.3 in Jul to 63.2 in Aug. The index of exports increased 2.0 percentage point from 53.5 in Jul to 55.5 in Aug, growing at a faster rate. The Non-Manufacturing ISM Report on Business^® PMI increased 2.6 percentage points from 56.0 in Jul to 58.6 in Aug, indicating growth of business activity/production during 49 consecutive months, while the index of new orders increased 2.8 percentage points from 57.7 in Jul to 60.5 in Aug (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	Jul 12 months NSA ∆%: 2.0; ex food and energy ∆%: 1.7 Jul month SA ∆%: 0.2; ex food and energy ∆%: 0.2 Blog 8/18/13
Producer Price Index	Aug 12-month NSA ∆%: 1.4; ex food and energy ∆% 1.1 Aug month SA ∆% = 0.3; ex food and energy ∆%: 0.0 Blog 9/15/13
PCE Inflation	Jul 12-month NSA ∆%: headline 1.4; ex food and energy ∆% 1.2 Blog 9/1/13
Employment Situation	Household Survey: Aug Unemployment Rate SA 7.3% Blog calculation People in Job Stress Jul: 28.3 million NSA, 17.4% of Labor Force Establishment Survey: Nov Nonfarm Jobs +169,000; Private +152,000 jobs created  Jul 12-month Average Hourly Earnings Inflation Adjusted ∆%: -0.7 Blog 9/8/13
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 Jul 2013 4.518 million lower by 1.037 million than 5555 million in Jul 2006 Blog 9/15/13
GDP Growth	BEA Revised National Income Accounts IQ2012/IQ2011 ∆%: 3.3 IIQ2012/IIQ2011 2.8 IIIQ2012/IIIQ2011 3.1 IVQ2012/IVQ2011 2.0 IQ2013/IQ2012 1.3 IIQ2013/IIQ2012 1.6 IQ2012 SAAR 3.7 IIQ2012 SAAR 1.2 IIIQ2012 SAAR 2.8 IVQ2012 SAAR 0.1 IQ2013 SAAR 1.1 IIQ2013 SAAR 2.5 Blog 9/1/13
Real Private Fixed Investment	SAAR IIQ2013 6.0 ∆% IVQ2007 to IIQ2013: minus 5.0% Blog 9/1/13
Personal Income and Consumption	Jul month ∆% SA Real Disposable Personal Income (RDPI) SA ∆% 0.1 Real Personal Consumption Expenditures (RPCE): 0.0 12-month Jul NSA ∆%: RDPI: 0.8; RPCE ∆%: 1.7 Blog 9/1/13
Quarterly Services Report	IIQ13/IIQ12 SA ∆%: Information 4.1 Financial & Insurance 4.2 Blog 9/8/13
Employment Cost Index	Compensation Private IIQ2013 SA ∆%: 0.5 Jun 13 months ∆%: 1.9 Blog 8/11/13
Industrial Production	Jul month SA ∆%: 0.0 Jul 12 months SA ∆%: 1.4 Manufacturing Jul SA ∆% minus 0.1 Jul 12 months SA ∆% 1.3, NSA 1.4 Capacity Utilization: 77.6 Blog 8/18/13
Productivity and Costs	Nonfarm Business Productivity IIQ2013∆% SAAE 2.3; IIQ2013/IIQ2012 ∆% 0.3; Unit Labor Costs SAAE IIQ2013 ∆% 0.0; IIQ2013/IIQ2012 ∆%: 1.5 Blog 9/8/2013
New York Fed Manufacturing Index	General Business Conditions From Jul 9.46 to Aug 8.24 New Orders: From Jul 3.77 to Aug 0.27 Blog 8/18/13
Philadelphia Fed Business Outlook Index	General Index from Jul 19.8 to Aug 9.3 New Orders from Jul 10.2 to Aug 5.3 Blog 8/18/13
Manufacturing Shipments and Orders	New Orders SA Jul ∆% -2.4 Ex Transport 1.2 Jan-Jul NSA New Orders 1.9 Ex transport 1.4 Blog 9/8/13
Durable Goods	Jul New Orders SA ∆%: minus 7.3; ex transport ∆%: 0.0 Jan-Jul 13/Jan-Jul 12 New Orders NSA ∆%: 3.3; ex transport ∆% 2.5 Blog 9/1/13
Sales of New Motor Vehicles	Jan-Aug 2013 10,647,486; Jan-Aug 2012 9,711,044. Aug 13 SAAR 16.09 million, Jul 13 SAAR 15.80 million, Aug 2012 SAAR 14.49 million Blog 9/8/13
Sales of Merchant Wholesalers	Jan-Jul 2013/Jan-Jul 2012 NSA ∆%: Total 3.2; Durable Goods: 3.2; Nondurable Goods: 3.3 Blog 9/15/13
Sales and Inventories of Manufacturers, Retailers and Merchant Wholesalers	Jul 13/Jun 12 NSA ∆%: Sales Total Business 6.4; Manufacturers 3.6 Retailers 7.7; Merchant Wholesalers 8.4 Blog 9/15/13
Sales for Retail and Food Services	Jan-Aug 2013/Jan-Aug 2012 ∆%: Retail and Food Services 4.3; Retail ∆% 4.4 Blog 9/15/13
Value of Construction Put in Place	Jul SAAR month SA ∆%: 0.6 Jul 12-month NSA: 5.2 Jan-Jul 2013 ∆% 5.6 Blog 9/8/13
Case-Shiller Home Prices	Jun 2013/Jun 2012 ∆% NSA: 10 Cities 11.9; 20 Cities: 12.1 ∆% Jun SA: 10 Cities 1.1 ; 20 Cities: 0.9 Blog 9/1/13
FHFA House Price Index Purchases Only	Jun SA ∆% 0.6; 12 month NSA ∆%: 7.8 Blog 8/25/13
New House Sales	Jul 2013 month SAAR ∆%: minus 13.4 Jan-Jul 2013/Jan-Jul 2012 NSA ∆%: 21.8 Blog 8/25/13
Housing Starts and Permits	Jul Starts month SA ∆%: 5.9 ; Permits ∆%: 2.7 Jan-Jul 2013/Jan-Jul 2012 NSA ∆% Starts 23.9; Permits  ∆% 23.3 Blog 8/18/13
Trade Balance	Balance Jul SA -$39,147 million versus Jun -$34,543 million Exports Jul SA ∆%: -0.6 Imports Jul SA ∆%: 1.6 Goods Exports Jan-Jul 2013/2012 NSA ∆%: 1.6 Goods Imports Jan-Jul 2013/2012 NSA ∆%: -1.4 Blog 9/8/13
Export and Import Prices	Aug 12-month NSA ∆%: Imports -0.4; Exports -1.1 Blog 9/15/13
Consumer Credit	Jul ∆% annual rate: Total 4.4; Revolving minus 2.6; Nonrevolving 7.4 Blog 9/15/13
Net Foreign Purchases of Long-term Treasury Securities	Jun Net Foreign Purchases of Long-term US Securities: $-66.9 billion Major Holders of Treasury Securities: China $1276 billion; Japan $1083 billion; Total Foreign US Treasury Holdings Feb $5601 billion Blog 8/18/13
Treasury Budget	Fiscal Year 2013/2012 ∆% Aug: Receipts 13.0; Outlays minus 3.7; Individual Income Taxes 15.8 Deficit Fiscal Year 2011 $1,296 billion Deficit Fiscal Year 2012 $1,087 billion Blog 9/15/2013
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	Jul 2013 SAAR ∆%: Securities -14.6 Loans 1.4 Cash Assets 44.9 Deposits 8.9 Blog 8/25/13
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:

9/8/13 http://cmpassocregulationblog.blogspot.com/2013/09/twenty-eight-million-unemployed-or.html

9/1/13 http://cmpassocregulationblog.blogspot.com/2013/09/increasing-interest-rate-risk.html

8/25/13 http://cmpassocregulationblog.blogspot.com/2013/08/interest-rate-risks-duration-dumping.html

8/18/13 http://cmpassocregulationblog.blogspot.com/2013/08/duration-dumping-and-peaking-valuations.html

8/11/13 http://cmpassocregulationblog.blogspot.com/2013/08/recovery-without-hiring-loss-of-full.html

6/16/13 http://cmpassocregulationblog.blogspot.com/2013/06/recovery-without-hiring-seven-million.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

Sales of manufacturers increased 1.1 percent in Jul after decreasing 0.3 percent in Jun and increased 3.6 percent in the 12 months ending in Jul, as shown in Table VA-1. Retailers’ sales increased 0.4 percent in Jul after increasing 0.8 percent in Jun and increased 7.7 percent in 12 months ending in Jul. Sales of merchant wholesalers increased 0.1 percent in Jul, 0.4 percent in Jun and increased 8.4 percent in 12 months ending in Jul. 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

	Jul 13/   Jun 13 ∆% SA	Jul 2013 Millions of Dollars NSA	Jun 13/ May 13  ∆% SA	Jul 13/ Jul 12 ∆% NSA
Total Business	0.6	1,288,912	0.2	6.4
.Manufacturers	1.1	474,914	-0.3	3.6
Retailers	0.4	382,572	0.8	7.7
Merchant Wholesalers	0.1	431,426	0.4	8.4

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-Jul 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 with monthly marginal strength.

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

US Census Bureau

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

Businesses added cautiously to inventories to replenish stocks. Retailers added 0.8 percent to inventories in Jul and 0.1 percent in Jun 2013 with growth of 5.3 percent in 12 months, as shown in Table VA-2. Total business increased inventories by 0.4 percent in Jul, 0.1 percent in Jun and 3.2 percent in 12 months. Inventories sales/ratios of total business continued at a level close to 1.29 under judicious management to avoid costs and risks. Inventory/sales ratios of manufacturers and retailers are higher than for merchant wholesalers. There is stability in inventory/sales ratios in individual months and relative to a year earlier.

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

Inventory Change	Jul 13 Millions of Dollars NSA	Jul 13/ Jun 13 ∆% SA	Jun 13/  May 13 ∆% SA	Jul 13/  Jul 12 ∆% NSA
Total Business	1,647,688	0.4	0.1	3.2
Manufacturers	632,238	0.2	0.2	2.0
Retailers	518,575	0.8	0.1	5.3
Merchant Wholesalers	496,875	0.1	-0.2	2.7
Inventory/ Sales Ratio NSA	Jul 13 Billions of Dollars NSA	Jul 2013 SA	Jun 2013 SA	Jul 2012 SA
Total Business	1,647,688	1.28	1.29	1.30
Manufacturers	632,238	1.29	1.30	1.30
Retailers	518,575	1.40	1.40	1.41
Merchant Wholesalers	496,875	1.17	1.17	1.21

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 Jul 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-Jul 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 Jul 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-Jul 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://www2.census.gov/retail/releases/historical/mtis/img/mtisbrf.gif

Sales and inventories of merchant wholesalers except manufacturers’ sales branches and offices are shown in Table VA-3 for Jan-Jul 2013 NSA and percentage changes from the prior month SA and for Jan-Jul 2013 relative to Jan-Jul 2012. These data are volatile, aggregating diverse categories of durable and nondurable goods without adjustment for price changes. Total sales for the US rose 3.2 percent in Jan-Jul 2013 relative to Jan-Jul 2012 and increased 0.1 percent in Jul 2013 relative to Jun 2013. The value of total sales is quite high at $2936.4 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-Jul 2013 reached $1343.3 billion, over two trillion dollars for a year, decreasing 0.6 percent in Jul 2013 relative to Jun 2013 and increasing 3.2 percent in Jan-Jul 2013 relative to Jan-Jul 2012. Sales of automotive products reached $233.7 billion in Jan-Jul 2013, decreasing 3.1 percent in the month and increasing 3.7 percent relative to a year earlier. There is strong performance of 8.7 percent in machinery but lower of 4.2 percent in electrical products. Sales of nondurable goods rose 3.3 percent over a year earlier. The influence of commodity prices returned as suggested by increase of 1.2 percent in Jul 2013 and increase of 7.4 percent in Jan-Jul 2013 relative to a year earlier in farm products with increase of 1.9 percent in petroleum products in Jul 2013 and increase of 0.8 percent relative to a year earlier. The final three columns in Table VA-3 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 0.1 percent in Jul 2013 and increased 2.7 percent relative to a year earlier. Inventories of durable goods of $312.0 billion are 62.8 percent of total inventories of $312.0 billion and rose 4.5 percent relative to a year earlier. Automotive inventories decreased 2.0 percent relative to a year earlier. Machinery inventories of $89.7 billion rose 9.0 percent relative to a year earlier. Inventories of nondurable goods of $184.8 billion are 37.2 percent of the total and increased 1.2 percent relative to a year earlier. Inventories of farm products decreased 10.1 percent in Jul relative to Jun and decreased 30.6 percent relative to a year earlier. Inventories of petroleum products increased 3.3 percent in Jul and increased 12.7 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-Jul 2013 NSA	Sales Jun ∆% SA	Sales∆% Jan-Jul 2013 from Jan-Jul 2012  NSA	INV $ Billions Jul 2013 NSA	INV  Jun ∆% SA	INV  ∆% Jul 2013 from Jul 2012 NSA
US Total	2936.4	0.1	3.2	496.9	0.1	2.7
Durable	1343.3	-0.6	3.2	312.0	0.6	4.5
Automotive	233.7	-3.1	3.7	48.6	0.4	-2.0
Prof. Equip.	271.6	0.0	1.4	38.0	-1.2	4.1
Computer Equipment	157.4	0.4	0.1	17.2	-3.5	3.9
Electrical	210.4	-0.7	4.2	38.0	0.6	5.3
Machinery	236.2	-0.8	8.7	89.7	1.2	9.0
Not Durable	1593.2	0.7	3.3	184.8	-0.8	-0.2
Drugs	243.4	-0.6	3.5	37.0	-0.2	4.1
Apparel	82.8	1.0	0.3	23.6	1.0	3.9
Groceries	340.6	0.1	4.0	32.9	0.5	4.8
Farm Products	140.2	1.2	7.4	14.4	-10.1	-30.6
Petroleum	430.3	1.9	0.8	23.2	3.3	12.7

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 Jul 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-Jul 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 Jul 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-Jul 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 1.17 in Jul 2013, 1.17 in Jun 2013 and 1.21 in Jul 2012. Inventory/sales ratios are higher in durable goods industries but remain relatively stable with 1.58 in Jul 2013, 1.56 in Jun 2013 and 1.59 in Jul 2012. Computer equipment operates with low inventory/sales ratios of 0.71 in Jul 2013, 0.73 in Jun 2013 and 0.70 in Jul 2012 because of the capacity to fill orders on demand. As expected because of perishable nature, nondurable inventory/sales ratios are quite low with 0.83 in Jul 2013 and 0.84 in Jun 2013, which are almost equal to 0.89 in Jul 2012. There are exceptions such as 1.84 in Jul 2013 in apparel that is equal to 1.84 in Jun 2013 and higher than 1.74 in Jul 2012.

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

	Jul 2013	Jun 2013	Jul 2012
US Total	1.17	1.17	1.21
Durable	1.58	1.56	1.59
Automotive	1.45	1.40	1.49
Prof. Equip.	0.94	0.95	0.92
Comp. Equip.	0.71	0.73	0.70
Electrical	1.19	1.17	1.21
Machinery	2.59	2.54	2.66
Not Durable	0.83	0.84	0.89
Drugs	1.03	1.02	1.05
Apparel	1.84	1.84	1.74
Groceries	0.68	0.68	0.68
Farm Products	0.95	1.07	1.42
Petroleum	0.36	0.36	0.36

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 with recent downward turn.

Chart VA-8, US, Inventories of Merchant Wholesalers, Millions of Dollars, NSA, Jan 1992-Jul 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 with recent downward turn.

Chart VA-9, US, Inventories of Merchant Wholesalers, Millions of Dollars, SA, Jan 1992-Jul 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 and new decline.

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 0.2 percent in Aug 2013 after increasing 0.4 percent in Jul 2013 seasonally adjusted (SA), growing 4.3 percent in Jan-Aug 2013 relative to Jan-Aug 2012 not seasonally adjusted (NSA), as shown in Table VA-5. Excluding motor vehicles and parts, retail sales increased 0.1 percent in Aug 2013, increasing 0.6 percent in Jul 2013 SA and increasing 3.3 percent NSA in Jan-Aug 2013 relative to a year earlier. Sales of motor vehicles and parts increased 0.9 percent in Aug 2013 after decreasing 0.5 percent in Jul 2013 SA and increasing 8.9 percent NSA in Jan-Aug 2013 relative to a year earlier. Gasoline station sales changed 0.0 percent SA in Aug 2013 after increasing 0.7 percent in Jul 2013 in oscillating prices of gasoline that are moderating, increasing 0.4 percent in Jan-Aug 2013 relative to a year earlier.

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

	Aug/Jul ∆% SA	Jul/ Jun ∆% SA	Jan-Aug 2013 Million Dollars NSA	Jan-Aug 2013 from Jan-Aug 2012 ∆% NSA
Retail and Food Services	0.2	0.4	3,340,686	4.3
Excluding Motor Vehicles and Parts	0.1	0.6	2,690,687	3.3
Motor Vehicles & Parts Dealers	0.9	-0.5	649,999	8.9
Retail	0.2	0.4	2,972,160	4.4
Building Materials	-0.9	1.8	211,553	6.5
Food and Beverage	0.1	0.4	429,309	3.0
Grocery	0.1	0.2	384,325	2.5
Health & Personal Care Stores	0.6	1.1	187,012	1.1
Clothing & Clothing Accessories Stores	-0.8	1.0	155,929	3.8
Gasoline Stations	0.0	0.7	370,090	0.4
General Merchandise Stores	-0.2	0.2	419,035	0.4
Food Services & Drinking Places	0.3	0.5	368,526	4.0

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

Chart VA-11 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-11, 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-12 of the US Census Bureau provides total sales of retail trade and food services seasonally adjusted (SA) from Jan 1992 to Aug 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-12, US, Total Sales of Retail Trade and Food Services, SA, Jan 1992-Aug 2013, Millions of Dollars

Source: US Census Bureau

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

Chart VA-13 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 Aug 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-13, US, Total Sales of Retail Trade and Food Services, NSA, Jan 1992-Aug 2013, Millions of Dollars

Source: US Census Bureau

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

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-

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. Import prices 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 0.4 percent in the 12 months ending in Aug 2013, export prices decreased 1.1 percent and prices of nonagricultural exports fell 0.6 percent. Imports excluding fuel fell 1.0 percent in the 12 months ending in Aug 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 that reverses 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
Aug 2013	-0.4	-1.0	-1.1	-0.6
Aug 2012	-1.8	-0.4	-0.9	-1.9
Aug 2011	12.9	5.4	9.4	8.0
Aug 2010	3.8	2.7	4.1	3.9
Aug 2009	-15.3	-5.1	-6.2	-5.3
Aug 2008	18.1	6.6	8.3	6.8
Aug 2007	1.9	2.4	3.7	2.5
Aug 2006	6.0	2.9	5.2	5.3
Aug 2005	8.2	1.3	3.1	2.8
Aug 2004	7.1	2.8	4.0	3.9
Aug 2003	2.0	0.3	0.9	0.8
Aug 2002	-1.3	NA	-0.3	-0.6
Aug 2001	-4.4	NA	-1.0	-1.6

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 explaining sharp declines in trade prices in 2009. 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	-1.8	0.1	0.9	-0.4

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/2013/08/duration-dumping-and-peaking-valuations.html and earlier http://cmpassocregulationblog.blogspot.com/2013/07/tapering-quantitative-easing-policy-and.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, 0.6 percent in May 2013 and 0.4 percent in Jun 2013. Import prices increased 0.1 percent in Jul 2013 and changed 0.0 percent in Aug 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	Dec
2001	0.0	-0.6	-1.6	-0.5	0.2	-0.4	-1.5	-0.1	-1.0
2002	0.2	0.0	1.3	1.6	0.1	-0.3	0.4	0.3	0.6
2003	1.8	1.7	0.6	-3.1	-0.7	0.9	0.5	0.0	0.7
2004	1.5	0.4	0.8	0.2	1.5	-0.2	0.4	1.5	-1.4
2005	0.6	0.9	2.2	0.9	-0.8	1.2	1.2	1.4	0.0
2006	1.2	-0.8	-0.1	2.1	1.8	0.1	0.8	0.5	1.1
2007	-1.2	0.4	1.6	1.4	0.9	1.2	1.3	-0.3	-0.2
2008	1.5	0.2	3.1	2.8	2.8	3.0	1.4	-3.1	-4.6
2009	-1.3	0.0	0.5	1.1	1.7	2.7	-0.6	1.5	0.2
2010	1.2	-0.1	0.4	1.1	-0.8	-1.2	0.0	0.4	1.4
2011	1.5	1.7	3.0	2.6	0.1	-0.6	0.1	-0.4	0.0
2012	0.0	0.0	1.4	-0.1	-1.5	-2.3	-0.7	1.2	-0.6
2013	0.5	0.9	-0.1	-0.7	-0.6	-0.4	0.1	0.0

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 1985 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/increase.

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

The report of consumer credit outstanding of the Board of Governors of the Federal Reserve System is provided in Table VA-6. The data are in seasonally adjusted annual rates both percentage changes and billions of dollars. The estimate of consumer credit “covers most short- and intermediate-term credit extended to individuals, excluding loans secured by real estate (http://www.federalreserve.gov/releases/g19/current/default.htm). Consumer credit is divided into two categories. (1) Revolving consumer credit (REV in Table VA-6) consists mainly of unsecured credit cards. (2) Non-revolving consumer credit (NREV in Table VA-6) “includes automobile loans and all other loans not included in revolving credit, such as loans for mobile homes, education, boats, trailers or vacations” (http://www.federalreserve.gov/releases/g19/current/default.htm). In Jul 2013, revolving credit was $850 billion, or 29.8 percent of total consumer credit of $2852 billion, and non-revolving credit was $2002 billion, or 70.2 percent of total consumer credit outstanding. Consumer credit grew at relatively high rates before the recession beginning in IVQ2007 (Dec) and extending to IIQ2009 (Jun) as dated by the National Bureau of Economic Research or NBER (http://www.nber.org/cycles/cyclesmain.html). Percentage changes of consumer credit outstanding fell already in 2009. Rates were still negative in 2010 with decline of 0.7 percent in annual data and sharp decline of 7.6 percent in revolving credit. In IVQ 2012, total consumer credit grew at 6.5 percent with increase of revolving credit at 0.3 percent and increase of non-revolving credit at 9.3 percent. Growth continued in Jul 2013 with total credit at 4.4 percent, revolving at minus 2.6 percent and non-revolving at 7.4 percent.

Table VA-6, US, Consumer Credit Outstanding, SA, Annual Rate and Billions of Dollars

	Total ∆%	REV ∆%	NRV ∆%	Total $B	REV $B	NREV $B
2013
Jul	4.4	-2.6	7.4	2852	850	2002
Jun	5.1	-5.2	9.5	2842	852	1990
May	6.8	8.4	6.1	2830	855	1974
IIQ	5.1	1.2	6.8	2842	852	1990
IQ	5.6	1.5	7.3	2806	849	1957
2012
IVQ	6.5	0.3	9.3	2767	846	1921
IIIQ	4.8	0.4	6.9	2723	845	1878
IIQ	6.3	1.0	8.8	2690	844	1846
2012	5.9	0.4	8.5	2767	846	1921
2011	3.7	0.2	5.4	2615	843	1773
2010	-0.7	-7.6	3.4	2522	841	1682
2009	-4.4	-8.8	-1.5	2420	917	1503
2008	0.8	0.2	1.2	2526	1005	1521
2007	5.9	8.5	4.3	2529	1008	1521

Note: REV: Revolving; NREV: Non-revolving; ∆%: simple annual rate from unrounded data; Total may not add exactly because of rounding

Source: Board of Governors of the Federal Reserve System

http://www.federalreserve.gov/releases/g19/current/default.htm

Chart VA-14 of the Board of Governors of the Federal Reserve System total consumer credit outstanding in millions of dollars measured in the right axis and the finance rate on 24-month personal loans at commercial banks, not seasonally adjusted, measured on the left axis. There was sharp decline of total consumer loans outstanding during the global recession followed by strong recovery. There is long-term decline of the financing rate.

Chart VA-14, US, Total Consumer Credit Owned and Securitized NSA and Financing Rate on 24-month Personal Loans at Commercial Banks NSA, Millions of Dollars and Percent, Feb 1972-Jul 2013

Source: Board of Governors of the Federal Reserve System

http://www.federalreserve.gov/releases/g19/current/default.htm

Chart VA-15 of the Board of Governors of the Federal Reserve System provides percentage changes of total consumer credit outstanding in the US and the financing rate on 24-month personal consumer loans at commercial banks, since 1972. The shaded bars are the cyclical contraction dates of the National Bureau of Economic Research (http://www.nber.org/cycles/cyclesmain.html). Consumer credit is cyclical, declining during contractions as shown by negative percentage changes during economic contractions. There is clear upward trend in 2012-2013 but with significant fluctuations.

Chart VA-15, US, Percent Change of Total Consumer Credit, Seasonally Adjusted at an Annual Rate and Finance Rate on 24-month Personal Loans at Commercial Banks NSA, Feb 1972-Jul 2013

Source: Board of Governors of the Federal Reserve System

http://www.federalreserve.gov/releases/g19/current/default.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 Jul 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 13.0 percent in the cumulative fiscal year 2013 for Aug 2013 relative to the cumulative in fiscal year 2012. Individual income taxes increased 15.8 percent relative to the same period a year earlier. Outlays decreased 3.7 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 2.2 percent on average in the cyclical expansion from IIIQ2009 to IIQ2013 (http://cmpassocregulationblog.blogspot.com/2013/09/increasing-interest-rate-risk.html). In contrast with the decline of revenue, outlays or expenditures increased 30.2 percent from $10,839 billion, or $10.8 trillion, in the four years from 2005 to 2008, to $14,109 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 $11,281 billion in 2012, by $5478 billion or 94.4 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-7, US, Treasury Budget in Fiscal Year to Date Million Dollars

Aug 2013	Fiscal Year 2013	Fiscal Year 2012	∆%
Receipts	2,472,542	2,187,527	13.0
Outlays	3,227,888	3,351,900	-3.7
Deficit	-755,345	-1,164,373	NA
Individual Income Taxes	1,175,536	1,015,419	15.8
Social Insurance	614,010	521,335	17.8
	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	11,281	72.6

Source: 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. Congressional Budget Office, 2013CBOHBDMay14. Historical budget data—May 2013. CBO, Washington, DC, May 14.

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/announcements/release_2013/k130711a.pdf). For fiscal 2013, the forecast is of growth of GDP between 2.5 and 3.0 percent, with the all items CPI less fresh food of 0.5 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
2013
Jul 2013	+2.5 to +3.0 [+2.8]	+0.5 to +0.8 [+0.6]
Apr 2013	+2.4 to +3.0 [+2.9]	+0.4 to +0.8 [+0.7]
2014
Jul 2013	+0.8 to +1.5 [+1.3]	+2.7 to +3.6 [+3.3]	+0.7 to +1.6 [+1.3]
Apr 2013	+1.0 to +1.5 [+1.4]	+2.7 to +3.6 [+3.4]	+0.7 to +1.6 [+1.4]
2015
Jul 2013	+1.3 to +1.9 [+1.5]	+1.6 to +2.9 [+2.6]	+0.9 to +2.2 [+1.9]
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/announcements/release_2013/k130711a.pdf

Private-sector activity in Japan expanded with the Markit Composite Output PMI^™ Index increasing from 50.7 in Jul to 51.9 in Aug (http://www.markiteconomics.com/Survey/PressRelease.mvc/0414d6252235491c8e40dc3548408355). Claudia Tillbrooke, Economist at Markit and author of the report, finds that the survey data suggest continuing growth of the economy of Japan but concern on implementation of the sales tax (http://www.markiteconomics.com/Survey/PressRelease.mvc/0414d6252235491c8e40dc3548408355). The Markit Business Activity Index of Services increased from 50.7 in Jul to 51.9 in Aug (http://www.markiteconomics.com/Survey/PressRelease.mvc/0414d6252235491c8e40dc3548408355). Claudia Tillbrooke, Economist at Markit and author of the report, finds mild acceleration of expansion (http://www.markiteconomics.com/Survey/PressRelease.mvc/0414d6252235491c8e40dc3548408355). Markit/JMMA Purchasing Managers’ Index^™ (PMI™), seasonally adjusted, increased from 50.7 in Jul to 52.2 in Aug, which is the highest in six months (http://www.markiteconomics.com/Survey/PressRelease.mvc/fb6254251871456a9bd934997d444b25). New orders grew for a sixth consecutive month. New export orders fell slightly with weak external demand compensating for yen depreciation. Claudia Tillbrooke, Economist at Markit and author of the report, finds manufacturing output expanding output expanding in Aug at the fastest rate in thirty months (http://www.markiteconomics.com/Survey/PressRelease.mvc/fb6254251871456a9bd934997d444b25).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	Aug ∆% +0.3 12 months ∆% 2.4 Blog 9/15/13
Consumer Price Index	Jul NSA ∆% 0.2; Jul 12 months NSA ∆% 0.7 Blog 9/1/13
Real GDP Growth	IIQ2013 ∆%: 0.9 on IQ2013;  IIQ2013 SAAR 3.8; ∆% from quarter a year earlier: 1.2 % Blog 6/16/13 8/18/13 9/15/13
Employment Report	Jul Unemployed 2.55 million Change in unemployed since last year: minus 330 thousand Unemployment rate: 3.9 % Blog 9/1/13
All Industry Indices	Jun month SA ∆% -0.6 12-month NSA ∆% 0.3 Blog 8/25/13
Industrial Production	Jul SA month ∆%: 3.2 12-month NSA ∆% 1.6 Blog 9/1/13
Machine Orders	Total Jul ∆% 4.4 Private ∆%: 3.4 Jul ∆% Excluding Volatile Orders 0.0 Blog 9/15/13
Tertiary Index	Jul month SA ∆% -0.4 Jul 12 months NSA ∆% 1.5 Blog 9/15/13
Wholesale and Retail Sales	Jul 12 months: Total ∆%: 1.3 Wholesale ∆%: 2.1 Retail ∆%: -0.3 Blog 9/1/13
Family Income and Expenditure Survey	Jul 12-month ∆% total nominal consumption 1.0, real 0.1 Blog 9/1/13
Trade Balance	Exports Jun 12 months ∆%: 12.2 Imports Jun 12 months ∆% 19.6 Blog 8/25/13

Links to blog comments in Table JPY:

9/1/13 http://cmpassocregulationblog.blogspot.com/2013/09/increasing-interest-rate-risk.html

8/25/13 http://cmpassocregulationblog.blogspot.com/2013/08/interest-rate-risks-duration-dumping.html

8/18/13 http://cmpassocregulationblog.blogspot.com/2013/08/duration-dumping-and-peaking-valuations.html

The economy of Japan grew 0.9 percent in IIQ2013 after 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 -0.3 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 0.9 percent in IIQ2011 as a result of the disruption of the tragic Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Recovery was robust in the first two quarters of 2010 but GDP grew at 1.5 percent in IIIQ2010 and fell 0.3 percent in IVQ2010. The deepest quarterly contractions in the recession were 3.3 percent in IVQ2008 and 4.0 percent in IQ2009.

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

	IQ	IIQ	IIIQ	IVQ
2013	1.0	0.9
2012	1.2	-0.3	-0.9	0.3
2011	-2.0	-0.9	2.6	0.4
2010	1.4	0.9	1.5	-0.3
2009	-4.0	1.6	0.1	1.8
2008	0.7	-1.2	-1.0	-3.3
2007	1.0	0.1	-0.4	0.8
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	-0.3
2003	-0.5	1.2	0.4	1.1
2002	-0.2	1.0	0.6	0.4
2001	0.7	-0.2	-1.1	-0.1
2000	1.7	0.2	-0.3	0.7
1999	-0.9	0.4	-0.1	0.4

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

Table VB-2 provides contributions to real GDP at seasonally adjusted annual rates (SAAR). Japan grew at 3.8 percent SAAR in IIQ2013 driven by contributions of 1.9 percent of personal consumption (PC) and 0.7 percent of net trade and gross fixed capital formation (GFCF) at 1.2 percent. In IQ2013, Japan’s GDP increased at the SAAR of 4.1 percent in large part because of 2.1 percent in personal consumption and 1.6 percent in trade. The SAAR of GDP in IVQ2012 was 1.1 percent: 1.2 percentage points from growth of personal consumption expenditures (PC) less 0.2 percentage points of net trade (exports less imports) less 0.8 percentage points of private inventory investment (PINV) plus 0.5 percentage points of government consumption and 0.4 percentage points of gross fixed capital formation (GFCF). The SAAR of GDP in IIIQ2011 was revised to a high 10.7 percent. Net trade deducted from GDP growth in three quarters of 2011 and provided the growth impulse of 3.4 percentage points in IIIQ2011. Growth in 2011 and IQ2012 was driven by personal consumption expenditures that deducted 0.9 percentage points from GDP growth in IIIQ2012 but added 1.2 percentage points to GDP growth in IVQ2012.

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

	GDP	PC	GFCF	Trade	PINV	GOVC
2013
I	4.1	2.1	0.5	1.6	-0.1	0.0
II	3.8	1.8	1.2	0.7	-0.7	0.6
2012
I	5.0	2.2	-0.2	0.3	1.3	1.3
II	-1.2	0.2	0.7	-1.0	-1.1	0.1
III	-3.5	-0.9	-0.9	-2.7	0.6	0.3
IV	1.1	1.2	0.4	-0.2	-0.8	0.5
2011
I	-7.6	-3.7	-0.4	-1.2	-2.5	0.1
II	-3.4	2.2	-0.5	-4.1	-1.3	0.2
III	10.7	3.7	1.3	3.4	1.9	0.2
IV	1.4	1.5	3.8	-2.8	-1.3	0.2
2010
I	5.9	1.4	0.2	2.1	2.5	-0.4
II	3.7	0.0	0.7	0.2	1.7	1.1
III	6.0	3.2	0.9	0.3	1.5	0.3
IV	-1.3	-0.5	-0.6	-0.3	-0.2	0.3
2009
I	-15.0	-2.1	-1.9	-4.4	-7.4	0.8
II	6.7	4.1	-3.2	7.5	-2.2	0.6
III	0.4	0.1	-1.4	2.1	-1.4	1.0
IV	7.5	3.7	0.3	2.8	0.5	0.3
2008
I	2.7	1.4	0.5	1.2	-0.3	0.0
II	-4.8	-3.3	-2.3	0.5	1.1	-0.8
III	-4.0	-0.4	-1.0	-0.1	-2.6	0.0
IV	-12.4	-2.8	-4.5	-11.4	5.7	0.3
2007
I	4.1	0.8	0.6	1.2	1.2	0.4
II	0.5	0.5	-1.5	0.8	0.0	0.5
III	-1.4	-0.8	-1.7	2.0	-0.6	-0.2
IV	3.4	0.3	0.3	1.4	0.9	0.6

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

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

Long-term economic growth in Japan significantly improved by increasing competitiveness in world markets. Net trade of exports and imports is an important component of the GDP accounts of Japan. Table VB-3 provides quarterly data for net trade, exports and imports of Japan. Net trade had strong positive contributions to GDP growth in Japan in all quarters from IQ2007 to IIQ2009 with exception of IVQ2008, IIIQ2008 and IQ2009. The US recession is dated by the National Bureau of Economic Research (NBER) as beginning in IVQ2007 (Dec) and ending in IIQ2009 (Jun) (http://www.nber.org/cycles/cyclesmain.html). Net trade contributions helped to cushion the economy of Japan from the global recession. Net trade deducted from GDP growth in seven of the nine quarters from IVQ2010 IQ2012. The only strong contribution of net trade was 3.4 percent in IIIQ2011. Net trade added 1.6 percentage points to GDP growth in IQ2013 and 0.7 percentage points in IIQ2013. 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	1.6	2.2	-0.7
II	0.7	1.7	-1.0
2012
I	0.3	1.6	-1.3
II	-1.0	-0.1	-0.9
III	-2.7	-2.7	0.0
IV	-0.2	-1.6	1.3
2011
I	-1.2	-0.5	-0.7
II	-4.1	-4.5	0.4
III	3.4	5.4	-2.0
IV	-2.8	-1.7	-1.1
2010
I	2.1	3.5	-1.3
II	0.2	2.7	-2.5
III	0.3	1.2	-0.9
IV	-0.3	0.2	-0.5
2009
I	-4.4	-16.4	12.0
II	7.5	4.7	2.7
III	2.1	5.2	-3.1
IV	2.8	4.2	-1.4
2008
I	1.2	2.2	-1.0
II	0.5	-1.6	2.1
III	-0.1	0.1	-0.1
IV	-11.4	-10.2	-1.2
2007
I	1.2	1.7	-0.5
II	0.8	1.6	-0.8
III	2.0	1.4	0.6
IV	1.4	2.1	-0.7

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

Japan’s percentage growth of GDP not seasonally adjusted in a quarter relative to the same quarter a year earlier is shown in Table VB-4. Contraction of GDP in a quarter relative to the same quarter a year earlier extended over seven quarters from IIQ2008 through IVQ2009. Contraction was sharpest in IQ2009 with output declining 9.4 percent relative to a year earlier. Yearly quarterly rates of growth of Japan were relatively high for a mature economy through the decade with the exception of the contractions from IVQ2001 to IIQ2002 and after 2007. The Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011 caused flat GDP in IQ2011 relative to the same quarter a year earlier and decline of 1.5 percent in IIQ2011. GDP fell 0.6 percent in IIIQ2011 relative to a year earlier and fell 0.2 percent in IVQ2011 relative to a year earlier. Growth resumed with 3.4 percent in IQ2012 relative to a year earlier. Growth of 3.8 percent in IIQ2012 is largely caused by the low level in IIQ2011 resulting from the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. GDP increased 0.3 percent in IIIQ2012 relative to a year earlier and 0.4 percent in IVQ2012 relative to a year earlier. GDP grew 0.3 percent in IQ2013 relative to a year earlier and 01.2 percent in IIQ2013. 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	0.3	1.2
2012	3.4	3.8	0.3	0.4
2011	0.0	-1.5	-0.6	-0.2
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

The tertiary activity index of Japan decreased 0.4 percent SA in Jul 2013 and increased 1.5 percent NSA in the 12 months ending in Jul 2013, as shown in Table VB-5. The index is showing significant volatility with increases of 1.3 percent in Feb 2013 and 1.7 percent in May 2013 but decreases in multiple months. The tertiary activity index fell 5.2 percent in 2009, growing 1.3 percent in 2010, 0.1 percent in 2011 and 1.4 percent in 2012.

Table VB-5, Japan, Tertiary Activity Index, ∆%

	Month ∆% SA	12 Months ∆% NSA
Jul 2013	-0.4	1.5
Jun	-0.5	0.7
May	1.2	1.7
Apr	-0.5	1.3
Mar	0.2	0.7
Feb	1.3	-1.6
Jan	-0.8	0.1
Dec 2012	0.2	-0.1
Nov	-0.1	1.0
Oct	0.2	1.3
Sep	0.0	0.1
Aug	0.2	0.6
Jul	-0.3	0.8
Jun	0.0	0.8
May	0.5	3.1
Apr	-0.2	2.4
Mar	-0.3	4.2
Feb	0.2	2.4
Jan	-0.8	0.3
Calendar Year
2012		1.4
2011		0.1
2010		1.3
2009		-5.2
2008		-1.0
2007		1.0
2006		1.8
2005		1.9
2004		1.8

Source: Japan, Ministry of Economy, Trade and Industry (METI) http://www.meti.go.jp/english/statistics/index.html

Month and 12-month rates of growth of the tertiary activity index of Japan and components in Jul 2013 are provided in Table VB-6. Electricity, gas, heat supply and water increased 1.2 percent in Jul 2013 and increased 0.9 percent in the 12 months ending in Jul 2013. Wholesale and retail trade decreased 2.3 percent in the month of Jul and decreased 3.0 percent in 12 months. Information and communications increased 1.0 percent in Jul and increased 4.9 percent in 12 months.

Table VB-6, Japan, Tertiary Index and Components, Month and 12-Month Percentage Changes ∆%

Jul 2013	Weight	Month ∆% SA	12 Months ∆% NSA
Tertiary Index	10,000.0	-0.4	1.5
Electricity, Gas, Heat Supply & Water	372.9	1.2	0.9
Information & Communications	951.2	1.0	4.9
Wholesale & Retail Trade	2,641.2	-2.3	-3.0
Finance & Insurance	971.1	-2.1	7.9
Real Estate & Goods Rental & Leasing	903.4	0.7	-0.1
Scientific Research, Professional & Technical Services	551.3	2.4	6.7
Accommodations, Eating, Drinking	496.0	-1.6	0.0
Living-Related, Personal, Amusement Services	552.7	1.7	0.1
Learning Support	116.9	-0.2	-1.0
Medical, Health Care, Welfare	921.1	-0.1	4.2
Miscellaneous ex Government	626.7	-0.7	-1.4

Source: Japan, Ministry of Economy, Trade and Industry (METI) http://www.meti.go.jp/english/statistics/index.html

Japan’s total machinery orders seasonally adjusted in Table VB-7 rebounded in Jul 2013, increasing 4.4 percent seasonally adjusted. Private sector orders increased 3.4 percent and changed 0.0 percent excluding volatile orders. Orders from overseas increased 1.4 percent and manufacturing orders 4.8 percent.

Table VB-7, Japan, Machinery Orders, Month ∆%, SA 

2013	Jul 13	Jun 13	May 13	Apr 13
Total	4.4	-14.3	12.0	-14.2
Private Sector	3.4	-6.0	12.4	-12.4
Excluding Volatile Orders	0.0	-2.7	10.5	-8.8
Mfg	4.8	2.4	3.8	-7.3
Non Mfg ex Volatile	0.0	-17.5	25.4	-6.0
Government	12.9	-28.2	44.8	-6.3
From Overseas	1.4	-16.7	10.3	-19.9
Through Agencies	-3.0	6.6	22.7	-38.2

Note: Mfg: manufacturing

Source: Japan Economic and Social Research Institute, Cabinet Office http://www.esri.cao.go.jp/index-e.html

Total orders for machinery and total private-sector orders excluding volatile orders for Japan are shown in Chart VB-1 of Japan’s Economic and Social Research Institute at the Cabinet Office. The trend of private-sector orders excluding volatile orders was showing recovery from the drop after Mar 2011 because of the earthquake/tsunami. There was reversal of the trend of increase in total orders with recent decreases and an upward movement in the final data point. Fluctuations still prevent detecting longer-term trends but recovery is still evident from the global recession. There was a major setback by the declines in May 2012 shown in the final segment of Chart VB-1 with partial recovery in Jun 2012, decline again in Jul and Aug 2012 and rebound in total orders in Nov reversed in Dec but decline in orders excluding volatile segments with increase in Nov-Dec 2012. The final segment shows growth in Feb-Mar 2013 interrupted by decline in Apr 2013 followed by increase in May 2013. Orders fell again in Jun 2013, rebounding in Jul 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-8 provides values and percentage changes from a year earlier of Japan’s machinery orders without seasonal adjustment. Total orders of JPY 1,790,273 million in Jul 2013 are divided between JPY 703,677 million overseas orders, or 39.2 percent of the total, and domestic orders of JPY 990,302 million, or 55.3 percent of the total, with orders through agencies of JPY 97,294 million, or 5.4 percent of the total. Orders through agencies are not in Table VB-8 because of the minor value and appear only in the note to the table. Twelve-month percentages changes in Jul 2013 rebounded with increases of 5.3 percent for total orders, 6.9 percent for domestic orders and 6.5 percent for orders excluding volatile components. Overseas orders rose 4.4 percent in 12 months.

Table VB-8, Japan, Machinery Orders, 12 Months ∆% and Million Yen, Original Series  

	Total	Overseas	Domestic	Private ex Volatile
Value Jul 2013	1,790,273	702,677	990,302	713,619
% Total	100.0	39.2	55.3	41.0
Value Jul 2012	1,700,619	672,881	926,006	670,295
% Total	100.0	39.6	54.5	40.1
12-month ∆%	2.7	0.1	4.1	4.9
Jul 2013	5.3	4.4	6.9	6.5
Jun 2013	2.7	0.1	4.1	4.9
May 2013	18.1	17.1	20.8	16.5
Apr 2013	-4.3	6.7	-9.9	-1.1
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 Jul 2013 were JPY 97,294 million or 5.4 percent of the total and JPY 101,732 or 6.0 percent of the total in Jun 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, 54.3 in May 2013 and 53.9 in Jun 2013, rebounding to 54.1 in Jul 2013. The index eased to 53.9 in Aug 2013.

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

	Total Index	New Orders	Interm. Input Prices	Subs Prices	Exp
Aug 2013	53.9	50.9	57.1	51.2	62.9
Jul	54.1	50.3	58.2	52.4	63.9
Jun	53.9	50.3	55.0	50.6	61.8
May	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, 54.3 in May 2013 and 53.9 in Jun 2013, rebounding to 54.1 in Jul 2013. The index stabilized at 53.9 in Aug 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, falling to 50.1 in Jun 2013 and rebounding to 50.3 in Jul 2013. The index increased to 51.0 in Aug 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, falling to 50.4 in Jun 2013 and 50.6 in Jul 2013. The index of new orders increased to 52.4 in Aug 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 and 48.7 in Jun 2013, increasing to 49.1 in Jul 2013. The index of employment increased to 49.3 in Aug 2013.

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

	IPM	PI	NOI	INV	EMP	SDEL
Aug 2013	51.0	52.6	52.4	48.0	49.3	50.4
Jul	50.3	52.4	50.6	47.6	49.1	50.1
Jun	50.1	52.0	50.4	47.4	48.7	50.3
May	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 and fell to 50.1 in Jun 2013, increasing to 50.3 in Jul 2013. The index increased to 51.0 in Aug 2013.

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

Source: National Bureau of Statistics of China

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

Cumulative growth of China’s GDP in IIQ2013 relative to the same period in 2012 was 7.6 percent, as shown in Table VC-GDP. Secondary industry accounts for 47.2 percent of GDP of which industry alone for 41.0 percent in IQ2013 and construction with the remaining 6.2 percent in the first three quarters of 2012. Tertiary industry accounts for 45.3 percent of cumulative GDP in IIQ2013 and primary industry for 7.5 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 10.4 percent in IIQ2011 to 7.4 percent in IVQ2011 and 6.2 percent in IQ2012, rebounding to 8.7 percent in IIQ2012, 8.2 percent in IIIQ2012 and 7.8 percent in IVQ2012. Annual equivalent growth in IQ2013 fell to 6.6 percent and to 7.0 percent in IIQ2013.

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

Cumulative GDP IIQ2013	Value Current CNY 100 Million	2013 Year-on-Year Constant Prices ∆%
GDP	248009	7.6
Primary Industry	18622	3.0
Farming	18622	3.0
Secondary Industry	117037	7.6
Industry	101601	7.3
Construction	15436	9.6
Tertiary Industry	112350	8.3
Transport, Storage, Post	12995	6.8
Wholesale, Retail Trades	23291	10.2
Hotel & Catering Services	4824	4.7
Financial Intermediation	16036	10.8
Real Estate	16127	7.5
Other	39077	7.4
Growth in Quarter Relative to Prior Quarter	∆% on Prior Quarter	∆% Annual Equivalent
2013
IIQ2013	1.7	7.0
IQ2013	1.6	6.6
2012
IVQ2012	1.9	7.8
IIIQ2012	2.0	8.2
IIQ2012	2.1	8.7
IQ2012	1.5	6.2
2011
IVQ2011	1.8	7.4
IIIQ2011	2.2	9.1
IIQ2011	2.5	10.4
IQ2011	2.3	9.5

Source: National Bureau of Statistics of China

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

Growth of China’s GDP in IIQ2013 relative to the same period in 2012 was 7.5 percent, as shown in Table VC-GDPA. Secondary industry accounts for 47.2 percent of GDP of which industry alone for 41.0 percent in cumulative IIQ2013 and construction with the remaining 7.5 percent in the first two quarters of 2013. Tertiary industry accounts for 45.3 percent of GDP in the cumulative to IIQ2013 and primary industry for 7.5 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). GDP growth decelerated from 12.1 percent in IQ2010 and 11.2 percent in IIQ2010 to 7.7 percent in IQ2013 and 7.5 percent in IIQ2013.

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

	IQ 2013	IIQ 2013
GDP	7.7	7.5
Primary Industry	3.4	3.0
Secondary Industry	7.8	7.6
Tertiary Industry	8.3	8.3
GDP ∆% Relative to a Prior Quarter	1.6	1.7
	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/6db45ffe4c024d7aadb1e6e701bd9f02) is moving at faster pace. The overall Flash HSBC China Manufacturing PMI^™ increased from 47.7 in Jul to 50.1 in Aug, which is moderately above the contraction frontier of 50.0, while the Flash HSBC China Manufacturing Output Index increased from 48.0 in Jul to 50.6 in Aug, moving into moderate expansion territory. Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds that the stabilizing index suggests recent stimulus is influencing economic activity (http://www.markiteconomics.com/Survey/PressRelease.mvc/6db45ffe4c024d7aadb1e6e701bd9f02). The HSBC China Services PMI^™, compiled by Markit, shows marginal improvement in business activity in China with the HSBC Composite Output, combining manufacturing and services, increasing from 49.5 in Jul to 51.8 in Aug, indicating moderate growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/43566e4eb02640ce8511830afb369003). Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds support of manufacturing combined with services (http://www.markiteconomics.com/Survey/PressRelease.mvc/43566e4eb02640ce8511830afb369003). The HSBC Business Activity index increased from 51.3 in Jul to 52.8 in Aug (http://www.markiteconomics.com/Survey/PressRelease.mvc/43566e4eb02640ce8511830afb369003). Hongbin Ku, Chief Economist, China & Co-Head of Asian Economic Research at HSBC, finds the highest reading of services in five months (http://www.markiteconomics.com/Survey/PressRelease.mvc/43566e4eb02640ce8511830afb369003). The HSBC Purchasing Managers’ Index^™ (PMI^™), compiled by Markit, increased to 50.1 in Aug from 47.7 in Jul, indicating relatively unchanged manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/ddf3bd97162247348ab421d1f65527fb). New export orders decreased for the fifth consecutive month at slower pace than in the prior month. Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds stabilizing conditions in manufacturing with marginal support of new orders and output (http://www.markiteconomics.com/Survey/PressRelease.mvc/ddf3bd97162247348ab421d1f65527fb). Table CNY provides the country data table for China.

Table CNY, China, Economic Indicators

Price Indexes for Industry	Aug 12-month ∆%: minus 1.6 Aug month ∆%: 0.1 Blog 9/15/13
Consumer Price Index	Aug month ∆%: 0.5 Jul 12 months ∆%: 2.6 Blog 9/15/13
Value Added of Industry	Aug month ∆%: 0.93 Jan-Aug 2013/Jan-Aug 2012 ∆%: 9.5 Aug 12-Month ∆%: 10.4 Blog 9/15/13
GDP Growth Rate	Year IIQ2013 ∆%: 7.5 Quarter IIQ2013 AE ∆%: 7.0 Blog 7/21/13
Investment in Fixed Assets	Total Jan-Aug 2013 ∆%: 20.3 Real estate development: 19.3 Blog 9/15/13
Retail Sales	Aug month ∆%: 1.17 Aug 12 month ∆%: 13.4 Jan-Aug ∆%: 12.8 Blog 9/15/13
Trade Balance	Aug balance $28.52 billion Exports 12M ∆% 7.2 Imports 12M ∆% 7.1 Cumulative Aug: $154.23 billion Blog 9/15/13

Links to blog comments in Table CNY:

7/21/2013 http://cmpassocregulationblog.blogspot.com/2013/07/tapering-quantitative-easing-policy-and.html

Cumulative and 12-months rates of value added of industry in China are provided in Table VC-1. Value added in total industry increased 9.5 in Jan-Aug 2013 relative to a year earlier and 10.4 percent in 12 months. Value added in total industry in Jan-Jul 2013 increased 9.4 percent relative to a year earlier. Heavy industry (manufacturing) had been the driver of growth with a cumulative rate of 10.0 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, 9.7 percent in Jan-May 2013, 10.0 percent in Jan-Jun 2013, 10.1 percent in Jan-Jul 2013 and 10.2 percent in Jan-Aug 2013. Light industry (mining and quarrying) grew 6.9 percent in Jan-Aug 2013 relative to a year earlier. Growth of total industry decelerated from cumulative 14.4 percent in Jan-Mar 2011 to 9.5 percent in Jan-Aug 2013.

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

	Industry	Light Industry	Heavy Industry	State Owned	Joint-Stock
2013
Jan-Aug	9.5	6.9	10.2	6.1	11.0
12M Aug	10.4	5.8	10.9	9.5	11.7
Jan-Jul	9.4	7.1	10.1	5.6	10.9
12M Jun	9.7	5.5	10.5	8.1	11.1
Jan-Jun	9.3	7.3	10.0	5.2	10.9
12M Jun	8.9	5.8	9.6	6.3	10.5
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

*After Jun 2013 Heavy Industry is Manufacturing and Light Industry is Mining and Quarrying

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

Chart VC-3 provides 12-month percentage changes of value added of industry in 2012 and from Jan to Jul 2013. 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 and 8.9 percent in Jun 2013, rebounding to 9.7 percent in Jul 2013. The rate of growth increased to 10.4 percent in Aug 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-Aug 2013, many segments grew at rates exceeding or around 10 percent with exception of electricity at 5.2 percent, crude oil at 5.5 percent and pig iron at 6.6 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 6.4 percent in Jan-Jul 2013 relative to a year earlier and increased 13.4 percent in the 12 months ending in Aug 2013.

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

	Elec- tricity	Pig Iron	Cement	Crude Oil	Non- ferrous Metals	Autos
2013
Jan-Aug	6.4	6.6	9.2	4.7	9.7	15.1
12M Aug	13.4	11.1	8.2	5.5	5.7	14.8
Jan-Jul	5.2	6.0	9.6	4.5	10.3	15.1
12 M Jul	8.1	5.0	9.1	7.1	9.8	15.4
Jan-Jun	4.4	5.7	9.7	4.1	10.0	15.2
12 M Jun	6.0	2.9	8.8	10.8	6.7	13.5
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 Jul 2013. Monthly sales growth remained below 1 percent in all the eighteen months from Jan 2012 to Aug 2013 with the exception of Mar 2012. Value added in industry increased 0.93 percent in Aug 2013.

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	0.89
Jun	0.83
Jul	0.59
Aug	0.63
Sep	0.83
Oct	0.80
Nov	0.82
Dec	0.85
Jan 2013	0.63
Feb	0.84
Mar	0.73
Apr	0.94
May	0.71
Jun	0.76
Jul	0.91
Aug	0.93

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-Aug 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-Aug 2013, investment in fixed assets in China grew 20.3 percent relative to a year earlier and 19.3 percent in real estate development. There was slight deceleration in the final two months of 2011 that continued into Jan-Aug 2013.

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

	Total	State	Real Estate Development
Jan-Aug 2013	20.3	NA	19.3
Jan-Jul	20.1	17.5	20.5
Jan-Jun	20.1	17.5	20.3
Jan-May	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 from 2012 to 2013. 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, 20.6 in Jan-Apr 2013 and 20.4 percent in Jan0May 2013. The rate eased to 20.1 percent in Jan-Jun 2013, Jan-Jul 2013 and Jan-Aug 2013. Rates in 2013 and 2012 have fallen from higher gains in 2011.

Chart VC-2, China, Total and Private 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, 21.1 percent in Jan-Apr 2013 and 20.6 percent in Jan-May 2013. The rate eased to 20.3 percent in Jan-Jun 2013, increasing to 22.8 percent in Jan-Jul 2013. The rate fell to 19.3 percent in Jan-Aug 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/

Growth rates of retail sales in 12 months and cumulative relative to a year earlier are in Table VC-5. 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. Growth strengthened with 13.3 percent in the 12 months ending in Jun 2013 and 12.7 percent in the cumulative to Jun 2013 relative to a year earlier. Growth continued with 13.2 in 12 months in Jul 2013 and 12.8 percent in the cumulative Jan-Jul 2013 relative to a year earlier. The rate stabilized in Aug 2013 at 13.4 percent in 12 months and 12.8 percent cumulative relative to a year earlier.

Table VC-5, China, Retail Sales 12-Month ∆% and Cumulative ∆% Relative to Year Earlier

	12-Month ∆%	Cumulative ∆%/ Cumulative Year Earlier
2013
Aug	13.4	12.8
Jul	13.2	12.8
Jun	13.3	12.7
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 from 2012 to 2013. 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-6 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-7, the rate of 1.36 percent in Sep 2012 is relatively high and 1.30 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-Aug 2013.

Table VC-6, 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	1.12
Jul	1.03
Aug	1.11
Sep	1.36
Oct	1.19
Nov	1.18
Dec	1.29
Jan 2013	0.19
Feb	1.00
Mar	1.30
Apr	1.26
May	1.19
Jun	1.25
Jul	1.24
Aug	1.17

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

Table VC-7 provides China’s exports, imports, trade balance and 12-month percentage changes from Dec 2010 to Aug 2013. Markets reacted positively to China’s trade data in Aug 2013 with exports growing 7.2 percent relative to a year earlier and imports 7.1 percent for increasing trade surplus of $28.52. Exports fell 3.1 percent in Jun 2013 and imports declined 0.7 percent with growth of 5.1 percent of exports in Jul 2013 and 10.9 percent of imports. The trade surplus reached $17.82 billion. 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 21.8 percent in Feb 2013 relative to a year earlier and imports fell 15.2 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 $31.62 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 2012 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-7, China, Exports, Imports and Trade Balance USD Billion and ∆%

	Exports USD Billion	∆% Relative Year Earlier	Imports USD Billion	∆% Relative Year Earlier	Balance USD Billion
Aug 2013	190.61	7.2	162.09	7.1	28.52
Jul	185.99	5.1	168.17	10.9	17.82
Jun	174.32	-3.1	147.19	-0.7	27.12
May	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-9 provides cumulative exports, imports and the trade balance of China together with percentage growth of exports and imports relative to a year earlier. Exports increased 9.2 in in Jan-Aug 2013 relative to a year earlier and imports 7.3 percent for trade surplus of $154.23 billion. Exports grew 9.5 percent in Jul 2013 relative to a year earlier and imports 7.3 percent with cumulative surplus of $125.71 billion. Exports increased 10.4 percent cumulatively in Jun 2013 and imports 6.7 for cumulative surplus of $107.95 billion. Exports increased 13.5 percent in Jan-May 2013 relative to a year earlier while imports increased 8.2 percent for cumulative surplus of $80.87 billion. Exports increased 17.4 percent in Jan-Apr 2012 relative to a year earlier while imports increased 10.6 percent for cumulative surplus of $60.98 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 $43.07 billion. Cumulative exports in Jan-Feb 2013 grew 23.6 percent relative to a year earlier and imports 5.0 percent for trade surplus of $44.15 billion. There is strong beginning of 2013 with trade surplus of $29.15 in Jan 2013 and growth of exports of 25.0 percent and imports of 28.8 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, $120.6 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-8, 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
Aug 2013	1429.34	9.2	1275.11	7.3	154.23
Jul	1238.73	9.5	1113.02	7.3	125.71
Jun	1052.82	10.4	944.87	6.7	107.95
May	878.56	13.5	797.69	8.2	80.87
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 1.5 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 http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/ http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database

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

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

	Euro Area	Germany	France	Italy	Spain
2014*	1.2	1.8	1.1	0.7	0.9
2013*	-0.4	0.4	-0.1	-1.3	-1.5
2012	-0.6	0.7	0.0*	-2.4	-1.6
2011	1.5	3.3	2.0	0.4	0.1
2010	2.0	4.0	1.7	1.7	-0.2
2009	-4.4	-5.1	-3.1	-5.5	-3.8
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 50.5 in Jul to 51.7 in Aug, which is a high in 26 months (http://www.markiteconomics.com/Survey/PressRelease.mvc/fd58998f084a468c8df4ba5b07d4754b). Chris Williamson, Chief Economist at Markit, finds that the Markit Flash Eurozone PMI index suggests that the euro area is experiencing the fastest growth of business in about two years (http://www.markiteconomics.com/Survey/PressRelease.mvc/fd58998f084a468c8df4ba5b07d4754b). The Markit Eurozone PMI^® Composite Output Index, combining services and manufacturing activity with close association with GDP, increased from 50.5 in Jul to 51.5 in Aug in the second consecutive monthly expansion (http://www.markiteconomics.com/Survey/PressRelease.mvc/83eb8041afdc454d8510e3951cead070). Chris Williamson, Chief Economist at Markit, finds growth in multiple sectors and regions (http://www.markiteconomics.com/Survey/PressRelease.mvc/83eb8041afdc454d8510e3951cead070). The Markit Eurozone Services Business Activity Index increased from 49.8 in Jul to 51.5 in Aug (http://www.markiteconomics.com/Survey/PressRelease.mvc/83eb8041afdc454d8510e3951cead070). The Markit Eurozone Manufacturing PMI^® increased to 51.4 in Aug from 50.3 in Jul, which is the highest reading since Jun 2011 (http://www.markiteconomics.com/Survey/PressRelease.mvc/2a5b5d40ce4449c3ab581276d1057282). New orders increased at the fastest pace since May 2011 with strongest growth of new export demand in over two years in Italy, Spain and Austria. Chris Williamson, Chief Economist at Markit, finds recovery indications in Aug with companies enjoying the best conditions in two years and supported by growth of new export orders (http://www.markiteconomics.com/Survey/PressRelease.mvc/2a5b5d40ce4449c3ab581276d1057282). Table EUR provides the data table for the euro area.

Table EUR, Euro Area Economic Indicators

GDP	IIQ2013 ∆% 0.3; IIQ2013/IIQ2012 ∆% -0.5 Blog 9/8/13
Unemployment	Jul 2013: 12.1% unemployment rate Jun 2013: 19.231 million unemployed Blog 9/1/13
HICP	Jul month ∆%: -0.5 12 months Jul ∆%: 1.6 Blog 8/18/13
Producer Prices	Euro Zone industrial producer prices Jul ∆%: 0.3 Jul 12-month ∆%: 0.2 Blog 9/8/13
Industrial Production	Jul month ∆%: -1.5; Jun 12 months ∆%: -2.1 Blog 9/15/13
Retail Sales	Jul month ∆%: 0.1 Jul 12 months ∆%: minus 1.3 Blog 9/8/13
Confidence and Economic Sentiment Indicator	Sentiment 95.2 Aug 2013 Consumer minus 15.6 Aug 2013 Blog 9/1/13
Trade	Jan-Jun 2013/Jan-Jun 2012 Exports ∆%: 1.6 Imports ∆%: -4.2 Jun 2013 12-month Exports ∆% -2.5 Imports ∆% -5.6 Blog 8/18/13

Links to blog comments in Table EUR:

9/8/13 http://cmpassocregulationblog.blogspot.com/2013/09/twenty-eight-million-unemployed-or.html

9/1/13 http://cmpassocregulationblog.blogspot.com/2013/09/increasing-interest-rate-risk.html

8/18/13 http://cmpassocregulationblog.blogspot.com/2013/08/duration-dumping-and-peaking-valuations.html

Table VD-1 provides monthly industrial production percentage changes for total production and major segments. Total production decreased 1.5 percent in Jul 2013 with declines of 1.6 percent in energy and 0.9 percent in nondurable goods. Capital goods decreased 2.6 percent and durable goods 2.2 percent. Industrial production increased in all months from Dec 2012 to Jun 2013 with exception of declines of 0.2 percent in May 2013 and 0.4 percent in Jan 2013.

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

	Total	INT	ENE	CG	DUR	NDUR
Jul 2013	-1.5	-0.7	-1.6	-2.6	-2.2	-0.9
Jun	0.6	0.3	-1.6	2.0	4.3	-0.4
May	-0.4	0.6	-0.1	-1.9	-2.1	0.6
Apr	0.1	0.0	-1.7	1.5	-1.8	0.8
Mar	0.7	0.1	3.8	0.3	1.8	0.0
Feb	0.2	-0.2	1.6	0.9	0.4	-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. All 12-month percentage changes in Table VD-2 are negative in the 12 months ending in Jul 2013. Industrial production decreased 1.5 percent in the month of Jul 2013 and decreased 2.1 percent in the 12 months ending in Jul 2013.

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

2013	Jul Month ∆%	Jul 12-Month ∆%
Total	-1.5	-2.1
Intermediate Goods	-0.7	-1.2
Energy	-1.6	-2.8
Capital Goods	-2.6	-3.3
Durable Consumer Goods	-2.2	-3.9
Nondurable Consumer Goods	-0.9	-0.7

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. All 12-month percentage changes are negative for the various segments of euro area industrial production.

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

	Total	INT	ENE	CG	DUR	NDUR
Jul 2013	-2.1	-1.2	-2.8	-3.3	-3.9	-0.7
Jun	-0.4	-1.3	-2.0	1.2	-1.6	-0.5
May	-1.9	-2.6	-0.2	-2.4	-6.1	-0.1
Apr	-0.9	-2.4	-0.7	0.4	-4.6	0.5
Mar	-1.6	-4.1	8.9	-3.6	-1.8	-2.6
Feb	-3.1	-2.9	-6.6	-3.7	-4.9	-0.1

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. All twelve-month percentage changes in Jul 2013 are negative for countries and regions in Table VD-4.

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

Jul 2013	Month ∆%	12-Month ∆%
Euro Zone	-1.5	-2.1
Germany	-2.3	-2.5
France	-0.6	-1.9
Netherlands	-0.5	-1.2
Finland	2.0	-2.7
Belgium	NA	NA
Portugal	-3.2	-2.3
Ireland	-8.7	-7.9
Italy	-1.1	-4.3
Greece	-2.8	-8.2
Spain	0.1	-1.4
UK	0.9	-1.1
European Union	-1.0	-1.7

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 4.0 percent in 2010, 3.3 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	3.3	3.4
2010	4.0	3.8
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/2013/08/PE13_278_811.html https://www.destatis.de/EN/FactsFigures/Indicators/ShortTermIndicators/ShortTermIndicators.html

The Flash Germany Composite Output Index of the Markit Flash Germany PMI^®, combining manufacturing and services, increased from 52.1 in Jul to 53.4 in Aug, for the highest reading in seven months with stronger improvement in manufacturing output at 55.3 in Aug, which is a 26 month high, while services increased to 52.4 for a six-month high (http://www.markiteconomics.com/Survey/PressRelease.mvc/aca6a0c2f9ea4c13a1a33a78a2d4f84f). New export orders for manufacturing increased after five consecutive months of decline. Tim Moore, Senior Economist at Markit, finds that the data is consistent with expansion of the German economy in IIIQ2013 (http://www.markiteconomics.com/Survey/PressRelease.mvc/aca6a0c2f9ea4c13a1a33a78a2d4f84f). 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 52.1 in Jul to 53.5 in Aug (http://www.markiteconomics.com/Survey/PressRelease.mvc/a16df9608164405a96a13d8a5ea4e657). Tim Moore, Senior Economist at Markit and author of the report, finds support in rising performance in manufacturing and services for growth in Germany in IIIQ2013 (http://www.markiteconomics.com/Survey/PressRelease.mvc/a16df9608164405a96a13d8a5ea4e657). The Germany Services Business Activity Index increased from 51.3 in Jul to 52.8 in Aug (http://www.markiteconomics.com/Survey/PressRelease.mvc/a16df9608164405a96a13d8a5ea4e657). The Markit/BME Germany Purchasing Managers’ Index^® (PMI^®), showing close association with Germany’s manufacturing conditions, increased from 50.7 in Jul to 51.8 in Aug, in movement away from contraction territory below 50.0 during two consecutive months (http://www.markiteconomics.com/Survey/PressRelease.mvc/1d5523e6508d4b4e8c958321b88f4009). New export orders increased for the first month since Feb. Tim Moore, Senior Economist at Markit and author of the report, finds the fastest growth in manufacturing output since mid-2011 supported by domestic and foreign demand (http://www.markiteconomics.com/Survey/PressRelease.mvc/1d5523e6508d4b4e8c958321b88f4009).Table DE provides the country data table for Germany.

Table DE, Germany, Economic Indicators

GDP	IIQ2013 0.7 ∆%; II/Q2013/IIQ2012 ∆% 0.9 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 8/18/13 8/25/13
Consumer Price Index	Aug month NSA ∆%: 0.0 Aug 12-month NSA ∆%: 1.5 Blog 9/15/13
Producer Price Index	Jul month ∆%: -0.1 CSA, 0.3 12-month NSA ∆%: 0.5 Blog 8/25/13
Industrial Production	MFG Jul month CSA ∆%: minus 2.1 12-month NSA: 0.9 Blog 9/8/13
Machine Orders	MFG Jun month ∆%: -2.7 Jun 12-month ∆%: 5.0 Blog 9/8/13
Retail Sales	Jul Month ∆% -1.4 12-Month ∆% 2.3 Blog 9/1/13
Employment Report	Unemployment Rate SA Jul 5.4% Blog 9/1/13
Trade Balance	Exports Jul 12-month NSA ∆%: 0.0 Imports Jul 12 months NSA ∆%: 0.9 Exports Jul month CSA ∆%: minus 1.1; Imports Jul month SA 0.5 Blog 9/8/13

Links to blog comments in Table DE:

9/8/13 http://cmpassocregulationblog.blogspot.com/2013/09/twenty-eight-million-unemployed-or.html

9/1/13 http://cmpassocregulationblog.blogspot.com/2013/09/increasing-interest-rate-risk.html

8/25/13 http://cmpassocregulationblog.blogspot.com/2013/08/interest-rate-risks-duration-dumping.html

8/18/13 http://cmpassocregulationblog.blogspot.com/2013/08/duration-dumping-and-peaking-valuations.html

http://cmpassocregulationblog.blogspot.com/2013/07/twenty-nine-million-unemployed-or.html

5/26/13 http://cmpassocregulationblog.blogspot.com/2013/05/united-states-commercial-banks-assets.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 4.0 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. The growth rate from 2000 to 2012 is 1.0 percent. 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	2.5
1970-1979	3.8
1960-1969	5.7
1950-1959	4.2

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=26&date=20130814

The Markit Flash France Composite Output Index fell from 49.1 in Jul to 47.9 in Aug for a two-month low (http://www.markiteconomics.com/Survey/PressRelease.mvc/547cb0f2e4bd47a791b811e256927034). Jack Kennedy, Senior Economist at Markit and author of the report, finds that the data suggest sharper deceleration with encouragement in growth of new orders (http://www.markiteconomics.com/Survey/PressRelease.mvc/547cb0f2e4bd47a791b811e256927034). The Markit France Composite Output Index, combining services and manufacturing with close association with French GDP, decreased marginally from 49.1 in Jul to 48.8 in Aug, indicating contraction of private sector activity in 17 consecutive months (http://www.markiteconomics.com/Survey/PressRelease.mvc/67c7f4b845e0420b8bb05949c3e960f6). Jack Kennedy, Senior Economist at Markit and author of the France Services PMI^®, finds stabilization with services compensating for weakness in manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/67c7f4b845e0420b8bb05949c3e960f6). The Markit France Services Activity index increased from 48.6 in Jul to 48.9 in Aug for the highest reading in 12 months (http://www.markiteconomics.com/Survey/PressRelease.mvc/67c7f4b845e0420b8bb05949c3e960f6). The Markit France Manufacturing Purchasing Managers’ Index^® changed to 49.7 in Aug from 49.7 in Jul, for the highest reading in eighteen consecutive months below the neutral level of 50.0 (http://www.markiteconomics.com/Survey/PressRelease.mvc/53d288d425be43c8b709684c67030d84). Jack Kennedy, Senior Economist at Markit and author of the France Manufacturing PMI^®, finds stabilization in French manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/53d288d425be43c8b709684c67030d84). Table FR provides the country data table for France.

Table FR, France, Economic Indicators

CPI	Aug month ∆% 0.5 12 months ∆%: 0.9 9/15/13
PPI	Jul month ∆%: 0.7 Jul 12 months ∆%: 0.3 Blog 9/8/13
GDP Growth	IIQ2013/IQ2013 ∆%: 0.5 IIQ2013/IIQ2012 ∆%: 0.3 Blog 3/31/13 5/19/12 6/30/13 8/18/13
Industrial Production	Jul ∆%: Manufacturing minus 0.7 12-Month ∆%: Manufacturing minus 2.5 Blog 9/15/13
Consumer Spending	Manufactured Goods Jun ∆%: -0.4 Jun 12-Month Manufactured Goods ∆%: -0.8 Blog 8/11/13
Employment	Unemployment Rate: IIQ2013 10.5% Blog 9/8/13
Trade Balance	Jul Exports ∆%: month 1.3, 12 months -0.6 Jul Imports ∆%: month 2.7, 12 months 1.1 Blog 9/8/13
Confidence Indicators	Historical averages 100 Aug Mfg Business Climate 98 Blog 9/1/13

Links to blog comments in Table FR:

9/8/13 http://cmpassocregulationblog.blogspot.com/2013/09/twenty-eight-million-unemployed-or.html

9/1/13 http://cmpassocregulationblog.blogspot.com/2013/09/increasing-interest-rate-risk.html

8/18/13 http://cmpassocregulationblog.blogspot.com/2013/08/duration-dumping-and-peaking-valuations.html

8/11/13 http://cmpassocregulationblog.blogspot.com/2013/08/recovery-without-hiring-loss-of-full.html

6/30/13 http://cmpassocregulationblog.blogspot.com/2013/06/tapering-quantitative-easing-policy-and.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 decreased 0.7 percent in Jul 2013 and fell 2.5 percent in the 12 months ending in Jun 2013. France’s manufacturing output fell 0.4 percent in Jun 2013 and 1.0 percent in May 2013. Manufacturing increased 2.6 percent in Apr 2013 and increased 0.1 percent in 12 months. Manufacturing fell 0.9 percent in Mar 2013 and 4.1 percent relative to a year earlier. Growth of 1.3 percent in Dec 2012 pulled down the 12-month rate of decline from 6.1 percent in Nov 2012 to 3.3 percent in Dec 2012. Manufacturing in France fell 14.1 percent in the 12 months ending in Dec 2008 and 4.2 percent in Dec 2009.

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

	Month ∆%	12-Month ∆%
Jul 2013	-0.7	-2.5
Jun	-0.4	-0.4
May	-1.0	-0.4
Apr	2.6	0.1
Mar	-0.9	-4.1
Feb	0.7	-1.6
Jan	-1.1	-4.1
Dec 2012	1.3	-3.3
Nov	-0.9	-6.1
Oct	-1.2	-3.3
Sep	-2.7	-2.3
Aug	2.0	-0.6
Jul	1.4	-2.6
Jun	-0.4	-3.5
May	-0.5	-5.2
Apr	-1.8	-3.1
Mar	1.7	-2.3
Feb	-1.8	-5.3
Jan	-0.3	-2.8
Dec 2011	-1.5	-0.5
Nov	2.0	1.8
Oct	-0.1	2.0
Sep	-1.1	1.2
Aug	-0.1	3.6
Jul	0.5	3.3
Jun	-2.2	3.2
May	1.7	4.7
Apr	-1.0	3.7
Mar	-1.4	5.1
Feb	0.8	8.9
Jan	2.0	8.0
Dec 2010	0.7	5.8
Dec 2009		-4.2
Dec 2008		-14.1
Dec 2007		-0.9
Dec 2006		2.7
Dec 2005		0.7
Dec 2004		0.9
Dec 2003		0.2
Dec 2002		-1.0
Dec 2001		-5.5
Dec 2000		4.7

Source:

Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=10&date=20130910

Chart VF-1 of the Institut National de la Statistique et des Études Économiques provides France’s index of manufacturing, adjusted for working days and seasonal effects, from Jan 1990 to Jul 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-Jul 2013, Seasonal and Working-Day Adjusted

Source:

Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=10&date=20130910

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. Manufacturing fell in May-Jul 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=20130910

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, minus 2.4 percent in IQ2013 and minus 2.0 percent in IIQ2013. The aggregate demand components of consumption and gross fixed capital formation (GFCF) have been declining at faster rates. The rates of decline of GDP, consumption and GFCF were somewhat milder in IIQ2013 than in IQ2013 and the final three quarters of 2012.

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

	GDP	Imports	Consumption	GFCF	Exports
2013
IIQ2013	-2.1	-4.6	-2.4	-5.9	0.2
IQ	-2.4	-5.0	-2.7	-7.1	-0.4
2012
IVQ	-2.8	-6.8	-4.3	-7.9	1.7
IIIQ	-2.6	-8.1	-4.3	-8.1	2.5
IIQ	-2.4	-7.5	-3.8	-8.3	2.5
IQ	-1.7	-8.9	-3.3	-7.6	2.1
2011
IVQ	-0.5	-6.9	-1.8	-3.2	3.1
IIIQ	0.3	0.1	-0.7	-2.1	5.6
IIQ	0.9	3.1	0.6	-0.7	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/98480

The Markit/ADACI Business Activity Index increased from 48.7 in Jul to 48.8 in Aug, indicating marginal contraction of output of Italy’s for 27 consecutive months of decline since Jun 2011 with contraction at moderate rhythm (http://www.markiteconomics.com/Survey/PressRelease.mvc/c06756e0924443d4a8d4891b62748cb9). Phil Smith, Economist at Markit and author of the Italy Services PMI^®, finds the index consistent with stagnation in IIIQ2013 but with possible improvement depending on services performance in Sep (http://www.markiteconomics.com/Survey/PressRelease.mvc/c06756e0924443d4a8d4891b62748cb9). The Markit/ADACI Purchasing Managers’ Index^® (PMI^®), increased from 50.4 in Jul to 51.3 in Aug, with the Aug reading at the highest level in 27 month and the second consecutive reading above 50.0 (http://www.markiteconomics.com/Survey/PressRelease.mvc/30ee8ab53c0b4bdb87c1469e5152fe40). Phil Smith, Economist at Markit and author of the Italian Manufacturing PMI^®, finds that manufacturing has been improving by obtaining foreign orders (http://www.markiteconomics.com/Survey/PressRelease.mvc/30ee8ab53c0b4bdb87c1469e5152fe40). Table IT provides the country data table for Italy.

Table IT, Italy, Economic Indicators

Consumer Price Index	Aug month ∆%: 0.4 Aug 12-month ∆%: 1.2 Blog 9/15/13
Producer Price Index	Jul month ∆%: 0.1 Jul 12-month ∆%: -1.0 Blog 9/1/13
GDP Growth	IIQ2013/IQ2013 SA ∆%: minus 0.3 IIQ2013/IIQ2012 NSA ∆%: minus 2.1 Blog 3/17/13 6/16/13 8/11/13 9/15/13
Labor Report	Jul 2013 Participation rate 63.6% Employment ratio 55.9% Unemployment rate 12.0% Blog 9/1/13
Industrial Production	Jul month ∆%: -1.1 12 months CA ∆%: -4.3 Blog 8/11/13
Retail Sales	Jun month ∆%: -0.2 Jun 12-month ∆%: -3.0 Blog 9/1/13
Business Confidence	Mfg Aug 92.9, Apr 88.2 Construction Aug 76.1, Apr 77.7 Blog 9/1/13
Trade Balance	Balance Jun SA €3155 million versus May €2683 Exports Jun month SA ∆%: 1.2; Imports Jun month ∆%: 1.6 Exports 12 months Jun NSA ∆%: -2.7 Imports 12 months NSA ∆%: -5.6 Blog 8/11/13

Links to blog comments in Table IT:

9/1/13 http://cmpassocregulationblog.blogspot.com/2013/09/increasing-interest-rate-risk.html

8/11/13 http://cmpassocregulationblog.blogspot.com/2013/08/recovery-without-hiring-loss-of-full.html

6/16/13 http://cmpassocregulationblog.blogspot.com/2013/06/recovery-without-hiring-seven-million.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 0.3 percent in IIQ2013 and fell 2.1 percent relative to 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 eight consecutive quarters from IIIQ2011 to IIQ2013 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, declining to minus 0.3 percent in IIQ2013. GDP contracted cumulatively 4.4 percent in seven consecutive quarterly contractions from IIIQ2011 to IQ2013 at the annual equivalent rate of 2.2 percent. The yearly rate has fallen from 2.0 percent in IVQ2010 to minus 2.4 percent in IQ2013 and minus 2.1 percent in IIQ2013. 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
IIQ2013	-0.3	-2.1
IQ2013	-0.6	-2.4
IVQ2012	-0.9	-2.8
IIIQ2012	-0.3	-2.6
IIQ2012	-0.6	-2.4
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/98480

Table VG-2 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, minus 2.4 percent in IQ2013 and minus 2.0 percent in IIQ2013. The aggregate demand components of consumption and gross fixed capital formation (GFCF) have been declining at faster rates. The rates of decline of GDP, consumption and GFCF were somewhat milder in IIQ2013 than in IQ2013 and the final three quarters of 2012.

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

	GDP	Imports	Consumption	GFCF	Exports
2013
IIQ2013	-2.1	-4.6	-2.4	-5.9	0.2
IQ	-2.4	-5.0	-2.7	-7.1	-0.4
2012
IVQ	-2.8	-6.8	-4.3	-7.9	1.7
IIIQ	-2.6	-8.1	-4.3	-8.1	2.5
IIQ	-2.4	-7.5	-3.8	-8.3	2.5
IQ	-1.7	-8.9	-3.3	-7.6	2.1
2011
IVQ	-0.5	-6.9	-1.8	-3.2	3.1
IIIQ	0.3	0.1	-0.7	-2.1	5.6
IIQ	0.9	3.1	0.6	-0.7	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/98480

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 IIQ2013 than for services.

Table VG-3, 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
IIQ	-2.6	-3.6	-1.2	-4.7	-2.1
IQ	0.1	-4.0	-1.4	-5.7	-2.4
% Value Added 2012	2.1	24.1	73.8
2012
IVQ	-6.9	-4.5	-1.7	-5.8	-2.8
IIIQ	-6.1	-3.6	-1.8	-5.0	-2.6
IIQ	-1.4	-4.8	-1.1	-6.0	-2.4
IQ	-3.5	-4.1	-0.4	-4.8	-1.7
2011
IVQ	0.9	-1.9	0.4	-3.7	-0.5
IIIQ	0.3	-0.3	0.8	-1.2	0.3
IIQ	-0.5	1.3	0.9	0.2	0.9
IQ	0.0	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/98480

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 and IIQ2013.

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 1.1 percent in Jul 2013 and fell 4.3 percent in 12 months. Industrial production increased 0.2 percent in Jun 2013 and 0.1 percent in May 2013 and fell 4.3 percent in the 12 months ending in May 2013 and 2.1 percent in the 12 months ending in Jun 2012, as shown in Table VG-4. Industrial production decreased 0.3 percent in Apr 2013 with decline of the 12-month rate of growth to minus 4.7 percent with calendar adjustment (CA) from minus 7.4 percent in Dec 2012. In the quarter Sep-Nov 2012, industrial production fell cumulatively 3.2 percent, at the annual equivalent rate of 15.8 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-4, Italy, Industrial Production ∆%

			Index CA	∆% CA	Index	∆%
2011	-	-	101.1	1.1	100.3	0.3
2012	-	-	94.6	-6.4	94.2	-6.1
Quarter	Index SA	Quarter	Index CA	4Q ∆%	Index	12M ∆%
IIIQ2012	94.5	-0.3	90.4	-5.1	88.7	-6.1
IVQ2012	92.4	-2.2	92.5	-6.9	92.4	-5.7
2013
IQ 2013	92.1	-0.3	92.5	-4.2	91.8	-6.1
IIQ2013	91.2	-1.0	95.1	-3.6	94.8	-3.3
	Index SA	Month ∆%	Index CA	12M ∆%	Index	12M ∆%
2011
Jul	100.4	-0.5	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	-3.7	102.9	-3.7
Nov	99.0	0.5	103.5	-3.5	103.9	-3.4
Dec	99.1	0.1	87.5	-2.5	87.1	-8.3
2012
Jan	96.5	-2.6	88.9	-4.9	89.2	-2.0
Feb	96.0	-0.5	96.2	-7.3	98.8	-3.6
Mar	96.2	0.2	104.8	-6.9	105.3	-6.9
Apr	95.0	-1.2	93.3	-9.2	89.5	-11.9
May	95.4	0.4	103.9	-5.8	105.2	-5.8
Jun	93.9	-1.6	99.0	-7.0	99.4	-7.0
Jul	94.6	0.7	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	92.0	-0.1	81.0	-7.4	78.1	-10.3
2013
Jan	92.9	1.0	86.0	-3.3	89.0	-0.2
Feb	92.1	-0.9	92.4	-4.0	91.2	-7.7
Mar	91.4	-0.8	99.2	-5.3	95.1	-9.7
Apr	91.1	-0.3	88.9	-4.7	89.3	-0.2
May	91.2	0.1	99.4	-4.3	100.7	-4.3
Jun	91.4	0.2	96.9	-2.1	94.3	-5.1
Jul	90.4	-1.1	103.7	-4.3	105.9	-1.4

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

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/98585

There is worsening trend of Italy’s industrial production in Chart VG-2 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 May-Jun 2013 followed by decline in Jul 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 5.1 percent in 2009 after dropping 0.8 percent in 2008. Recovery of 1.6 percent in 2010 is relatively low in comparison with annual growth rates in 2007 and earlier years. Growth was only 1.1 percent in 2011 and 0.2 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 per year 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. GDP in 2012 was lower by 3.1 percent than in 2007.

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

	∆% on Prior Year
1998	3.5
1999	2.9
2000	4.4
2001	2.1
2002	2.3
2003	3.9
2004	3.3
2005	3.3
2006	2.7
2007	3.4
2008	-0.8
2009	-5.1
2010	1.6
2011	1.1
2012	0.2
Average Growth Rates ∆% per Year
1948-2012	2.6
1950-1959	2.7
1960-1969	3.2
1970-1979	2.5
1980-1989	3.2
1990-1999	2.9
2000-2007	3.0
2007-2012	-3.1%
2000-2012	1.5

*Absolute change from 2007 to 2012

Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/naa2/second-estimate-of-gdp/q2-2013/index.html

The Business Activity Index of the Markit/CIPS UK Services PMI^® increased from60.2 in Jul to 60.5 in Aug, indicating increase in activity in every month since the beginning of 2013 and at the fastest rate since Dec 2006 with highest reading for new orders since May 1997 (http://www.markiteconomics.com/Survey/PressRelease.mvc/291fe2a94ee040bcb216d84676428f92). Paul Smith, Senior Economist at Markit, finds continuing improvement in the UK’s economy with possible higher growth of GDP in IIIQ2013 (http://www.markiteconomics.com/Survey/PressRelease.mvc/291fe2a94ee040bcb216d84676428f92). The Markit/CIPS UK Manufacturing Purchasing Managers’ Index^® (PMI^®) increased from 54.8 in Jul to 57.2 in Aug, which is the highest reading in 36 months (http://www.markiteconomics.com/Survey/PressRelease.mvc/89b62348c597490698dae25b0324e7a7). Respondents indicated stronger foreign demand. Rob Dobson, Senior Economist at Markit that compiles the Markit/CIPS Manufacturing PMI^®, finds that manufacturing could grow at around 1 percent in IIIQ2013, exceeding growth of -0.7 percent in IIQ2013 (http://www.markiteconomics.com/Survey/PressRelease.mvc/89b62348c597490698dae25b0324e7a7). Table UK provides the economic indicators for the United Kingdom.

Table UK, UK Economic Indicators

CPI	Jul month ∆%: 0.0 Jul 12-month ∆%: 2.8 Blog 8/18/13
Output/Input Prices	Output Prices: Jul 12-month NSA ∆%: 2.1; excluding food, petroleum ∆%: 1.1 Input Prices: Jul 12-month NSA ∆%: 5.0 Excluding ∆%: 3.9 Blog 8/18/13
GDP Growth	IIQ2013 prior quarter ∆% 0.7; year earlier same quarter ∆%: 1.5 Blog 3/31/13 4/28/13 5/26/13 7/28/13 8/25/13
Industrial Production	Jul 2013/Jul 2012 ∆%: Production Industries minus 1.6; Manufacturing minus 0.7 Blog 9/8/13
Retail Sales	Jul month ∆%: 1.1 Jul 12-month ∆%: 3.0 Blog 8/18/13
Labor Market	May-Jul Unemployment Rate: 7.7%; Claimant Count 4.2%; Earnings Growth 1.1% Blog 9/15/13
Trade Balance	Balance Jul minus ₤3085 million Exports Jul ∆%: -4.6; May-Jul ∆%: 1.1 Imports Jul ∆%: minus 0.4 May-Jul ∆%: 0.7 Blog 9/8/13

Links to blog comments in Table UK:

9/8/13 http://cmpassocregulationblog.blogspot.com/2013/09/twenty-eight-million-unemployed-or.html

8/25/13 http://cmpassocregulationblog.blogspot.com/2013/08/interest-rate-risks-duration-dumping.html

8/18/13 http://cmpassocregulationblog.blogspot.com/2013/08/duration-dumping-and-peaking-valuations.html

7/28/13 http://cmpassocregulationblog.blogspot.com/2013/07/duration-dumping-steepening-yield-curve.html

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

Labor market statistics of the UK for the quarter May-Jul 2013 are provided in Table VH-1. The unemployment rate decreased to 7.7 percent and the number unemployed decreased 105,000 in the year, reaching 2.487 million. The employment rate is 71.6 percent. Earnings growth including bonuses was 1.1 percent over the earlier year. The claimant count or those receiving unemployment benefits stands at 4.2 percent, down 0.1 percentage points on the month and down 0.5 percentage points on the year.

Table VH-1, UK, Labor Market Statistics

	Quarter May-Jul 2013
Unemployment Rate	7.7% down 0.1 on quarter and down 0.4 from year earlier
Number Unemployed	(1) Down 24,000 on quarter and down 105,000 from year earlier to reach 2.487 million (2) Unemployment rate 16 to 24 years of age 20.7% of that age group (3) Unemployed 16 to 24 years excluding those in full-time education 668,000 (291,000 in full-time education) up 8,000 on quarter; unemployment rate 19.4% +0.5 % Points
Number Unemployed > one and two years	(1) Number unemployed over one year: 899,000, unchanged on quarter (2) Number unemployed over two years: 469,000, up 11,000 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) 22.3%, down 0.1 % points on quarter, down 0.2 on year (2) Economically inactive 16-64 years down 33,000 on quarter and down 52,000 on year to 8.961 million
Employment Rate	71.6%, up 0.2 on quarter, up 0.4 % points on year
Number Employed	(1) Up 80,000 on quarter, +275,000 on year to 29.836 million                              (2) Number of employees up 98,000 on quarter to 25.392 million (3) Self-employed fell 27,000 on quarter to 4.173 million (4) Full-time 21.787 million, up 95,000 on quarter, up 349,000 on year
Earnings Growth Rates Year on Year	(1) Total +1.1% (including bonuses) over year earlier; regular 1.0%; private sector 1.4% on year earlier, public sector rose 0.5% on year earlier   (2) Regular private 1.2 % (excluding bonuses); regular public 0.7% on year earlier
Full-time and Part-time	(1) Number full-time 21.71 million, up 31,000 on quarter (2) Number part-time 8.07 million, down 38,000 on quarter
Claimant Count (Jobseeker’s Allowance, JSA)	(1) Latest estimate: 1.402 million; down 32,600 in month, down 168,100 on year earlier (2) Claimant count 4.2%, down 0.1 on month and down 0.5 % points on year
Labor Productivity	(1) Output per worker changed 0.0% from IVQ2012 to IQ2013 (2) Unit labor costs fell 0.4% from IVQ2012 to IQ2013

Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/lms/labour-market-statistics/september-2013/index.html

Table VH-3 provides indicators of the labor force survey of the UK for May-Jul 2013 and earlier quarters. There has been improvement in UK labor markets with the rate of unemployment decreasing from 8.1 percent in May-Jul 2012 to 7.7 percent in May-Jul 2013.

Table VH-2, UK, Labor Force Survey Indicators

	LFHP	EMP	PART	UNE	RATE
May-Jul 2011	40,167	29,130	70.4	2,531	8.0
May-Jul 2012	40,187	29,560	71.2	2,592	8.1
Aug-Oct 2012	40,204	29,601	71.2	2,510	7.8
Nov-Jan 2012	40,220	29,732	71.5	2,516	7.8
Feb-Apr 2013	40,237	29,756	71.5	2,511	7.8
May-Jul 2013	40,253	29,836	71.6	2,487	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/september-2013/index.html

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