CMP Associates Regulation Blog: Twenty Eight Million Unemployed or Underemployed, Seven Million Dropping from Job Searches, Interest Rate Risk, Steepening Yield Curve and Peaking Valuations of Risk Financial Assets, United States International Trade, World Economic Slowdown and Global Recession Risk: Part III

Twenty Eight Million Unemployed or Underemployed, Seven Million Dropping from Job Searches, Interest Rate Risk, Steepening Yield Curve and Peaking Valuations of Risk Financial Assets, United States International Trade, World Economic Slowdown and Global Recession Risk

Carlos M. Pelaez

Executive Summary

I Twenty Eight Million Unemployed or Underemployed

IIA1 Summary of the Employment Situation

IIA2 Number of People in Job Stress

IIA3 Long-term and Cyclical Comparison of Employment

IIA4 Job Creation

IB Stagnating Real Wages

II United States International Trade

III World Financial Turbulence

IIIA Financial Risks

IIIE Appendix Euro Zone Survival Risk

IIIF Appendix on Sovereign Bond Valuation

IV Global Inflation

V World Economic Slowdown

VA United States

VB Japan

VC China

VD Euro Area

VE Germany

VF France

VG Italy

VH United Kingdom

VI Valuation of Risk Financial Assets

VII Economic Indicators

VIII Interest Rates

IX Conclusion

References

Appendixes

Appendix I The Great Inflation

IIIB Appendix on Safe Haven Currencies

IIIC Appendix on Fiscal Compact

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

IIIG Appendix on Deficit Financing of Growth and the Debt Crisis

IIIGA Monetary Policy with Deficit Financing of Economic Growth

IIIGB Adjustment during the Debt Crisis of the 1980s

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 IQ2013 available now for all countries. Growth is weak throughout most of the world. Japan’s GDP increased 1.2 percent in IQ2012 and 3.4 percent relative to a year earlier but part of the jump could be the low level a year earlier because of the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Japan is experiencing difficulties with the overvalued yen because of worldwide capital flight originating in zero interest rates with risk aversion in an environment of softer growth of world trade. Japan’s GDP fell 0.2 percent in IIQ2012 at the seasonally adjusted annual rate (SAAR) of minus 0.9 percent, which is much lower than 4.8 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 3.6 percent and increased 0.3 percent relative to a year earlier. Japan’s GDP grew 0.3 percent in IVQ2012 at the SAAR of 1.0 percent and increased 0.4 percent relative to a year earlier. Japan grew 0.9 percent in IQ2013 at the SAAR of 3.8 percent and 0.3 percent relative to a year earlier. Japan’s GDP increased 0.4 percent in IIQ2013 at the SAAR of 1.7 percent and increased 1.4 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 2.3 percent relative to a year earlier. Italy’s GDP fell 0.2 percent in IIQ2013 and 2.0 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: 4.8	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: -0.2 SAAR: -0.9	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: –3.6	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: 1.0	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: 0.9 SAAR: 3.8	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	-2.3
UK	0.3	0.3
	IIQ2013/IQ2013	IIQ2013/IIQ2012
United States	QOQ: 0.6 SAAR: 2.5	1.6
Japan	QOQ: 0.6 SAAR: 2.6	0.9
China	1.7	7.5
Euro Area	0.3	-0.5
Germany	0.7	0.9
France	0.5	0.3
Italy	-0.2	-2.0
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 2.8 percentage points from GDP growth in IIIQ2012 and deducted 0.6 percentage points from GDP growth in IVQ2012. In Jul 2013, China exports increased 5.1 percent relative to a year earlier and imports increased 10.9 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		5.1 Jul -3.1 Jun 1.0 May 14.7 Apr 10.0 Mar 21.8 Feb		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	-1.1 IIQ2012 -2.8 IIIQ2012 -0.6 IVQ2012
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	Jul 12-month NSA ∆%: 2.1; ex food and energy ∆% 1.2 Jul month SA ∆% = 0.0; ex food and energy ∆%: 0.1 Blog 8/18/13
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 Jun 2013 4.918 million lower by 1.221 million than 6.139 million in Jun 2006 Blog 8/11/13
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-Jun 2013/Jan-Jun 2012 NSA ∆%: Total 2.4; Durable Goods: 2.4; Nondurable Goods: 2.3 Blog 8/11/13
Sales and Inventories of Manufacturers, Retailers and Merchant Wholesalers	Jun 13/Jun 12 NSA ∆%: Sales Total Business 2.6; Manufacturers 1.7 Retailers 4.2; Merchant Wholesalers 2.4 Blog 8/18/13
Sales for Retail and Food Services	Jan-Jul 2013/Jan-Jul 2012 ∆%: Retail and Food Services 4.2; Retail ∆% 4.3 Blog 8/18/13
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	Jul 12-month NSA ∆%: Imports 1.0; Exports 0.4 Blog 8/18/13
Consumer Credit	Jun ∆% annual rate: 5.9 Blog 8/11/13
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 ∆% Jul: Receipts 13.9; Outlays minus 2.9; Individual Income Taxes 17.2 Deficit Fiscal Year 2011 $1,296 billion Deficit Fiscal Year 2012 $1,087 billion Blog 8/18/2013
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:

9/1/13 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

The Bureau of Labor Statistics (BLS) of the Department of Labor provides the quarterly report on productivity and costs. The operational definition of productivity used by the BLS is (http://www.bls.gov/news.release/pdf/prod2.pdf 1): “Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours worked of all persons, including employees, proprietors, and unpaid family workers.” The BLS has revised the estimates for productivity and unit costs. Table VA-1 provides the new estimate for IIQ2013 and revised data for nonfarm business sector productivity and unit labor costs for IQ2013 and IVQ2012 in seasonally adjusted annual equivalent (SAAE) rate and the percentage change from the same quarter a year earlier. Reflecting increases in output of 3.7 percent and of 1.4 percent in hours worked, nonfarm business sector labor productivity increased at a SAAE rate of 2.3 percent in IIQ2013, as shown in column 2 “IIQ2013 SAEE.” The increase of labor productivity from IIQ2012 to IIQ2013 was 0.3 percent, reflecting increases in output of 2.1 percent and of hours worked of 1.7 percent, as shown in column 3 “IIQ2013 YoY.” Hours worked decreased from 2.4 percent in IVQ2012 in SAAE to 1.5 percent in IQ2013 and 1.4 percent in IIQ2013 while output growth increased from 0.7 percent in IVQ2011 to minus 0.3 percent in IQ2013 and 3.7 percent in IIQ2013. The BLS defines unit labor costs as (http://www.bls.gov/news.release/pdf/prod2.pdf 1): “BLS defines unit labor costs as the ratio of hourly compensation to labor productivity; increases in hourly compensation tend to increase unit labor costs and increases in output per hour tend to reduce them.” Unit labor costs changed at the SAAE rate of 0.0 percent in IIQ2013 and rose 1.5 percent in IIQ2013 relative to IIQ2012. Hourly compensation increased at the SAAE rate of 2.3 percent in IIQ2013, which deflating by the estimated consumer price increase SAAE rate in IIQ2013 results in increase of real hourly compensation at 2.3 percent. Real hourly compensation increased 0.3 percent in IIQ2013 relative to IIQ2012.

Table VA-1, US, Nonfarm Business Sector Productivity and Costs %

	IIQ 2013 SAAE	IIQ 2013 YoY	IQ 2013 SAAE	IQ 2013 YoY	IVQ 2012 SAAE	IVQ 2012 YoY
Productivity	2.3	0.3	-1.7	0.0	-1.7	0.9
Output	3.7	2.1	-0.3	1.5	0.7	2.8
Hours	1.4	1.7	1.5	1.5	2.4	1.9
Hourly Comp.	2.3	1.8	-5.2	1.7	9.9	5.3
Real Hourly Comp.	2.3	0.3	-6.6	0.0	7.5	3.3
Unit Labor Costs	0.0	1.5	-3.5	1.6	11.8	4.4
Unit Nonlabor Payments	2.4	0.9	6.8	1.3	-12.0	-1.8
Implicit Price Deflator	1.0	1.2	0.7	1.5	0.8	1.7

Notes: SAAE: seasonally adjusted annual equivalent; Comp.: compensation; YoY: Quarter on Same Quarter Year Earlier

Source: US Bureau of Labor Statistics http://www.bls.gov/lpc/

In 2012, productivity increased 1.5 percent in the annual average, as shown in Table VA-2. Increases in productivity were 0.5 percent in 2011, 3.3 percent in 2010 and 3.2 percent in 2009. Savings of labor inputs have characterized the contraction period and the recovery period. Real hourly compensation increased 0.5 percent in 2012 and fell 0.7 percent in 2011, interrupting increases of 0.4 percent in 2010 and 1.5 percent in 2009. Unit labor costs fell 2.0 percent in 2009 and 1.2 percent in 2010 but increased 2.0 percent in 2011 and 1.2 percent in 2012.

Table VA-2, US, Revised Nonfarm Business Sector Productivity and Costs Annual Average, ∆% Annual Average

	2012 ∆%	2011 ∆%	2010 ∆%	2009 ∆%	2008 ∆%	2007 ∆%
Productivity	1.5	0.5	3.3	3.2	1.0	1.4
Real Hourly Compensation	0.5	-0.7	0.4	1.5	-1.1	1.4
Unit Labor Costs	1.2	2.0	-1.2	-2.0	1.7	2.9

Source: US Bureau of Labor Statistics http://www.bls.gov/lpc/

Productivity jumped in the recovery after the recession from Mar IQ2001 to Nov IVQ2001 (http://www.nber.org/cycles.html). Table VA-3 provides quarter on quarter and annual percentage changes in nonfarm business output per hour, or productivity, from 1999 to 2012. The annual average jumped from 2.7 percent in 2001 to 4.3 percent in 2002. Nonfarm business productivity increased at the SAAE rate of 9.5 percent in the first quarter after the recession in IQ2002. Productivity increases decline later in the expansion period. Productivity increases were mediocre during the recession from Dec IVQ2007 to Sep IIIQ2009 (http://www.nber.org/cycles.html) and increased during the first phase of expansion from IIQ2009 to IQ2010, trended lower and collapsed in 2011 and 2012 with sporadic jumps and declines. Productivity increased at 2.3 percent in IIQ2013.

Table VA-3, US, Nonfarm Business Output per Hour, Percent Change from Prior Quarter at Annual Rate, 1999-2013

Year	Qtr1	Qtr2	Qtr3	Qtr4	Annual
1999	4.5	0.8	3.5	6.8	3.5
2000	-1.4	8.6	0.1	3.8	3.3
2001	-1.2	6.8	2.3	4.9	2.7
2002	9.5	0.3	3.1	-0.7	4.3
2003	6.1	7.4	10.0	3.9	4.6
2004	-0.5	3.8	0.9	1.1	3.1
2005	4.8	-0.3	2.8	0.0	2.0
2006	2.4	-0.6	-2.1	2.9	0.7
2007	0.0	2.5	4.7	2.1	1.4
2008	-3.5	4.3	1.1	-2.6	1.0
2009	3.1	8.1	5.8	4.7	3.2
2010	1.9	1.5	2.4	2.1	3.3
2011	-3.2	1.9	0.0	2.9	0.5
2012	1.5	1.2	2.5	-1.7	1.5
2013	-1.7	2.3

Source: US Bureau of Labor Statistics http://www.bls.gov/lpc/

Chart VA-1 of the Bureau of Labor Statistics (BLS) provides SAAE rates of nonfarm business productivity from 1999 to 2013. There is a clear pattern in both episodes of economic cycles in 2001 and 2007 of rapid expansion of productivity in the transition from contraction to expansion followed by more subdued productivity expansion. Part of the explanation is the reduction in labor utilization resulting from adjustment of business to the sudden shock of collapse of revenue. Productivity rose briefly in the expansion after 2009 but then collapsed and moved to negative change with some positive changes recently at lower rates.

Chart VA-1, US, Nonfarm Business Output per Hour, Percent Change from Prior Quarter at Annual Rate, 1999-2013

Source: US Bureau of Labor Statistics http://www.bls.gov/lpc/

Percentage changes from prior quarter at SAAE rates and annual average percentage changes of nonfarm business unit labor costs are provided in Table VA-4. Unit labor costs fell during the contractions with continuing negative percentage changes in the early phases of the recovery. Weak labor markets partly explain the decline in unit labor costs. As the economy moves toward full employment, labor markets tighten with increase in unit labor costs. The expansion beginning in IIIQ2009 has been characterized by high unemployment and underemployment. Table VA-4 shows continuing subdued increases in unit labor costs in 2011 but with increase of 7.4 percent in IQ2012 followed by increase of 0.7 percent in IIQ2012, decline of 1.8 percent in IIIQ2012 and increase of 11.8 percent in IVQ2012. Unit labor costs decreased at 3.5 percent in IQ2013 and changed 0.0 percent in IIQ2013.

Table VA-4, US, Nonfarm Business Unit Labor Costs, Percent Change from Prior Quarter at Annual Rate 1999-2013

Year	Qtr1	Qtr2	Qtr3	Qtr4	Annual
1999	2.0	0.1	-0.1	1.7	0.7
2000	17.4	-6.8	8.2	-1.5	4.0
2001	11.4	-5.4	-1.8	-1.3	1.6
2002	-6.7	3.3	-1.1	1.8	-1.9
2003	-3.4	-0.1	-3.6	1.5	-0.8
2004	0.0	4.1	6.0	0.6	1.4
2005	-1.6	2.5	2.1	2.6	1.6
2006	6.3	0.7	2.6	4.4	3.2
2007	10.1	-2.5	-3.2	2.4	2.9
2008	7.7	-3.9	2.3	7.3	1.7
2009	-12.2	2.0	-2.9	-2.2	-2.0
2010	-4.4	3.5	-0.1	-0.1	-1.2
2011	10.2	-2.9	3.0	-7.3	2.0
2012	7.4	0.7	-1.8	11.8	1.2
2013	-3.5	0.0

Source: US Bureau of Labor Statistics http://www.bls.gov/lpc/

Chart VA-2 provides percentage changes quarter on quarter at SAAE rates of nonfarm business unit labor costs. With the exception of 3.5 percent in IIQ2010, a jump of 10.2 percent in IQ2011, 3.0 percent in IIIQ2011, 7.4 percent in IQ2012, 0.7 percent in IIQ2012 and 11.8 percent in IVQ2012, changes in nonfarm business unit labor costs have been negative.

Chart VA-2, US, Nonfarm Business Unit Labor Costs, Percent Change from Prior Quarter at Annual Rate 1999-2013

Source: US Bureau of Labor Statistics http://www.bls.gov/lpc/

Table VA-5 provides percentage change from prior quarter at annual rates for nonfarm business real hourly worker compensation. The expansion after the contraction of 2001 was followed by strong recovery of real hourly compensation. Real hourly compensation increased at the rate of 2.1 percent in IQ2011 but fell at annual rates of 5.4 percent in IIQ2011 and 5.9 percent in IVQ2011. Real hourly compensation increased at 6.5 percent in IQ2012 and at 0.9 percent in IIQ2012, declining at 1.3 percent in IIIQ2012 and increasing at 7.5 percent in IVQ2012. Real hourly compensation fell 0.7 percent in 2011 and increased 0.5 percent in 2012. Real hourly compensation fell at 6.6 percent in IQ2013 and increased at 2.3 percent in IIQ2013.

Table VA-5, Nonfarm Business Real Hourly Compensation, Percent Change from Prior Quarter at Annual Rate 1999-2013

Year	Qtr1	Qtr2	Qtr3	Qtr4	Annual
1999	5.1	-1.9	0.3	5.5	2.1
2000	11.5	-1.8	4.4	-0.5	3.9
2001	6.0	-1.8	-0.7	4.0	1.5
2002	0.7	0.4	-0.2	-1.4	0.7
2003	-1.5	8.0	3.0	3.9	1.5
2004	-3.9	4.8	4.2	-2.5	1.8
2005	1.2	-0.6	-1.1	-1.2	0.3
2006	6.5	-3.3	-3.4	9.2	0.6
2007	6.0	-4.5	-1.2	-0.5	1.4
2008	-0.5	-4.7	-2.7	14.7	-1.1
2009	-7.1	8.2	-0.8	-0.8	1.5
2010	-3.3	5.3	0.9	-1.0	0.4
2011	2.1	-5.4	0.0	-5.9	-0.7
2012	6.5	0.9	-1.3	7.5	0.5
2013	-6.6	2.3

Source: US Bureau of Labor Statistics http://www.bls.gov/lpc/

Chart VA-3 provides percentage change from prior quarter at annual rate of nonfarm business real hourly compensation from 1999 to 2012. There are significant fluctuations in quarterly percentage changes oscillating between positive and negative. There is no clear pattern in the two contractions in the 2000s.

Chart VA-3, US, Nonfarm Business Real Hourly Compensation, Percent Change from Prior Quarter at Annual Rate 1999-2013

Source: US Bureau of Labor Statistics http://www.bls.gov/lpc/

Chart VA-4 provides percentage change of nonfarm business output per hour in a quarter relative to the same quarter a year earlier. As in most series of real output, productivity increased sharply in 2010 but the momentum was lost after 2011 as with the rest of the real economy.

Chart VA-4, US, Nonfarm Business Output per Hour, Percent Change from Same Quarter a Year Earlier 1999-2013

Source: US Bureau of Labor Statistics http://www.bls.gov/lpc/

Chart VA-5 provides percentage changes of nonfarm business unit labor costs relative to the same quarter a year earlier. Softening of labor markets caused relatively high yearly percentage changes in the recession of 2001 repeated in the recession in 2009. Recovery was strong in 2010 but then weakened.

Chart VA-5, US, Nonfarm Business Unit Labor Costs, Percent Change from Same Quarter a Year Earlier 1999-2013

Source: US Bureau of Labor Statistics http://www.bls.gov/lpc/

Chart VA-6 provides percentage changes in a quarter relative to the same quarter a year earlier for nonfarm business real hourly compensation. Labor compensation eroded sharply during the recession with brief recovery in 2010 and another fall until recently.

Chart VA-6, US, Nonfarm Business Real Hourly Compensation, Percent Change from Same Quarter a Year Earlier 1999-2013

Source: US Bureau of Labor Statistics http://www.bls.gov/lpc/

Rapid increase of US labor productivity in the 1990s is shown in Chart VA-7 with the index of nonfarm business labor productivity from 1947 to 2013. The rate of productivity increase continued in the early part of the 2000s but then softened and fell during the global recession.

Chart VA-7, US, Nonfarm Business Labor Productivity, Output per Hour, 1947-2013, Index 2005=100

Source: US Bureau of Labor Statistics http://www.bls.gov/lpc/

Unit labor costs increased sharply during the Great Inflation from the late 1960s to 1981 as shown by sharper slope in Chart VA-8. Unit labor costs continued to increase but at a lower rate.

Chart VA-8, US, Nonfarm Business, Unit Labor Costs, 1947-2013, Index 2005=100

Source: US Bureau of Labor Statistics http://www.bls.gov/lpc/

Real hourly compensation increased at relatively high rates after 1947 to the early 1970s but reached a plateau that lasted until the early 1990s, as shown in Chart VA-9. There were rapid increases until the global recession.

Chart VA-9, US, Nonfarm Business, Real Hourly Compensation, 1947-2013, Index 2005=100

Source: US Bureau of Labor Statistics http://www.bls.gov/lpc/

Chart VA-10 of the US Census Bureau of the Department of Commerce provides the quarterly service report SA from IIIQ2003 to IIQ2013. Services revenue contracted during the recession from IVQ2007 (December) to IIQ2009 (June) (http://wwwdev.nber.org/cycles/cyclesmain.html) but there appears to be continuing growth especially for professional, scientific and technical services with steeper slope from IVQ2010 through IVQ2012.

Chart VA-10, US, Quarterly Revenue for Selected Services, SA $ Billions

Source: US Census Bureau

http://www2.census.gov/services/qss/qss.gif

Total revenues of information services not seasonally adjusted in millions of current dollars are shown in Table VA-6 from IVQ2003, when they become available, to IIQ2013. The row below current values provides percentage change in the quarter from the quarter a year earlier. Growth rates were robust before the global recession in the range from 3.9 percent in IVQ2005 to 5.5 percent in IQ2005. Percentage changes were negative in all quarters in 2009 with the largest losses in the first three quarters. Growth was milder in the expansion phase than before the global recession. As with most indicators of the US, growth was robust in the final three quarters of 2010 and initial quarters of 2011. Growth rates fell with the lowest of 2.5 percent in IIIQ2012 relative to IIIQ2011 and recovered to 5.3 percent in IVQ2012, 4.3 percent in IQ2013 and 4.1 percent in IIQ2013.

Table VA-6, US, Information Services Revenue Not Seasonally Adjusted, Millions of Dollars, 2003-2013

Year	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter
2003	NA	NA	NA	237,399
2004	223,675	233,241	232,983	246,201
∆%	NA	NA	NA	3.7
2005	236,033	244,136	244,711	255,856
∆%	5.5	4.7	5.0	3.9
2006	245,182	254,735	255,745	271,401
∆%	3.9	4.3	4.5	6.1
2007	257,973	265,739	267,325	281,304
∆%	5.2	4.3	4.5	3.6
2008	270,217	277,643	277,604	282,885
∆%	4.7	4.5	3.8	0.6
2009	261,948	266,881	265,508	280,622
∆%	-3.1	-3.9	-4.4	-0.8
2010	267,483	274,697	276,055	291,990
∆%	2.1	2.9	4.0	4.1
2011	277,885	289,552	288,862	304,550
∆%	3.9	5.4	4.6	4.3
2012	290,131	297,462	296,119	320,584
∆%	4.4	2.7	2.5	5.3
2013	302,482	309,664	NA	NA
∆%	4.3	4.1

Source: US Census Bureau

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

Chart VA-11 provides total revenue of information services not seasonally adjusted from IVQ2013 to IVQ2012 in current millions of dollars not seasonally adjusted. Oscillating growth was strong before the drop of the global recession. Growth has been moderate in more recent quarters with strong increase in IVQ2012 and mild decline into IQ2013 followed by increase in IIQ2013.

Chart VA-11, Quarterly Revenue for Information Services Not Seasonally Adjusted, Millions of Dollars 2003-2013

Source: US Census Bureau

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

A similar pattern is provided by Chart VA-12 with quarterly total revenue of information services in current millions of dollars adjusted for seasonality. There is the same hump of the global recession followed by resumption of growth.

Chart VA-12, Quarterly Revenue for Information Services Seasonally Adjusted, Millions of Dollars 2003-2013

Source: US Census Bureau

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

Table VA-7 provides total revenue of financial services and insurance in current million dollars not seasonally adjusted from IIIQ2009, when data first become available, to IIQ2013. The row below values provides percentage changes in a quarter relative to the same quarter a year earlier. Percentage changes were negative until 2012 with 3.5 percent in IQ2012, 2.1 percent in IIQ2012, 6.6 percent in IIIQ2012 and 6.0 percent in IVQ2012. Revenue increased 1.7 percent in IQ2013 relative to a year earlier and increased 4.2 percent in IIQ2013.

Table VA-7, US, Financial Services and Insurance Total Revenue Not Seasonally Adjusted, Millions of Dollars, 2003-2013

Year	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter
2009	NA	NA	844,608	843,302
2010	831,558	832,016	830,991	831,420
∆%	NA	NA	-1.6	-1.4
2011	828,643	827,048	813,659	821,366
∆%	-0.4	-0.6	-2.1	-1.2
2012	858,053	844,148	867,281	870,349
∆%	3.5	2.1	6.6	6.0
2013	872,526	879,912	NA	NA
∆%	1.7	4.2

Source: US Census Bureau

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

Chart VA-13 provides total quarterly revenue of financial services and insurance from IIIQ2009, when data first become available, to IQ2013. Total revenue of financial services and insurance contracted 2.6 percent between IVQ2009 and IVQ2011 and grew 6.0 percent between IVQ2011 and IVQ2012. Revenue increased 1.7 percent in IQ2013 relative to a year earlier and 4.2 percent in IIQ2013.

Chart VA-13, Total Quarterly Revenue for Financial Services and Insurance Not Seasonally Adjusted, Millions of Dollars 2003-2012

Source: US Census Bureau

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

Motor vehicle sales and production in the US have been in long-term structural change. Table VA-8 provides the data on new motor vehicle sales and domestic car production in the US from 1990 to 2010. New motor vehicle sales grew from 14,137 thousand in 1990 to the peak of 17,806 thousand in 2000 or 29.5 percent. In that same period, domestic car production fell from 6,231 thousand in 1990 to 5,542 thousand in 2000 or -11.1 percent. New motor vehicle sales fell from 17,445 thousand in 2005 to 11,772 in 2010 or 32.5 percent while domestic car production fell from 4,321 thousand in 2005 to 2,840 thousand in 2010 or 34.3 percent. In Jan-Aug 2013, light vehicle sales accumulated to 10,647,486, which is higher by 9.6 percent relative to 9,711,044 a year earlier (http://motorintelligence.com/m_frameset.html). The seasonally adjusted annual rate of light vehicle sales in the US reached 16.09 million in Aug 2013, slightly higher than 15.80 million in Jul 2013 and higher than 14.49 million in Aug 2012 (http://motorintelligence.com/m_frameset.html).

Table VA-8, US, New Motor Vehicle Sales and Car Production, Thousand Units

	New Motor Vehicle Sales	New Car Sales and Leases	New Truck Sales and Leases	Domestic Car Production
1990	14,137	9,300	4,837	6,231
1991	12,725	8,589	4,136	5,454
1992	13,093	8,215	4,878	5,979
1993	14,172	8,518	5,654	5,979
1994	15,397	8,990	6,407	6,614
1995	15,106	8,536	6,470	6,340
1996	15,449	8,527	6,922	6,081
1997	15,490	8,273	7,218	5,934
1998	15,958	8,142	7,816	5,554
1999	17,401	8,697	8,704	5,638
2000	17,806	8,852	8,954	5,542
2001	17,468	8,422	9,046	4,878
2002	17,144	8,109	9,036	5,019
2003	16,968	7,611	9,357	4,510
2004	17,298	7,545	9,753	4,230
2005	17,445	7,720	9,725	4,321
2006	17,049	7,821	9,228	4,367
2007	16,460	7,618	8,683	3,924
2008	13,494	6,814	6.680	3,777
2009	10,601	5,456	5,154	2,247
2010	11,772	5,729	6,044	2,840

Source: US Census Bureau http://www.census.gov/compendia/statab/cats/wholesale_retail_trade/motor_vehicle_sales.html

Chart VA-14 of the Board of Governors of the Federal Reserve provides output of motor vehicles and parts in the United States from 1972 to 2013. Output has stagnated since the late 1990s.

Chart VA-14, US, Motor Vehicles and Parts Output, 1972-2013

Source: Board of Governors of the Federal Reserve System

http://www.federalreserve.gov/releases/g17/current/

Manufacturing jobs increased 14,000 in Aug 2013 relative to Jul 2013, seasonally adjusted (Section I and earlier http://cmpassocregulationblog.blogspot.com/2013/08/risks-of-steepening-yield-curve-and.html). Manufacturing jobs not seasonally adjusted increased 15,000 from Aug 2012 to Aug 2013 or at the average monthly rate of 1,250. There are effects of the weaker economy and international trade together with the yearly adjustment of labor statistics. The report of the Board of Governors of the Federal Reserve System states (http://www.federalreserve.gov/releases/g17/Current/default.htm):

Table VA-9 provides national income by industry without capital consumption adjustment (WCCA). “Private industries” or economic activities have share of 86.6 percent in IQ2013. Most of US national income is in the form of services. In Aug 2013, there were 135.961 million nonfarm jobs NSA in the US, according to estimates of the establishment survey of the Bureau of Labor Statistics (BLS) (http://www.bls.gov/news.release/empsit.nr0.htm Table B-1). Total private jobs of 115.218 million NSA in Aug 2013 accounted for 84.7 percent of total nonfarm jobs of 135.664 million, of which 12.063 million, or 10.5 percent of total private jobs and 8.9 percent of total nonfarm jobs, were in manufacturing. Private service-producing jobs were 96.174 million NSA in Aug 2013, or 70.7 percent of total nonfarm jobs and 83.5 percent of total private-sector jobs. Manufacturing has share of 10.9 percent in US national income in IQ2013, as shown in Table VA-9. Most income in the US originates in services. Subsidies and similar measures designed to increase manufacturing jobs will not increase economic growth and employment and may actually reduce growth by diverting resources away from currently employment-creating activities because of the drain of taxation.

Table VA-9, US, National Income without Capital Consumption Adjustment by Industry, Seasonally Adjusted Annual Rates, Billions of Dollars, % of Total

	SAAR IQ2013	% Total	SAAR IIQ2013	% Total
National Income WCCA	14,354.5	100.0	14,480.5	100.0
Domestic Industries	14,117.1	98.3	14,223.1	98.2
Private Industries	12,432.9	86.6	12,542.6	86.6
Agriculture	226.4	1.6
Mining	247.6	1.7
Utilities	209.1	1.5
Construction	618.2	4.3
Manufacturing	1568.1	10.9
Durable Goods	878.8	6.1
Nondurable Goods	689.2	4.8
Wholesale Trade	870.0	6.1
Retail Trade	971.4	6.8
Transportation & WH	434.0	3.0
Information	496.0	3.5
Finance, Insurance, RE	2418.9	16.8
Professional, BS	1973.6	13.7
Education, Health Care	1423.7	9.9
Arts, Entertainment	569.7	4.0
Other Services	406.1	2.8
Government	1684.3	11.7	1680.5	11.6
Rest of the World	237.4	1.7	257.4	1.8

Notes: SSAR: Seasonally-Adjusted Annual Rate; WCCA: Without Capital Consumption Adjustment by Industry; WH: Warehousing; RE, includes rental and leasing: Real Estate; Art, Entertainment includes recreation, accommodation and food services; BS: business services

Source: US Bureau of Economic Analysis http://bea.gov/iTable/index_nipa.cfm

Chart VA-15 of the Board of Governors of the Federal Reserve System provides the finance rate on a loan for buying new autos with terms of 48 months. In contrast with mortgage rates, analyzed in Chart VI-13 in Section VI, financing rates on autos declined during and after the global recession with continuing downward trend. The initial data point in Chart VA-15 is for Feb 1972 with the rate at 10.20 percent. The rate rose to 17.36 percent in in Nov 1981, falling to 7.4 percent in Feb 1994. The rate increased to 9.62 percent in Aug 2000, falling to 6.43 percent in Jun 2004. The rate increased to 7.95 percent in Aug 2006, 7.92 percent in May 2007 and 6.84 percent in May 2008. The rate fell to 4.13 percent in May 2013, which is the final point in Chart VA-15. Bankrate quotes the rate on 48-month new car loan at 4.04 percent on Sep 4, 2013, 4.14 percent for a 60-month loan for a new car and 4.62 percent for a 36-month loan of a used car (http://www.bankrate.com/finance/auto/current-interest-rates.aspx).

Chart VA-15, US, Finance Rates on New Autos 48 Month Loan, 1972-2013

Source: Board of Governors of the Federal Reserve System

http://www.federalreserve.gov/releases/G19/default.htm

Manufacturers’ shipments decreased 1.1 percent in Jul 2013 and decreased 0.3 percent in Jun 2013 after increasing 1.0 percent in May 2013. New orders decreased 2.4 percent in Jul 2013, after increasing 1.6 percent in Jun 2013 and 3.0 percent in May 2013, as shown in Table VA-10. These data are very volatile. Volatility is illustrated by increase of 2642.2 percent of new orders of nondefense aircraft in Sep 2012 following decline by 97.2 percent in Aug. New orders excluding transportation equipment increased 1.2 percent in Jul2013 after decreasing 0.3 percent in Jun 2013 and increasing 1.0 percent in May 2013. Capital goods new orders, indicating investment, decreased 16.6 percent in Jul 2013 after increasing 9.0 percent in Jun 2013 and 13.7 percent in May 2013. New orders of nondefense capital goods decreased 16.0 percent in Jul 2013 after increasing 6.9 percent in Jun 2013 and 12.8 percent in May 2013. Excluding more volatile aircraft, capital goods orders decreased 4.9 percent in Jul 2013 after increasing 1.1 percent in Jun 2013 and 2.1 percent in May 2013.

Table VA-10, US, Value of Manufacturers’ Shipments and New Orders, SA, Month ∆%

	Jul 2013 ∆%	Jun 2013 ∆%	May 2013 ∆%
Total
S	1.1	-0.3	1.0
NO	-2.4	1.6	3.0
Excluding Transport
S	1.3	-0.3	0.6
NO	1.2	-0.3	1.0
Excluding Defense
S	1.3	-0.4	1.0
NO	-2.0	1.1	2.7
Durable Goods
S	-0.3	-0.1	1.3
NO	-7.4	3.9	5.5
Machinery
S	-1.5	-2.0	1.6
NO	-1.1	0.9	0.5
Computers & Electronic Products
S	-3.1	1.1	-1.2
NO	-3.5	-0.8	3.2
Computers
S	-11.4	-10.9	0.6
NO	6.2	-23.1	-3.1
Transport Equipment
S	0.1	-0.5	3.8
NO	-19.4	11.7	15.1
Automobiles
S	-4.7	1.3	-2.1
Motor Vehicles
S	-1.2	1.8	-1.9
NO	-1.6	0.4	-0.7
Nondefense Aircraft
S	1.4	-4.7	29.7
NO	-52.3	33.8	67.6
Capital Goods
S	-2.1	-1.4	5.8
NO	-16.6	9.0	13.7
Nondefense Capital Goods
S	-1.5	-1.8	6.3
NO	-16.0	6.9	12.8
Capital Goods ex Aircraft
S	-1.7	-1.0	2.0
NO	-4.0	1.1	2.1
Nondurable Goods
S	2.4	-0.5	0.8
NO	2.4	-0.5	0.8

Note: Mfg: manufacturing; S: shipments; NO: new orders; Transport: transportation

Source: US Census Bureau http://www.census.gov/manufacturing/m3/

Chart VA-16 of the US Census Bureau provides new orders of manufacturers from Aug 2012 to Jul 2013. There is significant volatility that prevents discerning clear trends.

Chart VA-16, US, Manufacturers’ New Orders 2010-2011 Seasonally Adjusted, Month ∆%

Source: US Census Bureau

http://www.census.gov/briefrm/esbr/www/esbr022.html

Chart VA-17 of the US Census Bureau provides total value of manufacturers’ new orders, seasonally adjusted, from 1992 to 2013. Seasonal adjustment reduces sharp oscillations. The series dropped nearly vertically during the global recession but rose along a path even steeper than in the high-growth period before the recession. The final segment suggests deceleration but similar segments occurred in earlier periods followed with continuing growth and stability currently.

Chart VA-17, US, Value of Total Manufacturers’ New Orders, Seasonally Adjusted, 1992-2013

Source: US Census Bureau

http://www.census.gov/manufacturing/m3/

Additional perspective on manufacturers’ shipments and new orders is provided by Table VA-11. Values are cumulative millions of dollars in Jan-Jul 2013 not seasonally adjusted (NSA). Shipments of all manufacturing industries in Jan-Jul 2013 total $3367.4billion and new orders total $3359.8 billion, growing respectively by 1.6 percent and 1.9 percent relative to the same period in 2012. Excluding transportation equipment, shipments grew 0.7 percent and new orders increased 1.4 percent. Excluding defense, shipments grew 1.6 percent and new orders grew 2.5 percent. Durable goods shipments reached $1582.7 billion in Jan-Jul 2013, or 47.0 percent of the total, growing by 2.6 percent, and new orders $1575.1 billion, or 46.9 percent of the total, growing by 3.3 percent. Important information in Table VA-11 is the large share of nondurable goods with shipments of $1784.7.0 billion or 53.0 percent of the total, growing by 0.7 percent. Capital goods have relatively high value of $571.9 billion for shipments, growing 1.8 percent, and new orders $607.5 billion, increasing 2.3 percent, which could be an indicator of future investment. Excluding aircraft, capital goods shipments reached $454.7 billion, growing 1.0 percent, and new orders $474.9 billion, increasing 3.6 percent. There is no suggestion in these data that the US economy is close to recession but manufacturing accounts for 10.9 percent of US national income in IQ2013. These data are not adjusted for inflation.

Table VA-11, US, Value of Manufacturers’ Shipments and New Orders, NSA, Millions of Dollars

Jan-Jul 2013	Shipments	∆% 2013/ 2012	New Orders	∆% 2013/ 2012
Total	3,367,406	1.6	3,359,792	1.9
Excluding Transport	2,904,016	0.7	2,882,386	1.4
Excluding Defense	3,285,556	1.6	3,288,668	2.5
Durable Goods	1,582,668	2.6	1,575,054	3.3
Machinery	239,940	3.7	244,735	5.5
Computers & Electronic Products	187,663	-4.8	144,926	-5.1
Computers	3,509	-31,2	3,706	-26.1
Transport Equipment	463,390	7.2	477,406	5.2
Automobiles	72,421	21.5
Motor Vehicles	134l57	4.5	133,719	5.0
Nondefense Aircraft	74,170	8.9	99,863	13.5
Capital Goods	571,888	1.8	607,454	2.3
Nondefense Capital Goods	505,527	2.0	549,735	5.3
Capital Goods ex Aircraft	454,714	1.0	474,901	3.6
Nondurable Goods	1,784,738	0.7	1,784,778	0.7
Food Products	425,755	3.1
Petroleum Refineries	482,785	0.5
Chemical Products	451,352	-0.8

Note: Transport: transportation Source: US Census Bureau http://www.census.gov/manufacturing/m3/

Chart VA-18 of the US Census Bureau provides value of manufacturer’s new orders not seasonally adjusted from Jan 1992 to Jul 2013. Fluctuations are evident, which are smoothed by seasonal adjustment in the earlier Chart VA-17. The series drops nearly vertically during the global contraction and then resumes growth in a steep upward trend, flattening recently.

Chart VA-18, US, Value of Total Manufacturers’ New Orders, Not Seasonally Adjusted, 1992-2013

Source: US Census Bureau

http://www.census.gov/manufacturing/m3/

Construction spending at seasonally adjusted annualized rate (SAAR) reached $900.8 billion in Jul 2013, which was higher by 0.6 percent than in the prior month of Jun 2013, as shown in Table VA-12. Residential investment, with $340.6 billion accounting for 37.8 percent of total value of construction, increased 0.5 percent in Jul and nonresidential investment, with $560.2 billion accounting for 61.2 percent of the total, increased 0.6 percent. Public construction decreased 0.3 percent while private construction increased 0.9 percent. Data in Table VA-12 show that nonresidential construction at $631.4 billion is much higher in value than residential construction at $340.6 billion while total private construction at $631.4 billion is much higher than public construction at $269.4 billion, all in SAAR. Residential and nonresidential construction contributed positively to growth of GDP in the US in all quarters in 2012. Nonresidential investment deducted 0.57 percentage points from GDP growth in IIQ2013 while residential construction added 0.34 percentage points. Nonresidential construction added 0.53 percentage points to GDP growth in IIQ2013 with residential construction adding 0.37 percentage points. In 2012, residential construction added 0.32 percentage points to GDP growth and added 0.01 percentage points in 2011. Nonresidential construction added 0.85 percentage points to GDP growth in 2012 and 0.84 percentage points in 2011 (http://cmpassocregulationblog.blogspot.com/2013/09/increasing-interest-rate-risk.html).

Table VA-12, Construction Put in Place in the United States Seasonally Adjusted Annual Rate Million Dollars and Month and 12-Month ∆%

	Jul 2013 SAAR $ Millions	Month ∆%	12-Month ∆%
Total	900,824	0.6	5.2
Residential	340,608	0.5	16.8
Nonresidential	560,216	0.6	-0.8
Total Private	631,403	0.9	9.5
Private Residential	334,578	0.6	17.2
New Single Family	168,194	0.5	29.3
New Multi-Family	31,874	0.1	39.3
Private Nonresidential	296,824	1.3	2.0
Total Public	269,422	-0.3	-3.7
Public Residential	6,030	-3.1	-2.4
Public Nonresidential	263,392	-0.2	-3.7

SAAR: seasonally adjusted annual rate; B: billions

Source: US Census Bureau http://www.census.gov/construction/c30/c30index.html

Further information on construction spending is provided in Table VA-13. The original monthly estimates not-seasonally adjusted (NSA) and their 12-month rates of change are provided in the first two columns while the SAARs and their monthly changes are provided in the final two columns. There has been improvement in construction in the US. There are only four declines in the monthly rate from Dec 2011 to Jun 2013. Growth in 12 months fell from 12.0 percent in Nov 2012 to 5.2 percent in Jul 2013.

Table VA-13, US, Value and Percentage Change in Value of Construction Put in Place, Dollars Millions and ∆%

	Value NSA Month $ Millions	12-Month ∆% NSA	Value SAAR $ Millions	Month ∆% SA*
Jul 2013	83,029	5.2	900.824	0.6
Jun	81,428	4.6	895,748	0.0
May	77,327	7.0	896,134	2.0
Apr	70,535	6.5	878,396	1.1
Mar	64,036	5.3	869,164	-0.1
Feb	58,395	4.3	869,909	0.8
Jan	59,143	6.2	863,136	-2.3
Dec 2012	68,136	9.5	883,550	0.1
Nov	77091	12.0	882,685	2.3
Oct	81,520	9.8	863,065	-1.2
Sep	80,812	7.2	873,259	2.2
Aug	81,712	6.0	854,048	-0.3
Jul	78,897	9.4	856,348	0.1
Jun	77,876	6.9	855,779	1.3
May	72,240	9.8	844,709	1.4
Apr	66,223	7.8	833,243	0.8
Mar	60,796	7.5	826,641	0.4
Feb	55,981	10.8	823,331	0.7
Jan	55,671	9.3	817,616	0.0
Dec 2011	62,242	3.4	817,569	1.0

SAAR: Seasonally Adjusted Annual Rate

Source: US Census Bureau http://www.census.gov/construction/c30/c30index.html

The sharp contraction of the value of construction in the US is revealed by Table VA-14. Construction spending in Jan-Jul 2013, not seasonally adjusted, reached $493.9 billion, which is higher by 5.6 percent than $467.7 billion in the same period in 2012. The depth of the contraction is shown by the decline of construction spending from $680.9 billion in Jan-Jun 2006 to only $467.9 billion in the same period in 2013, or decline by minus 27.5 percent. The comparable decline from Jan-Jul 2005 to Jan-Jul 2013 is minus 21.6 percent. Construction spending in Jan-Jul 2013 decreased by 2.2 percent relative to the same period in 2003. Construction spending is lower by 5.4 percent in Jan-Jul 2013 relative to the same period in 2009. Construction has been weaker than the economy as a whole.

Table VA-14, US, Value of Construction Put in Place in the United States, Not Seasonally Adjusted, $ Millions and ∆%

Jan-Jul 2013 $ MM	493,894
Jan-Jul 2012	467,683
∆% to 2013	5.6
Jan-Jul 2011 $ MM	425,037
∆% to 2013	16.2
Jan-Jul 2010 $ MM	451,174
∆% to 2013	9.5
Jan-Jul 2009 $MM	521,990
∆% to 2013	-5.4
Jan-Jul 2006 $ MM	680,863
∆% to 2013	-27.5
Jan-Jul 2005 $ MM	630,235
∆% to 2013	-21.6
Jan-Jul 2003 $ MM	504,752
∆% to 2013	-2.2

Source: US Census Bureau http://www.census.gov/construction/c30/c30index.html

Chart VA-19 of the US Census Bureau provides value of construction spending in the US not seasonally adjusted from 2002 to 2013. There are wide oscillations requiring seasonal adjustment to compare adjacent data. There was sharp decline during the global recession followed in recent periods by a stationary series that may be moving upward again.

Chart VA-19, Value of Construction Spending not Seasonally Adjusted, Millions of Dollars, 2002-2013

Source: US Census Bureau

http://www.census.gov/construction/c30/c30index.html

Monthly construction spending in the US in Jan-Jul not seasonally adjusted is shown in Table VA-15 for the years between 2002 and 2013. The value of $83.0 billion in Jul 2013 is higher by 5.2 percent than $78.9 billion in Jul 2012. Construction fell by 23.4 percent from the peak of $108.4 billion in Jul 2006 to $83.0 billion in Jul 2013. The data are not adjusted for inflation or changes in quality.

Table VA-15, US, Value of Construction Spending Not Seasonally Adjusted, Millions of Dollars

Year	Jan	Feb	Mar	Apr	May	Jun	Jul
2002	59,516	58,588	63,782	69,504	73,384	77,182	78,863
2003	59,877	58,526	64,506	69,638	74,473	80,377	82,971
2004	64,934	64,138	73,238	78,354	83,736	89,932	93,614
2005	71,474	72,048	81,345	85,485	92,959	99,632	103,158
2006	81,058	81,478	92,855	95,324	102,495	107,607	108,423
2007	79,406	79,177	88,905	93,375	100,534	105,399	107,090
2008	77,349	77,227	82,779	87,743	92,781	96,338	98,483
2009	66,944	66,296	71,624	75,187	76,808	81,429	83,379
2010	55,586	54,019	60,228	66,422	68,906	74,035	73,077
2011	50,955	50,544	56,536	61,454	65,814	72,850	72,113
2012	55,671	55,981	60,796	66,223	72,240	77,876	78,897
2013	59,143	58,395	64,036	70,535	77,327	81,428	83,029

Source: US Census Bureau

http://www.census.gov/construction/c30/c30index.html

Chart VA-20 of the US Census Bureau shows SAARs of construction spending for the US since 1993. Construction spending surged in nearly vertical slope after the stimulus of 2003 combining near zero interest rates and subsequent slow adjustment in 17 doses of increases by 25 basis points between Jun 2004 and Jun 2006 together with other housing subsidies. Construction spending collapsed after subprime mortgages defaulted with the fed funds rate increasing from 1.00 percent in Jun 2004 to 5.25 percent in Jun 2006. Subprime mortgages were programmed for refinancing in two years after increases in homeowner equity in the assumption that fed funds rates would remain low forever or increase in small increments (Gorton 2009EFM see http://cmpassocregulationblog.blogspot.com/2011/07/causes-of-2007-creditdollar-crisis.html). Price declines of houses or even uncertainty prevented refinancing of subprime mortgages that defaulted, causing the financial crisis that eventually triggered the global recession. Chart VA-20 shows a trend of increase in the final segment but it is difficult to assess if it will be sustained.

Chart VA-20, US, Construction Expenditures SAAR 1993-2012

Source: US Census Bureau

http://www.census.gov/construction/c30/c30index.html

Construction spending at SAARs in the five months Mar-Jul is shown in Table VA-16 for the years between 2002 and 2013. There is a peak in 2005 to 2007 with subsequent collapse of SAARs and rebound in 2012-2013.

Table VA-16, US, Value of Construction Spending SAAR Millions of Dollars

Year	Mar	Apr	May	Jun	Jul
2002	844,551	858,240	850,935	846,777	847,129
2003	851,132	859,459	866,814	880,865	891,264
2004	960,946	967,761	974,158	983,072	1,006,119
2005	1,065,262	1,058,365	1,078,586	1,089,505	1,109,691
2006	1,213,270	1,183,485	1,180,059	1,172,932	1,165,093
2007	1,167,402	1,159,124	1,168,195	1,166,892	1,154,018
2008	1,094,910	1,091,142	1,091,008	1,074,637	1,066,919
2009	954,984	929,593	911,241	901,987	899,601
2010	805,985	824,008	816,318	816,302	788,524
2011	763,058	772,204	773,764	797,080	789,297
2012	826,641	833,243	844,709	855,779	856,348
2013	869,164	878,396	896,134	895,748	900,824

Source: US Census Bureau

http://www.census.gov/construction/c30/c30index.html

Chart VA-21 of the US Census Bureau provides SAARs of value of construction from 2002 to 2013. There is clear acceleration after 2003 when fed funds rates were fixed at 1.0 percent from Jun 2003 until Jun 2004. Construction peaked in 2005-2006, stabilizing in 2007 at a lower level and then collapsed in a nearly vertical drop until 2011 with increases into 2012 and marginal drop in Jan 2013 followed by increase in Feb 2013 and decline in Mar 2013 followed by continuing increase in Apr-May 2013. Construction fell slightly in Jun 2013 and increased in Jul 2013.

Chart VA-21, US, Construction Expenditures SAAR 2002-2013

Source: US Census Bureau

http://www.census.gov/construction/c30/c30index.html

Chart VA-22 of the US Census Bureau provides monthly residential construction in the US not seasonally adjusted from 2002 to 2013. There was steep increase until 2006 followed by sharp contraction. The series stabilized at the bottom and increased in the final segment.

Chart VA-22, US, Residential Construction, Not Seasonally Adjusted, Millions of Dollars, 2002-2013

Source: US Census Bureau http://www.census.gov/construction/c30/c30index.html

Chart VA-23 of the US Census Bureau provides monthly nonresidential construction in the US not seasonally adjusted. There is similar acceleration until 2006 followed by milder contraction than for residential construction. The final segment is stationary.

Chart VA-23, US, Nonresidential Construction, Not Seasonally Adjusted, Millions of Dollars, 2002-2013

Source: US Census Bureau http://www.census.gov/construction/c30/c30index.html

Annual available data for the value of construction put in place in the US between 1993 and 2012 are provided in Table VA-17. Data from 1993 to 2001 are available for public and private construction with breakdown in residential and nonresidential only for private construction. Data beginning in 2002 provide aggregate residential and nonresidential values. Total construction value put in place in the US increased 76.5 percent between 1993 and 2012 but most of the growth, 65.3 percent, was concentrated in 1993 to 2000 with increase of 6.8 percent between 2000 and 2012. Total value of construction increased 1.1 percent between 2002 and 2012 with value of nonresidential construction increasing 27.9 percent while value of residential construction fell 28.7 percent. Value of total construction fell 22.4 percent between 2005 and 2012, with value of residential construction declining 53.6 percent while value of nonresidential construction rose 17.2 percent. Value of total construction fell 26.6 percent between 2006 and 2012, with value of nonresidential construction increasing 4.2 percent while value of residential construction fell 53.8 percent. In 2002, nonresidential construction had a share of 52.6 percent in total construction while the share of residential construction was 47.4 percent. In 2012, the share of nonresidential construction in total value rose to 66.6 percent while that of residential construction fell to 33.4 percent.

Table VA-17, Annual Value of Construction Put in Place 1993-2012, Millions of Dollars and ∆%

	Total	Private Nonresidential	Private Residential
1993	485,548	150,006	208,180
1994	531,892	160,438	241,033
1995	548,666	180,534	228,121
1996	599,693	195,523	257,495
1997	631,853	213,720	264,696
1998	688,515	237,394	296,343
1999	744,551	249,167	326,302
2000	802,756	275,293	346,138
2001	840,249	273,922	364,414
	Total	Total Nonresidential	Total Residential
2002	847,874	445,914	401,960
2003	891,497	440,246	451,251
2004	991,356	452,948	538,408
2005	1,104,136	486,629	617,507
2006	1,167,222	547,408	619,814
2007	1,152,351	651,883	500,468
2008	1,067,564	709,818	357,746
2009	903,201	649,273	253,928
2010	804,561	555,449	249,112
2011	788,014	535,357	252,657
2012	856,953	570,429	286,524
∆% 1993-2012	76.5
∆% 1993-2000	65.3
∆% 2000-2012	6.8
∆% 2002-2012	1.1	27.9	-28.7
∆% 2005-2012	-22.4	17.2	-53.6
∆% 2006-2012	-26.6	4.2	-53.8

Source: US Census Bureau http://www.census.gov/construction/c30/c30index.html

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:

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

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

Fiscal Year Date of Forecast	Real GDP	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	Jul ∆% +0.5 12 months ∆% 2.2 Blog 8/18/13
Consumer Price Index	Jul NSA ∆% 0.2; Jul 12 months NSA ∆% 0.7 Blog 9/1/13
Real GDP Growth	IIQ2013 ∆%: 0.6 on IQ2013; IQ2013 SAAR 2.6; ∆% from quarter a year earlier: 0.0 % Blog 6/16/13 8/18/13
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 Jun ∆% -14.3 Private ∆%: -6.0 Jun ∆% Excluding Volatile Orders -2.7 Blog 8/18/13
Tertiary Index	Jun month SA ∆% -0.3 Jun 12 months NSA ∆% 1.0 Blog 8/11/13
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

8/11/13 http://cmpassocregulationblog.blogspot.com/2013/08/recovery-without-hiring-loss-of-full.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	Jul 12-month ∆%: minus 2.3 Jul month ∆%: -0.3 Blog 8/11/13
Consumer Price Index	Jul month ∆%: 0.1 Jul 12 months ∆%: 2.7 Blog 8/11/13
Value Added of Industry	Jul month ∆%: 0.88 Jan-Jul 2013/Jan-Jul 2012 ∆%: 9.4 Blog 8/11/13
GDP Growth Rate	Year IIQ2013 ∆%: 7.5 Quarter IIQ2013 AE ∆%: 7.0 Blog 7/21/13
Investment in Fixed Assets	Jul month ∆%: 1.58 Total Jan-Jul 2013 ∆%: 20.1 Real estate development: 20.5 Blog 8/11/13
Retail Sales	Jul month ∆%: 1.23 Jul 12 month ∆%: 13.2 Jan-Jul ∆%: 12.8 Blog 8/11/13
Trade Balance	Jul balance $17.82 billion Exports 12M ∆% 5.1 Imports 12M ∆% 10.9 Cumulative Jun: $126.37 billion Blog 8/11/13

Links to blog comments in Table CNY:

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

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

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	Jun month ∆%: 0.7; Jun 12 months ∆%: 0.3 Blog 8/18/13
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:

9/1/13 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 percentage changes of euro area real GDP in a quarter relative to the prior quarter. Real GDP fell 0.2 percent in IVQ2011, fell 0.1 in IQ2012 and fell in the final three quarters of 2012: 0.3 percent in IIQ2012, 0.1 percent in IIIQ2012 and 0.5 percent in IVQ2012. GDP fell 0.2 percent in IQ2013 and increased 0.3 percent in IIQ2013. The global recession manifested in the euro area in five consecutive quarterly declines from IIQ2008 to IIQ2009. The strongest impact was contraction of 2.8 percent in IQ2009. Recovery began in IIIQ2009 with cumulative growth of 4.0 percent to IQ2011 or at the annual equivalent rate of 2.2 percent. Growth was much more vigorous from IVQ2003 to IQ2008.

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

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

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

Table VD-2 provides percentage change in real GDP in the euro area in a quarter relative to the same quarter a year earlier. Growth rates were quite strong from 2004 to 2007. There were five consecutive quarters of sharp declines in GDP in a quarter relative to the same quarter a year earlier from IVQ2008 to IVQ2009 with sharp contractions of 5.4 percent in IQ2009, 5.3 percent in IIQ2009 and 4.4 percent in IIIQ2009. Growth rates decline in magnitude with 1.4 percent in IIIQ2011, 0.7 percent in IVQ211 and -0.2 percent in IQ2012 followed by contractions of 0.5 percent in IIQ2012, 0.7 percent in IIIQ2012 and 1.0 percent in IVQ2012. GDP contracted 1.0 percent in IQ2013 relative to a year earlier and contracted 0.5 percent in IIQ2013.

Table VD-2, Euro Area, Real GDP Percentage Change in a Quarter Relative to Same Quarter a

Year Earlier, Seasonally and Working Day Adjusted ∆%

	IQ	IIQ	IIIQ	IV
2013	-1.0	-0.5
2012	-0.2	-0.5	-0.7	-1.0
2011	2.6	1.7	1.4	0.7
2010	1.0	2.2	2.2	2.2
2009	-5.5	-5.3	-4.4	-2.2
2008	2.1	1.2	0.0	-2.1
2007	3.7	3.0	3.0	2.3
2006	2.9	3.4	3.4	3.8
2005	1.5	1.6	1.9	2.2
2004	1.8	2.2	2.2	1.8
2003	0.8	0.4	0.5	1.2
2002	0.4	1.0	1.2	1.1
2001	2.9	2.1	1.7	1.3
2000	4.3	4.5	3.8	3.2

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

Table VD-3 provides growth of euro area real GDP in a quarter relative to the same quarter a year earlier not seasonally adjusted. GDP in IQ2013 fell 0.5 percent in IIQ2013 relative to a year earlier without seasonal adjustment and declined 1.8 percent in IQ2013 relative to a year earlier without seasonal adjustment. Growth rates in 2006 and 2007 were quite strong followed by sharp declines of 5.6 percent in IQ2009, 5.9 percent in IIQ2009 and 4.2 percent in IQ2009.

Table VD-3, Euro Area, Real GDP Percentage Change in a Quarter Relative to Same Quarter a Year Earlier, Not Seasonally Adjusted ∆%

	IQ	IIQ	IIIQ	IV
2013	-1.8	-0.5
2012	0.2	-0.9	-0.9	-1.0
2011	2.8	1.8	1.4	0.2
2010	1.1	2.5	2.2	2.1
2009	-5.6	-5.9	-4.2	-2.0
2008	1.7	1.6	0.5	-2.1
2007	3.5	3.1	3.1	2.4
2006	3.5	2.6	3.1	3.7
2005	1.0	2.1	1.9	1.8
2004	2.1	2.6	2.2	2.0
2003	1.0	0.1	0.5	1.2
2002	0.0	1.2	1.5	1.0
2001	2.8	2.0	1.7	1.5
2000	5.0	4.3	3.3	2.6

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

Table VD-4 provides GDP growth in IIQ2013 and relative to the same quarter a year earlier with SAWDA (seasonal and working day adjustment) and NSA (not seasonally adjusted) for the euro zone, European Union, Japan and the US. The GDP of the euro zone increased 0.3 percent in IIQ2013 and declined 0.5 percent relative to a year earlier SWDA and NSA while the GDP of the European Union increased 0.5 percent in IIQ2013, changed 0.0 percent SWDA and decreased 0.3 percent relative to a year earlier NSA. Growth in IIQ2013 was weak worldwide with somewhat stronger performance by the US but still insufficient to reduce unemployment and underemployment (Section I and earlier http://cmpassocregulationblog.blogspot.com/2013/08/risks-of-steepening-yield-curve-and.html) and motivate hiring (http://cmpassocregulationblog.blogspot.com/2013/08/risks-of-steepening-yield-curve-and.html).

Table VD-4, Euro Zone, European Union, Japan and USA, Real GDP Growth

	∆% IIQ2013/ IQ2013 SAWDA	∆% IIQ2013/ IIQ2012 SWDA	∆% IIQ2013/ IIQ2012 NSA
Euro Zone	0.3	-0.5	-0.5
European Union	0.4	0.0	-0.2
Germany	0.7	0.5	0.9
France	0.5	0.3	0.3
Netherlands	-0.2	-1.8	-1.8
Finland	0.7	0.0	NA
Belgium	0.1	-0.1	NA
Portugal	1.1	-2.0	NA
Ireland	NA	NA	NA
Italy	-0.2	-2.0	NA
Greece	NA	-4.6	-4.6
Spain	-0.1	-1.6	-1.7
United Kingdom	0.7	1.5	0.7
Japan	0.6	0.9	0.9
USA	0.6	1.6	NA

*SAWDA: Seasonally and Working Day Adjusted except UK, Japan and USA

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

Advanced economies are experiencing weak demand. Table VD-5 provides month and 12-month percentage changes of the volume of retail sales in the euro zone from Jan 2011 to Jul 2013. Retail sales increased 0.1 percent in Jul 2013 and fell 1.3 percent in 12 months. The 12-month rates of growth have become negative since Mar 2011 with exception of 1.1 percent in Apr 2011, stability in Aug 2011 at 0.1 percent and in Mar 2012 at 0.0 percent and growth of 0.1 percent in May 2013. The lower part of Table VD-1 provides annual percentage changes of inflation-adjusted retail sales in the euro zone since 2001. Retail sales fell 0.5 percent in 2010 after falling 0.4 percent in 2009 and 1.7 percent in 2008 and fell again by 1.4 percent in 2011 and 2.7 percent in 2012.

Table VD-5, Euro Zone, Volume of Retail Sales, Deflated ∆%

	Month ∆%	12-Month CA ∆%
Jul 2013	0.1	-1.3
Jun	-0.7	-1.1
May	1.1	0.1
Apr	0.0	-1.1
Mar	-0.2	-2.2
Feb	-0.3	-1.9
Jan	0.9	-1.8
Dec 2012	-0.7	-2.7
Nov	0.2	-1.9
Oct	-0.5	-3.2
Sep	-1.6	-1.9
Aug	0.6	-0.8
Jul	-0.1	-1.5
Jun	0.3	-1.0
May	0.5	-0.7
Apr	-1.5	-3.5
Mar	0.3	0.0
Feb	-0.1	-2.2
Jan	-0.1	-1.1
Dec 2011	0.0	-1.4
Nov	-0.7	-1.1
Oct	0.2	-0.3
Sep	-0.4	-0.9
Aug	0.0	0.1
Jul	0.2	-0.1
Jun	0.8	-0.5
May	-1.8	-1.4
Apr	1.3	1.1
Mar	-1.6	-1.2
Feb	0.7	1.6
Jan	0.1	1.1
Dec ∆%
2012		-2.7
2011		-1.4
2010		-0.5
2009		-0.4
2008		-1.7
2007		-0.9
2006		2.5
2005		0.8
2004		2.3
2003		0.7
2002		-0.3
2001		1.9

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

Growth rates of retail sales of the euro zone by major segments are in Table VD-6. Total sales increased 0.1 percent in Jul 2013 and declined 1.3 percent in the 12 months ending in Jul 2013. Food sales increased 1.0 percent and fell 0.6 percent in 12 months and nonfood products decreased 0.4 percent in Jul and fell 1.6 percent in 12 months. Sales of automotive fuel stores decreased 1.0 percent in Jul and fell 4.9 percent in 12 months.

Table VD-6, Euro Zone, Volume of Retail Sales by Products, ∆%

Jul 2013	Month ∆%	12-Month ∆%
Total	0.1	-1.3
Food, Drinks, Tobacco	1.0	-0.6
Nonfood Products ex Automotive Fuel	-0.4	-1.6
Automotive Fuel in Specialized Stores	-1.0	-4.9

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

Month and 12-month percentage rates of change of retail sales by member countries of the euro zone are shown in Table VD-7 for Jul 2013. Retail sales are weak throughout the euro zone. The 12-month percentage changes are negative for some members in Table VD-3 with the exception 1.4 percent for Ireland and 4.5 percent for Belgium. The 12-month percentage change for the UK, which is not a member of the euro zone, was 3.4 percent. The European Union’s 12-month percentage change was -0.3 percent.

Table VD-7, Euro Zone, Volume of Retail Sales by Member Countries, ∆%

Jul 2013	Month ∆%	12-Month ∆%
Euro Zone	0.1	-1.3
Germany	-1.4	-0.8
France	2.0	-0.9
Netherlands	NA	NA
Finland	-0.8	-1.3
Belgium	1.9	4.5
Portugal	0.6	-2.2
Ireland	1.6	1.4
Italy	NA	NA
Greece	NA	NA
Spain	0.0	-5.5
UK	0.9	3.4
European Union	0.2	-0.3

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

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	Jul month NSA ∆%: 0.5 Jul 12-month NSA ∆%: 1.9 Blog 8/18/13
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:

9/1/13 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

The production industries index of Germany in Table VE-1 shows increase of 0.2 percent in Dec 2012 and decrease of 9.4 percent in the 12 months ending in Dec 2012. The index decreased 0.5 percent in Jan 2013 and 1.4 percent in 12 months and increased 0.5 percent in Feb 2013, declining 5.1 percent in 12 months. In Mar 2013, the production index of Germany increased 0.9 percent and fell 9.1 percent in 12 months. The production index jumped 0.9 percent in Apr 2013 and 7.0 percent in 12 months. In May 2013, the production index fell 1.2 percent and 4.8 percent in 12 months. The production index of Germany increased 2.0 percent in Jun 2013 and 0.9 percent in 12 months. In Jul 2013, the production industries index fell 1.7 percent and increased 1.3 percent in 12 months. Germany’s production industries suffered decline of 7.3 percent in Dec 2008 relative to Dec 2007 and decline of 2.3 percent in 2009. Recovery was vigorous with 17.1 percent in the 12 months ending in Dec 2010. The first quarter of 2011 was quite strong when the German economy outperformed the other advanced economies. The performance of Germany’s production industries from 2002 to 2006 was vigorous with average rate of 4.5 percent. Data for the production industries index of Germany fluctuate sharply from month to month and in 12-month rates.

Table VE-1, Germany, Production Industries, Month and 12-Month ∆%

	12-Month ∆% NSA	Month ∆% Calendar SA
Jul 2013	1.3	-1.7
Jun	0.9	2.0
May	-4.8	-1.2
Apr	7.0	0.9
Mar	-9.1	0.7
Feb	-5.1	0.5
Jan	-1.4	-0.5
Dec 2012	-9.4	0.2
Nov	-3.0	-0.3
Oct	4.1	-1.5
Sep	-6.8	-1.3
Aug	-0.7	0.0
Jul	2.2	0.8
Jun	4.3	-0.7
May	-6.2	1.2
Apr	-0.5	-2.0
Mar	-0.1	2.1
Feb	2.5	-0.5
Jan	4.9	0.9
Dec 2011	1.5	-1.7
Nov	3.6	0.1
Oct	-0.4	1.0
Sep	4.0	-1.9
Aug	9.8	-0.5
Jul	5.4	2.9
Jun	-1.1	-1.2
May	17.5	0.5
Apr	4.7	0.2
Mar	9.2	0.6
Feb	15.1	1.0
Jan	14.4	0.9
Dec 2010	17.1
Dec 2009	-2.3
Dec 2008	-7.3
Dec 2007	-0.1
Dec 2006	2.5
Dec 2005	4.9
Dec 2004	5.3
Dec 2003	5.1
Dec 2002	2.0
Average ∆% per Year
Dec 1994 to Dec 2012	0.7
Dec 1994 to Dec 2000	0.8
Dec 1994 to Dec 2006	1.3
Dec 2002 to Dec 2006	4.5

Source: Source: Statistisches Bundesamt Deutschland (Destatis)

Table VE-2 provides monthly percentage changes of the German production industries index by components from Dec 2012 to Jul 2013. The index decreased 1.7 percent in Jul 2013 with decreases of 2.1 percent in industry, 2.1 percent in manufacturing, 3.4 percent in capital goods, 4.4 percent in durable goods, 0.4 percent in intermediate goods and 2.9 percent in energy while other segments decreased with minus 1.0 percent in intermediate goods.

Table VE-2, Germany, Production Industries, Industry and Components, Month ∆%

	Jul 2013	Jun 2013	May	Apr	Mar	Feb	Jan	Dec 2012
Production Industries	-1.7	2.0	-1.2	0.9	0.7	0.5	-0.5	0.2
Industry	-2.1	1.9	-1.2	0.6	0.6	0.8	-0.9	1.1
Mfg	-2.1	1.9	-1.2	0.5	0.6	0.8	-0.9	1.1
Intermediate Goods	-1.0	0.4	1.1	-0.3	0.8	0.0	0.2	0.1
Capital Goods	-3.4	3.4	-3.5	1.6	0.0	2.7	-1.8	1.2
Durable Goods	-4.4	12.5	-5.0	-1.9	2.1	1.4	1.2	0.8
Nondurable Goods	-0.4	-1.1	0.8	0.4	1.1	-3.2	-2.1	4.4
Energy	-2.9	4.9	-2.7	-3.1	7.6	0.5	0.3	-4.6

Seasonally Calendar Adjusted

Source: Source: Statistisches Bundesamt Deutschland (Destatis)

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

Table VE-3 provides 12-month unadjusted percentage changes of industry and components in Germany. There have been percentage declines of 12-month rates in the production index of Germany and all segments in the four months from Dec 2012 to Mar 2013 with exception of nondurables in Jan 2013 and energy in Mar 2013. There is sharp recovery in Apr 2013 with growth of manufacturing by 7.8 percent and capital goods by 11.2 percent. All segments show declines in 12 months in May 2013. There are increases in the 12 months ending in Jun of 0.9 percent in capital goods and 2.1 percent in durable goods. All segmented increased in Jul 2013 with exception of energy. Percentage declines in 12 months are quite sharp in Dec 2012 with most percentage changes negative around two-digits. Although there are sharp fluctuations in the data, there is suggestion of deceleration that would be expected from much higher earlier rates. The deceleration is quite evident in single-digit percentage changes from Sep 2011 to Dec 2012 relative to high double-digit percentage changes in Jan-Mar 2011. There are multiple negative 12-month percentage changes across many segments. Growth rates in the recovery from the global recession from IVQ2007 to IIQ2009 were initially very vigorous in comparison with the growth rates before the contraction that are shown in the bottom part of Table VE-3.

Table VE-3, Germany, Industry and Components, 12-Month ∆% Unadjusted

	IND	MFG	INTG	CG	DG	NDG	EN
2013
Jul	0.9	0.9	1.5	0.0	3.0	2.3	-1.2
Jun	-0.5	-0.5	-2.0	0.9	2.1	-1.9	-1.0
May	-4.7	-4.7	-3.7	-5.8	-10.7	-2.2	-5.3
Apr	7.9	7.8	4.3	11.2	9.0	7.7	-1.9
Mar	-8.8	-8.7	-8.0	-9.7	-9.4	-7.9	0.7
Feb	-4.9	-4.9	-5.6	-4.8	-6.4	-2.8	-11.9
Jan	-0.7	-0.6	-1.2	-1.9	-2.0	4.8	-4.1
2012
Dec	-9.6	-9.3	-11.8	-8.5	-12.4	-7.1	-2.3
Nov	-3.2	-3.1	-4.0	-2.7	-7.6	-1.3	0.7
Oct	3.9	3.8	2.9	4.0	0.7	6.9	3.2
Sep	-7.7	-7.6	-9.0	-7.2	-11.1	-5.4	3.9
Aug	-1.1	-1.1	-3.3	0.3	0.6	0.5	4.4
Jul	2.0	1.9	0.3	4.7	-2.3	-0.8	2.1
Jun	4.0	3.9	2.1	6.5	7.4	0.4	6.9
May	-6.8	-6.7	-7.2	-5.9	-10.6	-7.7	4.0
Apr	-0.9	-0.9	-1.8	1.9	-5.3	-5.7	4.0
Mar	-0.4	-0.3	-3.0	2.8	-6.0	-2.2	-0.8
Feb	3.3	3.3	1.1	7.4	0.0	-2.3	5.8
Jan	5.7	5.6	3.2	10.4	5.0	0.1	-3.3
2011
Dec	0.9	0.8	1.0	0.9	0.1	1.0	-9.3
Nov	4.0	3.9	2.2	7.5	2.1	-1.4	-5.8
Oct	0.1	0.2	-1.0	2.7	-2.5	-3.8	-6.1
Sep	5.2	5.2	4.1	8.8	3.2	-1.6	-6.3
Aug	11.6	11.5	8.6	20.0	4.6	0.7	-3.2
Jul	7.3	7.3	4.4	13.1	6.6	-0.7	-5.9
Jun	-0.1	-0.2	-0.6	1.9	-10.3	-2.5	-4.8
May	20.8	20.5	16.9	27.7	20.5	12.4	-7.4
Apr	6.8	6.7	5.3	10.6	4.4	1.3	-5.7
Mar	10.5	10.4	9.7	14.5	8.1	1.1	2.5
Feb	16.5	16.3	15.0	22.6	9.7	5.4	-0.6
Jan	16.3	16.0	16.1	22.9	9.7	2.7	-2.7
2010
Dec	17.6	17.6	15.0	25.8	8.3	1.5	2.5
Nov	14.0	14.0	13.0	19.3	7.7	3.7	3.5
Oct	9.9	9.9	9.8	14.1	6.3	0.6	2.4
Sep	9.8	9.5	12.1	10.1	8.3	2.8	2.1
Aug	17.0	17.0	19.3	19.9	18.3	7.1	1.3
Jul	9.0	8.7	13.1	8.7	7.4	1.0	1.9
Jun	16.3	16.2	20.7	16.1	19.6	4.9	-2.8
May	13.0	13.3	19.9	12.0	11.2	1.2	11.1
Apr	14.8	14.9	21.6	15.5	8.8	-0.1	9.4
Mar	14.3	14.5	20.4	12.1	12.0	5.9	4.2
Feb	6.8	7.4	10.6	6.5	8.0	-0.9	3.7
Jan	0.4	0.9	6.4	-3.9	0.7	-2.8	0.8
Dec 2010	17.6	17.6	15.0	25.8	8.3	1.5	2.5
Dec 2009	-3.2	-3.1	3.3	-9.9	-0.1	1.1	3.7
Dec 2008	-7.6	-7.4	-14.3	-5.4	-11.2	3.7	-9.0
Dec 2007	0.0	-0.3	-0.6	2.5	-10.0	-2.7	1.6
Dec 2006	3.2	3.1	5.2	2.3	8.6	-0.9	-5.3
Dec 2005	5.8	5.9	3.5	9.0	3.2	2.1	0.6
Dec 2004	5.3	5.5	7.7	3.4	0.8	5.7	9.6
Dec 2003	5.5	5.3	5.5	6.4	1.7	4.4	0.3
Dec 2002	3.7	3.3	5.4	3.4	-5.9	2.3	-2.6

Note: IND: Industry; MFG: Manufacturing; INTG: Intermediate Goods; CG: Capital Goods; DG: Durable Goods; NDG: Nondurable Goods; EN: Energy

Source: Statistisches Bundesamt Deutschland (Destatis

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

Broader perspective since 2005 is provided by Chart VE-1 of the Statistisches Bundesamt Deutschland, Federal Statistical Agency of Germany. The index of production industries not seasonally adjusted rises by more than one third between 2003 and 2008 with sharp fluctuations and then collapses during the global recession in 2008. Recovery has been in a steep upward trajectory that has recovered at the more recent peaks the losses during the contraction. Recovery was reversed by the drop in Dec 2011 with strong rebound into 2012 and another sharp drop in Apr 2012 with recovery in May 2012 and drops in Jun, Aug, Sep, Oct and Jan 2013 followed by recovery in Feb-Apr 2013. The index fell again in May 2013 but recovered in Jul 2013.

Chart VE-1, Germany, Production Industries, Not Adjusted, 2005=100

Source: Statistiche Bundesamt Deutschland

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

More detail is provided by Chart VE-2 of the Statistiche Bundesamt Deutschland, or Federal Statistical Agency of Germany, with the unadjusted production industries index and trend from 2009 to 2013. There could be some flattening in recent months probably leading into stagnation or mild downturn as depicted by trend.

Chart VE-2, Germany, Production Industries, Not Adjusted, 2005=100

Source: Statistiche Bundesamt Deutschland

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

Table VE-4 provides month and 12-month rates of growth of manufacturing in Germany from Dec 2010 to Jul 2013. There are fluctuations in both monthly rates and in the past 12 months. In Jan 2013, manufacturing fell 0.9 percent and decreased 0.6 percent in 12 months. Manufacturing increased 0.8 percent in Feb 2013, declining 4.9 percent in 12 months. In Mar 2013, manufacturing increased 0.6 percent but fell 8.7 percent in 12 months. There is strong recovery in Apr 2013 with growth of 0.5 percent and 7.8 percent in 12 months. Manufacturing fell 1.2 percent in May 2013 and declined 4.7 percent in 12 months. Recovery is strong in Jun 2013 with growth of 1.9 percent in the month and decline of 0.5 percent in 12 months. Manufacturing fell 2.1 percent in Jul 2013 and increased 0.9 percent in 12 months.

Table VE-4, Germany, Manufacturing Month and 12-Month ∆%

	12-Month ∆% NSA	Month ∆% SA and Calendar Adjusted
Jul 2013	0.9	-2.1
Jun	-0.5	1.9
May	-4.7	-1.2
Apr	7.8	0.5
Mar	-8.7	0.6
Feb	-4.9	0.8
Jan	-0.6	-0.9
Dec 2012	-9.3	1.1
Nov	-3.1	-0.1
Oct	3.8	-1.5
Sep	-7.6	-1.5
Aug	-1.1	-0.1
Jul	1.9	1.1
Jun	3.9	-1.1
May	-6.7	1.8
Apr	-0.9	-2.0
Mar	-0.3	1.0
Feb	3.3	0.3
Jan	5.6	0.7
Dec 2011	0.8	-1.6
Nov	3.9	-0.2
Oct	0.2	0.9
Sep	5.2	-1.9
Aug	11.5	-0.5
Jul	7.3	3.1
Jun	-0.2	-1.3
May	20.5	0.8
Apr	6.7	0.4
Mar	10.4	0.8
Feb	16.3	1.2
Jan	16.0	-0.7
Dec	17.6	1.3

Source: Statistisches Bundesamt Deutschland (Destatis)

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

Chart VE-3 of the Statistisches Bundesamt Deutschland, or Federal Statistical Office of Germany, provides the manufacturing index of Germany from 2009 to 2013. Manufacturing was already flattening in 2007 and fell sharply in 2008 to the beginning of 2010. Manufacturing grew sharply in the initial phase of recovery but has flattened in recent months as revealed by the trend that may be turning downward.

Chart VE-3, Germany, Production Index, Manufacturing, Not Adjusted Index and Trend, 2005=100

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

Table VE-5 provides month and 12-month rates of growth of new orders of manufacturing in Germany from Jan 2010 to Jul 2013. There are fluctuations in both monthly rates and in the past 12 months. Table VE-5 reveals strong fluctuations in an evident deceleration of total orders for industry of Germany. Total orders for manufacturing fell 2.7 percent in Jul and increased 5.0 percent in 12 months. There is the same behavior for total, foreign and domestic orders with decline in 12-month rates from two-digit levels to single digits and negative changes. An important aspect of Germany is that the bulk of orders is domestic or from other European countries while foreign orders have been growing rapidly. There is weakening world trade affecting export economies. As in other countries, data on orders for manufacturing are highly volatile. Most 12-month percentage changes from Jan 2012 to Sep 2012 in Table VE-1 are negative largely because of the unusual strength of the Germany economy in the beginning of 2011 but more recently because of slowing world economy in 2012-2013.

Table VE-5, Germany, Volume of Orders Received in Manufacturing, Total, Domestic and Foreign, ∆%

	Total 12 M	Total M	Foreign 12 M	Foreign M	Home 12 M	Home M
2013
Jul	5.0	-2.7	5.8	-4.5	3.9	-0.3
Jun	4.6	5.0	7.8	6.1	0.3	3.5
May	-3.7	-0.5	-1.9	0.5	-6.1	-1.7
Apr	5.7	-1.9	7.3	-1.2	3.5	-2.9
Mar	-5.9	2.2	-4.9	2.8	-7.3	1.7
Feb	-3.1	2.1	-2.0	2.0	-4.6	2.1
Jan	-1.0	-1.4	0.5	-2.7	-2.7	0.2
2012
Dec	-9.1	0.9	-6.7	1.5	-12.6	0.2
Nov	-0.9	-2.7	2.4	-4.7	-5.1	-0.1
Oct	4.5	4.1	7.0	6.8	1.3	0.8
Sep	-8.9	-1.8	-6.6	-2.2	-11.7	-1.2
Aug	-4.4	-1.1	-2.1	-0.7	-7.1	-1.6
Jul	-1.6	0.6	0.6	0.5	-4.2	0.6
Jun	-4.5	-2.2	-6.4	-2.2	-1.7	-2.1
May	-11.0	1.0	-3.7	2.4	-18.8	-0.9
Apr	-3.9	-1.9	-4.4	-2.8	-3.1	-0.7
Mar	-2.2	2.4	-1.2	3.4	-3.3	1.3
Feb	-4.3	0.4	-4.7	1.1	-3.8	-0.6
Jan	-2.6	-1.6	-4.6	-2.7	-0.2	-0.1
2011
Dec	0.0	2.1	-0.3	4.3	0.5	-0.6
Nov	-4.8	-2.9	-8.2	-5.1	-0.3	-0.1
Oct	0.1	1.6	2.1	2.9	-2.1	0.2
Sep	2.2	-3.0	1.9	-3.3	2.6	-2.8
Aug	7.1	-1.0	5.2	-0.2	9.4	-2.0
Jul	4.9	-2.3	4.6	-6.4	5.4	3.3
Jun	3.5	-0.4	7.8	8.9	-2.0	-10.7
May	23.1	2.7	16.0	-3.7	31.8	10.9
Apr	6.7	1.7	9.6	2.2	3.0	1.0
Mar	9.8	-3.0	12.3	-3.0	6.9	-3.1
Feb	21.5	0.7	24.1	0.0	18.4	1.7
Jan	22.5	4.2	26.1	4.2	18.2	4.3
2010
Dec	21.8	-2.9	26.8	-4.1	15.4	-1.3
Nov	21.4	5.5	27.1	8.7	15.0	1.6
Oct	14.2	0.5	18.2	-0.1	10.0	1.3
Sep	13.9	-1.0	15.6	-2.6	11.9	1.0
Aug	22.2	2.2	29.7	4.1	14.5	-0.1
Jul	14.1	-0.7	21.4	-0.9	6.4	-0.5
Jun	27.6	2.5	30.6	3.3	24.2	1.6
May	24.8	-0.1	29.6	0.8	19.4	-1.1
Apr	29.9	3.0	34.0	3.1	25.7	2.9
Mar	29.4	4.9	32.9	5.1	25.8	4.8
Feb	24.0	-0.2	28.7	0.2	18.6	-0.7
Jan	17.0	4.1	23.8	4.7	9.8	3.3
Dec 2009	9.1	-1.7	10.5	-2.6	7.3	-0.5
Dec 2008	-28.3	-6.7	-31.5	-9.5	-23.7	-2.9
Dec 2007	7.1	-0.9	9.1	-2.0	4.4	0.2
Dec 2006	2.8	0.8	3.4	0.5	2.2	1.1
Dec 2005	5.0	-0.5	10.4	-1.1	-1.4	0.3
Dec 2004	12.7	6.5	13.0	8.5	12.7	4.9
Dec 2003	10.7	2.4	16.4	5.4	5.1	-0.8
Dec 2002	-0.2	-3.4	-0.8	-6.6	0.2	-0.3
Average ∆% 2003-2007	7.6		10.4		4.5
Average ∆% 2003-2012	2.3		3.9		0.3

Notes: AE: Annual Equivalent; M: Month; M: Calendar and seasonally adjusted; 12 M: Non-adjusted Source: Statistisches Bundesamt Deutschland https://www.destatis.de/EN/FactsFigures/Indicators/ShortTermIndicators/ShortTermIndicators.html

Orders for capital goods of Germany are shown in Table VE-6. Total capital goods orders decreased 5.1 percent in Jul 2013 and increased 6.1 percent in 12 months. Domestic orders decreased 1.1 percent in Jul and foreign orders 7.2 percent. There has been evident deceleration from 2010 and early 2011 with growth rates falling from two digit levels to single digits and multiple negative changes. An important aspect of Germany’s economy shown in Tables VE-5 and VE-6 is the success in increasing the competitiveness of its economic activities as shown by rapid growth of orders for industry after the recession of 2001 in the period before the global recession beginning in late 2007. Germany adopted fiscal and labor market reforms to increase productivity.

Table VE-6, Germany, Volume of Orders Received of Capital Goods Industries, Total, Foreign and Domestic, ∆%

	Total 12 M	Total M	Foreign 12 M	Foreign M	Domestic 12 M	Domestic M
2013
Jul	6.1	-5.1	7.6	-7.2	3.6	-1.1
Jun	8.7	9.0	13.3	10.4	1.1	6.5
May	-3.6	-0.6	-1.1	1.4	-7.9	-4.0
Apr	5.6	-2.7	6.5	-3.0	3.9	-2.1
Mar	-6.1	1.9	-4.6	3.0	-8.5	0.1
Feb	-0.7	3.1	1.6	2.5	-4.3	4.0
Jan	1.3	-2.2	3.6	-2.8	-2.3	-1.0
2012
Dec	-7.7	2.4	-4.6	2.6	-13.3	1.8
Nov	-0.7	-3.8	3.1	-5.4	-6.5	-0.8
Oct	4.6	5.1	6.3	6.9	2.1	1.9
Sep	-7.5	-0.7	-4.8	-0.3	-11.6	-1.3
Aug	-4.6	-2.5	-2.6	-2.0	-7.4	-3.2
Jul	-0.3	0.8	1.2	0.8	-2.7	0.6
Jun	-7.1	-2.2	-9.9	-2.5	-1.9	-1.8
May	-12.0	1.1	-2.8	2.1	-23.9	-0.6
Apr	-3.3	-3.5	-4.2	-4.4	-1.7	-2.0
Mar	2.2	5.1	3.3	7.5	0.2	1.4
Feb	-5.9	1.4	-7.0	1.3	-4.2	1.4
Jan	-3.7	-3.6	-6.5	-4.2	1.0	-2.8
2011
Dec	1.2	2.7	-0.1	4.1	3.5	0.6
Nov	-6.5	-3.5	-10.5	-6.7	0.7	1.9
Oct	3.1	2.9	6.2	4.7	-2.0	0.1
Sep	2.9	-3.1	2.2	-3.3	4.0	-3.0
Aug	6.7	-0.7	4.5	0.0	10.6	-1.8
Jul	7.2	-6.1	6.4	-10.4	8.8	1.6
Jun	9.1	1.0	13.3	13.7	2.0	-16.1
May	27.5	4.9	17.7	-4.4	43.5	20.5
Apr	11.0	3.6	14.1	4.7	6.3	1.7
Mar	12.0	-5.8	14.4	-5.4	8.5	-6.5
Feb	29.3	2.4	32.5	0.7	24.8	5.4
Jan	26.8	3.9	32.8	4.5	17.7	2.9
2010
Dec	27.4	-5.2	31.2	-6.9	21.1	-2.0
Nov	30.4	9.6	37.0	13.9	20.1	2.7
Oct	20.5	-0.2	24.9	-1.8	14.3	2.4
Sep	18.2	-1.9	20.3	-3.5	14.7	0.8
Aug	27.5	4.9	40.0	6.7	11.5	2.1
Jul	14.1	-2.1	28.1	-2.3	-2.5	-1.7
Jun	32.0	3.5	38.7	5.2	22.1	0.6
May	26.2	1.7	36.6	1.8	12.8	1.5
Apr	31.0	2.9	41.4	3.7	18.1	1.7
Mar	25.8	6.5	33.8	7.3	15.7	5.0
Feb	21.2	-1.1	31.3	-0.1	8.3	-2.6
Jan	17.0	4.4	29.6	3.0	2.8	7.1
Dec 2009	8.1	-1.2	13.6	-1.5	0.3	-1.0
Dec 2008	-32.2	-7.2	-36.8	-10.0	-24.5	-3.6
Dec 2007	9.4	-0.6	11.6	-2.3	6.1	2.2
Dec 2006	3.5	2.2	3.9	2.9	2.9	1.2
Dec 2005	1.8	-2.1	9.7	-2.5	-8.4	-1.6
Dec 2004	19.5	11.2	18.6	12.2	20.6	9.7
Dec 2003	11.7	2.1	17.2	5.0	5.4	-1.6
Dec 2002	-2.8	-4.3	-3.7	-8.1	-1.8	0.2
Average ∆% 2003-2007	9.0		12.1		4.9
Average ∆% 2003-2012	3.0		4.7		0.5

Notes: AE: Annual Equivalent; M: Month; M: Calendar and seasonally-adjusted; 12 M: Non-adjusted

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

Chart VE-4 of the German Statistisches Bundesamt Deutschland shows the sharp upward trend of total orders in manufacturing before the global recession. There is also an obvious upward trend in the recovery from the recession with Germany’s economy being among the most dynamic in the advanced economies until the slowdown beginning in the final months of 2011 and what could be stationary series from late 2011 into 2012 but risk of decline in the final segment.

Chart VE-4, Germany, Volume of Total Orders in Manufacturing, Non-Adjusted, 2005=100

Source: Statistisches Bundesamt Deutschland

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

Chart VE-5 of the German Statistisches Bundesamt Deutschland provides unadjusted volume of total orders in manufacturing and a trend curve. The final segment on the right could be the beginning of inversion to mildly increasing trend but it may be early to reach conclusions.

Chart VE-5, Germany, Volume of Total Orders in Manufacturing and Trend, Non-Adjusted, 2005=100

Source: Statistisches Bundesamt Deutschland

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

Twelve-month rates of growth Germany’s exports and imports are shown in Table VE-7. There was sharp decline in the rates in Jun and Jul 2011 to single-digit levels especially for exports. In the 12 months ending in Aug 2011, exports rose 14.6 percent and imports 13.2 percent. In Sep 2011, exports grew 10.5 percent relative to a year earlier and imports grew 11.7 percent. Growth rates in 12 months ending in Oct 2011 fell significantly to 3.6 percent for exports and 9.2 percent for imports. Lower prices may explain part of the decline in nominal values. Exports fell 3.4 percent in 12 months ending in Sep 2012, rebounding to growth of 10.5 percent in Oct 2012 and minus 0.1 percent in Nov 2012 but sharp decline of 6.9 percent in Dec 2012 followed by rebound of 3.0 percent in Jan 2013. Exports fell 2.8 percent in the 12 months ending in Feb 2013 and declined 4.2 percent in the 12 months ending in Mar 2013. In Apr 2013, exports increased 8.3 percent relative to a year earlier. Exports fell 4.5 percent in the 12 months ending in May 2013. Exports fell 2.1 percent in the 12 months ending in Jun 2013 and imports fell 1.3 percent. Exports changed 0.0 percent in the 12 months ending in Jul 2013 while imports increased 0.9 percent. Imports decreased 3.6 percent in the 12 months ending in Sep 2012, rebounding to growth of 6.0 percent in Oct 2012, decreasing 1.1 percent in Nov 2012 and 7.5 percent in Dec 2012 and rebounding 2.9 percent in Jan 2013. Imports fell 5.9 percent in the 12 months ending in Feb 2013 and declined 7.0 percent in Mar 2013. In Apr 2013, imports increased 5.1 percent relative to a year earlier. In May 2013, imports fell 2.8 percent relative to a year earlier. Imports fell 1.2 percent in the 12 months ending in Jun 2013. In Jul 2013, imports increased 0.9 percent relative to a year earlier. Growth was much stronger in the recovery during 2010 and 2011 from the fall from 2007 to 2009. Germany’s trade grew at high rates in 2006 and 2005.

Table VE-7, Germany, Exports and Imports NSA Euro Billions and 12-Month ∆%

	Exports EURO Billions	12- Month ∆%	Imports EURO Billions	12-Month ∆%
Jul 2013	93.4	0.0	77.3	0.9
Jun	92.7	-2.1	75.7	-1.3
May	88.6	-4.5	75.0	-2.8
Apr	94.3	8.3	76.4	5.1
Mar	94.6	-4.2	75.7	-7.0
Feb	88.6	-2.8	71.8	-5.9
Jan	88.5	3.0	74.9	2.9
Dec 2012	79.0	-6.9	66.9	-7.5
Nov	94.0	-0.1	77.1	-1.1
Oct	98.4	10.5	82.7	6.0
Sep	91.7	-3.4	74.8	-3.6
Aug	90.2	5.7	73.9	0.5
Jul	93.5	9.2	76.6	2.1
Jun	94.7	7.5	76.8	2.1
May	92.7	0.4	77.2	-0.5
Apr	87.1	3.1	72.7	-1.3
Mar	98.8	0.1	81.4	2.0
Feb	91.2	7.9	76.3	5.4
Jan	86.0	8.4	72.8	4.9
Dec 2011	84.8	4.7	72.3	5.6
Nov	94.1	7.4	78.0	5.8
Oct	89.1	3.6	78.1	9.2
Sep	95.0	10.5	77.7	11.7
Aug	85.3	14.6	73.5	13.2
Jul	85.6	5.2	75.0	9.7
Jun	88.1	3.3	75.2	5.6
May	92.4	21.2	77.5	17.4
Apr	84.5	12.4	73.7	18.5
Mar	98.7	15.3	79.8	15.1
Feb	84.5	20.8	72.5	27.6
Jan	79.3	25.2	69.4	26.0
Dec 2010	81.0	20.0	68.4	24.4
Nov	87.6	21.2	73.7	30.9
Oct	86.0	18.7	71.5	19.2
Sep	86.0	21.2	69.5	17.0
Aug	74.4	23.8	64.9	27.1
Jul	81.4	15.3	68.4	24.4
Jun	85.3	27.5	71.2	33.9
May	76.2	25.6	66.1	31.3
Apr	75.2	16.8	62.2	14.4
Mar	85.6	22.0	69.3	18.0
Feb	70.0	9.7	56.8	3.2
Jan	63.4	-0.3	55.1	-1.9
Dec 2009	67.5	1.2	55.0	-7.3
Dec 2008	66.7	-8.6	59.4	-5.1
Dec 2007	73.0	-0.6	62.5	-0.1
Dec 2006	73.4	10.2	62.6	8.5
Dec 2005	66.6	11.5	57.7	18.1
Dec 2004	59.7	9.2	48.9	10.8
Dec 2003	54.7	7.6	44.1	3.9
Dec 2002	50.8	5.5	42.5	6.4
Dec 2001	48.2	-3.7	39.9	-17.5
Dec 2000	50.0		48.4

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

Chart VE-6 of the Statistisches Bundesamt Deutschland shows exports and trend of German exports. Growth has been with fluctuations around a strong upward trend that is milder than earlier in the recovery but could be flattening or even falling.

Chart VE-6, Germany, Exports Original Value and Trend 2008-2012

Source: Statistisches Bundesamt Deutschland

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

Chart VE-7 of the Statistisches Bundesamt Deutschland provides German imports and trend. Imports also fell sharply and have been recovering with fluctuations around a strong upward trend that could be flattening.

Chart VE-7, Germany, Imports Original Value and Trend 2008-2012

Source: Statistisches Bundesamt Deutschland

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

Chart VE-8 of the Statistisches Bundesamt Deutschland shows the trade balance of Germany since 2008. There was sharp decline during the global recession and fluctuations around a mild upward trend during the recovery with stabilization followed by stronger trend in recent months and flattening/declining recently.

Chart VE-8, Germany, Trade Balance Original and Trend 2008-2012

Source: Statistisches Bundesamt Deutschland

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

Table VE-8 provides monthly rates of growth of exports and imports of Germany. Exports fell 1.1 percent in Jul 2013 calendar and seasonally adjusted (CSA) and imports increased 0.5 percent. Exports increased 0.5 percent in Jun 2013 while imports decreased 1.0 percent. Exports fell 2.0 percent in May 2013 while imports increased 1.4 percent. There is strong recovery in Apr 2013 with growth of exports of 1.4 percent and of imports of 1.2 percent. Export growth had been relatively strong from Dec 2012 to Apr 2013 with only one monthly decline of 1.2 percent in Feb 2013. Export growth and import growth were vigorous in Jan-Mar 2011 when Germany’s economy outperformed most advanced economies but less dynamic and consistent in following months as world trade weakens.

Table VE-8, Germany, Exports and Imports Month ∆% Calendar and Seasonally Adjusted

	Exports	Imports
Jul 2013	-1.1	0.5
Jun	0.6	-1.0
May	-2.0	1.4
Apr	1.4	1.2
Mar	0.5	1.0
Feb	-1.2	-3.4
Jan	1.5	3.3
Dec 2012	0.4	-1.4
Nov	-2.2	-3.8
Oct	0.1	2.7
Sep	-2.0	-0.9
Aug	1.6	0.0
Jul	0.0	0.2
Jun	-0.9	-2.0
May	4.1	5.3
Apr	-1.2	-4.7
Mar	-0.3	0.8
Feb	1.2	3.3
Jan	2.8	0.3
Dec 2011	-2.9	-1.8
Nov	2.7	-0.4
Oct	-3.4	-0.2
Sep	1.8	0.0
Aug	2.6	-0.2
Jul	-1.4	0.3
Jun	-0.4	0.2
May	2.1	1.3
Apr	-3.2	-0.8
Mar	4.6	2.3
Feb	1.2	2.1
Jan	1.1	3.4
Dec 2010	-0.1	-2.0

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

There is extremely important information in Table VE-9 for the current sovereign risk crisis in the euro zone. Table VE-9 provides the structure of regional and country relations of Germany’s exports and imports with newly available data for Jul 2013. German exports to other European Union (EU) members are 56.0 percent of total exports in Jul 2013 and 57.3 percent in cumulative Jan-Jul 2013. Exports to the euro area are 36.0 percent in Jul and 37.2 percent cumulative in Jan-Jul. Exports to third countries are 44.1 percent of the total in Jul and 42.7 percent cumulative in Jan-Jul. There is similar distribution for imports. Exports to non-euro countries are increasing 3.6 percent in the 12 months ending in Jul 2013, increasing 1.5 percent cumulative in Jan-Jul 2013 while exports to the euro area are decreasing 0.7 percent in the 12 months ending in Jul 2013 and decreasing 2.9 percent cumulative in Jan-Jul 2013. Exports to third countries, accounting for 44.1 percent of the total in Jun 2013, are decreasing 1.0 percent in the 12 months ending in Jul 2013 and decreasing 0.7 percent cumulative in Jan-Jul 2013, accounting for 42.7 percent of the cumulative total in Jan-Jul 2013. Price competitiveness through devaluation could improve export performance and growth. Economic performance in Germany is closely related to its high competitiveness in world markets. Weakness in the euro zone and the European Union in general could affect the German economy. This may be the major reason for choosing the “fiscal abuse” of the European Central Bank considered by Buiter (2011Oct31) over the breakdown of the euro zone. There is a tough analytical, empirical and forecasting doubt of growth and trade in the euro zone and the world with or without maintenance of the European Monetary Union (EMU) or euro zone. Germany could benefit from depreciation of the euro because of high share in its exports to countries not in the euro zone but breakdown of the euro zone raises doubts on the region’s economic growth that could affect German exports to other member states.

Table VE-9, Germany, Structure of Exports and Imports by Region, € Billions and ∆%

	Jul 2013 € Billions	Jun 12-Month ∆%	Cumulative Jan-Jul 2012 € Billions	Cumulative Jan-Jul 2013/ Jan-Jul 2012 ∆%
Total Exports	93.4	0.0	640.8	-0.5
A. EU Members	52.3 % 56.0	0.8	367.1 % 57.3	-1.4
Euro Area	33.6 % 36.0	-0.7	238.5 % 37.2	-2.9
Non-euro Area	18.6 % 19.9	3.6	128.6 % 20.1	1.5
B. Third Countries	41.2 % 44.1	-1.0	273.8 % 42.7	0.7
Total Imports	77.3	0.9	526.8	-1.3
C. EU Members	49.6 % 64.2	0.6	340.8 % 64.7	0.1
Euro Area	35.3 % 45.7	1.5	238.8 % 45.3	-0.4
Non-euro Area	14.3 % 18.5	-1.7	102.0 % 19.4	1.4
D. Third Countries	27.7 % 35.8	1.6	186.1 % 35.3	-3.7

Notes: Total Exports = A+B; Total Imports = C+D

Source: Statistisches Bundesamt Deutschland https://www.destatis.de/EN/PressServices/Press/pr/2013/09/PE13_298_51.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	Jul month ∆% -0.3 12 months ∆%: 1.1 8/18/13
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	Jun ∆%: Manufacturing minus 0.4 12-Month ∆%: Manufacturing minus 0.6 Blog 8/11/13
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:

9/1/13 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

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

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

The number of unemployed in France rose from 2.098 million in IV2007, for a rate of unemployment of 7.5 percent, to 3.001 million in IVQ2012, for a rate of unemployment of 10.5 percent, as shown in Table VF-1. At the same time, the rate of employment fell from 64.6 percent in IV2007 to 63.9 percent in IIQ2013.

Table VF-1, France, Metropolitan France, Employment Rate, Unemployed and Unemployment Rate, Millions and %

	Unemployed Millions	Unemployed Percent	Employment Rate
IIQ2013	3.001	10.5	63.9
IQ2013	2,975	10.4	63.8
IVQ2012	2.914	10.1	64.0
IIIQ2012	2.827	9.9	63.9
IIQ2012	2.784	9.8	63.8
IQ2012	2.714	9.5	63.8
IVQ2011	2.656	9.3	63.8
IIIQ2011	2.613	9.2	63.8
IIQ2011	2.564	9.1	63.9
IQ2011	2.584	9.1	63.8
IVQ2010	2.616	9.2	63.8
IIIQ2010	2.634	9.3	63.9
IIQ2010	2.625	9.3	63.9
IQ2010	2.663	9.4	63.9
IVQ2009	2.705	9.6	63.7
IIIQ2009	2.588	9.2	63.9
IIQ2009	2.591	9.2	64.1
IQ2009	2.412	8.6	64.4
IVQ2008	2.181	7.8	64.8
IIIQ2008	2.063	7.4	64.8
IIQ2008	2.029	7.3	64.8
IQ2008	1.983	7.1	64.9
IV2007	2.098	7.5	64.6
IIIQ2007	2.215	8.0	64.4
IIQ2007	2.251	8.1	64.1
IQ2007	2.336	8.4	63.9
IVQ2006	2.326	8.4	63.9
IVQ2005	2.494	9.1	63.5
IVQ2004	2.434	8.9	63.7
IVQ2003	2.373	8.8	63.8
IVQ2002	2.143	8.0
IVQ2001	2.067	7.8
IVQ2000	2.115	8.0
IVQ1999	2.476	9.5
IVQ1995	2.546	10.0
IVQ1990	1.958	7.9
IVQ1985	2.173	8.9
IVQ1980	1.331	5.6
IVQ1975	0.847	3.7

Source: Institut National de la Statistique et des Études Économiques http://www.insee.fr/en/themes/info-rapide.asp?id=14&date=20130905

Chart VF-1 of the Institut National de la Statistique et des Études Économiques of France provides the unemployment rate according to the ILO (International Labor Organization) quarterly from 1975 to 2013. The preliminary estimate for IIQ2013 is 10.5 percent. The rate of unemployment had decline before the global recession, rising again recently.

Chart VF-1, France, Unemployment Rate According to ILO, Quarterly SA, 1975-2013

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=14&date=20130905

Chart VF-2 of the Institut National de la Statistique et des Études Économiques of France provides an excellent view of the unemployment rate in France. The rate of unemployment rose from 2003 to 2006 and then fell sharply in 2007. The global recession caused sharp increase in the French rate of unemployment that has declined from the peak, stabilized at a high level and is climbing again.

Chart VF-2, France, Unemployment Rate International Labor Organization Criterion, Seasonally Adjusted Average over Quarter, Percent

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=14&date=20130905

France has been running a trade deficit fluctuating around €5,000 million as shown in Table VF-2. Exports increased 1.3 percent in Jul 2013 while imports increased 2.7 percent. The trade deficit increased from revised €4484 million in Jun 2013 to €5109 million in Jul 2013 partly because of the higher value of imports than exports in Jun 2013.

Table VF-2, France, Exports, Imports and Trade Balance, € Millions

	Exports	Imports	Trade Balance
Jul 2013	36,526	41,635	-5,109
Jun	36,065	40,549	-4,484
May	35,895	41,752	-5,857
Apr	37,825	42,051	-4,226
Mar	36,151	40,700	-4,549
Feb	35,639	41,373	-5,734
Jan	36,483	41,937	-5,454
Dec 2012	37,274	43,071	-5,797
Nov	36,341	40,982	-4,641
Oct	37,273	42,274	-5,001
Sep	37,231	42,490	-5,259
Aug	38,003	43,691	-5,688
Jul	36,748	41,164	-4,416
Jun	36,539	43,250	-6,711
May	37,851	43,058	-5,207
Apr	36,451	42,626	-6,175
Mar	36,320	42,383	-6,063
Feb	37,232	43,475	-6,243
Jan	36,539	42,257	-5,718
Dec 2011	35,858	41,486	-5,628
Dec 2010	33,832	39,524	-5,692

Source: France, Direction générale des douanes et droits indirects http://lekiosque.finances.gouv.fr/AppChiffre/Portail_default.asp

Table VF-3 provides month and 12-month percentage changes of France’s exports and imports. Exports increased 1.3 percent in Jul 2013 and decreased 0.6 percent in the 12 months ending in Jul 2013. Imports increased 2.7 percent in Jul 2013 and increased 1.1 percent in 12 months. Growth of exports and imports has fluctuated in 2011, 2012 and 2013 because of price surges of commodities and raw materials. Weak economic conditions worldwide also influence trade performance.

Table VF-3, France, Exports and Imports, Month and 12-Month ∆%

	Exports Month ∆%	Exports 12-Month ∆%	Imports Month ∆%	Imports 12-Month ∆%
Jul 2013	1.3	-0.6	2.7	1.1
Jun	0.5	-1.3	-2.9	-6.2
May	-5.1	-5.2	-0.7	-3.0
Dec 2012		3.9		3.8
Dec 2011		6.0		5.0
Dec 2010		13.4		14.9
Dec 2009		-9.8		-2.0
Dec 2008		-6.7		-10.8
Dec 2007		5.9		8.2
Dec 2006		6.6		6.7
Dec 2005		11.3		15.2
Dec 2004		-3.7		5.8
Dec 2003		7.1		1.6

Source: France, Direction générale des douanes et droits indirects http://lekiosque.finances.gouv.fr/AppChiffre/Portail_default.asp

Annual data for France’s exports, imports and trade balance are provided in Table VF-4. France’s trade balance deteriorated sharply from 2007 to 2011 with the deficit increasing from €42,494 million in 2007 to €73,717 million in 2011. Annual growth rates of exports have not been sufficiently high to compensate for growth of imports driven in part by commodity price increases. In 2012, the trade deficit declined to €67,034 million with growth of exports of 3.1 percent and of imports of 1.3 percent.

Table VF-4, France, Exports, Imports and Balance Year € Millions and ∆%

	Exports € Millions	∆%	Imports € Millions	∆%	Balance € Millions
Jul 2013 12 Months	438,808		500,065		-61,257
Year
2012	441,574	3.1	508,608	1.3	-67,034
2011	428,281	8.4	501,998	12.2	-73,717
2010	395,034	14.0	447,489	14.2	-52,455
2009	346,481	-17.0	391,872	-17.3	-45,391
2008	417,636	2.7	473,853	5.5	-56,217
2007	406,487	3.0	448,981	5.8	-42,494
2006	394,621	9.5	424,549	10.4	-29,928
2005	360,376	4.4	384,588	9.6	-24,212
2004	345,256	5.4	350,996	7.0	-5,740
2003	327,653		327,884		-231

Source: France, Direction générale des douanes et droits indirects http://lekiosque.finances.gouv.fr/AppChiffre/Portail_default.asp

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.

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

	GDP	Imports	Consumption	GFCF	Exports
2013
IIQ2013	-2.0
IQ	-2.3	-5.2	-2.7	-7.5	-0.2
2012
IVQ	-2.8	-6.7	-4.2	-7.8	1.8
IIIQ	-2.6	-8.1	-4.3	-8.2	2.5
IIQ	-2.4	-7.5	-3.9	-8.3	2.5
IQ	-1.7	-8.9	-3.3	-7.6	2.1
2011
IVQ	-0.5	-6.9	-1.8	-3.3	3.1
IIIQ	0.3	0.1	-0.7	-2.1	5.6
IIQ	0.9	3.1	0.6	-0.6	7.0
IQ	1.3	8.8	0.9	0.6	10.9
2010
IVQ	2.0	15.3	1.1	0.8	13.2
IIIQ	1.8	13.2	1.3	2.4	12.0
IIQ	1.9	13.5	0.8	1.1	12.0
IQ	1.1	7.2	0.8	-2.0	7.3
2009
IVQ	-3.4	-6.4	0.2	-7.8	-9.3
IIIQ	-4.9	-12.2	-0.8	-12.6	-16.4
IIQ	-6.6	-17.9	-1.5	-13.6	-21.4
IQ	-7.0	-17.2	-1.7	-12.6	-22.8
2008
IVQ	-3.0	-8.2	-0.9	-8.3	-10.3
IIIQ	-1.9	-5.0	-0.8	-4.5	-3.9
IIQ	-0.2	-0.1	-0.3	-1.5	0.4
IQ	0.5	1.7	0.1	-1.0	2.9

GFCF: Gross Fixed Capital Formation

Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/92338 http://www.istat.it/it/archivio/97261

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 ∆%: 0.3 Aug 12-month ∆%: 1.1 Blog 9/1/13
Producer Price Index	Jul month ∆%: 0.1 Jul 12-month ∆%: -1.0 Blog 9/1/13
GDP Growth	IIQ2013/IQ2013 SA ∆%: minus 0.2 IIQ2013/IIQ2012 NSA ∆%: minus 2.0 Blog 3/17/13 6/16/13 8/11/13
Labor Report	Jul 2013 Participation rate 63.6% Employment ratio 55.9% Unemployment rate 12.0% Blog 9/1/13
Industrial Production	Jun month ∆%: 0.3 12 months CA ∆%: -2.1 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

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	Apr-Jun Unemployment Rate: 7.8%; Claimant Count 4.3%; Earnings Growth 2.1% Blog 8/18/13
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:

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

The UK Office for National Statistics provides the output of production industries with revisions. Table VH-1 incorporates the revisions released in Dec, 2011(http://www.ons.gov.uk/ons/rel/iop/index-of-production/november-2012/index.html) and the latest available data for Jul 2013. Manufacturing accounts for 68.4 percent of the production industries of the UK and decreased 0.7 percent in the 12 months ending in Jul 2013. Capital goods industries increased 2.3 percent in the 12 months ending in Jul 2013, increasing 3.5 percent in the 12 months ending in Jun 2013. Capital goods industries fell 1.1 percent in the 12 months ending in May 2013, grew 3.6 percent in the 12 months ending in Apr 2013 and had been growing at very high rates during the current cyclical recovery but falling from the unsustainable high of 12.0 percent in the 12 months ending in Feb 2011. Mining and quarrying decreased 9.7 percent in the 12 months ending in Jul 2013. The 12-month rates of growth of the entire index of production industries registered declines for all 12 months from Mar 2011 to May 2013. With exception of most months for capital goods and Sep to Dec 2012 for consumer durables, 12-month percentage changes of all segments are mostly negative from Jan to Dec 2012. Energy and mining have been drivers of decline. The upper part of Table VH-1 provides rates of change of yearly values. Manufacturing output fell 10.2 percent in 2009 after falling 2.8 percent in 2008 but grew at 4.2 percent in the initial phase of the recovery in 2010 and 1.8 percent in 2011 but fell 1.7 percent in 2012.

Table VH-1, UK, Output of the Production Industries, Chained Volume Indices of Gross Value Added, 12-Month ∆%

	PROD IND	MNG	MFG	CON DUR	CON NDUR	CAP	ENGY
2008	-2.9	-6.1	-2.8	-5.5	-1.7	-3.3	-2.9
2009	-9.5	-9.7	-10.2	-6.8	-0.8	-12.1	-6.5
2010	2.8	-2.4	4.2	-4.1	-0.3	10.4	-2.5
2011	-1.2	-14.8	1.8	0.6	-0.7	6.7	-10.7
2012	-2.4	-9.6	-1.7	-2.9	-3.8	1.6	-7.4

		PROD IND	MNG	MFG	CON DUR	CON NDUR	CAP	ENGY
2011	May	-1.4	-21.6	3.2	1.1	2.2	6.0	-13.5
	Jun	-0.5	-15.4	2.3	7.4	0.3	6.8	-10.1

	Jul	-0.9	-15.2	1.8	2.2	1.8	5.2	-9.9
	Aug	-2.1	-16.5	0.2	-1.5	-1.0	4.3	-10.5
	Sep	-2.3	-18.6	0.7	-2.0	-2.7	7.4	-12.1
	Oct	-3.0	-14.2	-1.0	-1.1	-3.9	4.5	-11.9
	Nov	-3.4	-14.0	-1.0	-0.3	-2.7	5.6	-12.6
	Dec	-2.5	-14.1	0.9	-3.7	-1.7	7.1	-15.4

2012	Jan	-3.5	-19.5	0.4	-5.2	0.5	4.7	-15.3
	Feb	-1.6	-6.8	-1.6	-7.0	-0.6	-1.2	-4.3
	Mar	-2.1	-6.2	-0.9	-6.6	-1.9	1.3	-8.1
	Apr	-1.5	-12.1	-1.2	-2.5	-5.0	2.5	-6.8
	May	-1.5	-6.7	-1.2	-3.9	-5.7	2.6	-4.7
	Jun	-4.2	-4.2	-4.2	-10.8	-6.3	-	-5.5

	Jul	-0.7	-0.4	-0.8	-2.8	-4.9	4.7	-3.5
	Aug	-0.8	2.2	-1.4	-2.3	-4.2	2.2	-2.0
	Sep	-3.7	-16.5	-1.6	2.1	-1.8	0.3	-12.0
	Oct	-3.9	-20.9	-2.4	4.7	-4.6	0.5	-11.9
	Nov	-3.0	-13.2	-2.6	0.9	-5.5	0.2	-7.9
	Dec	-3.0	-8.6	-2.5	0.7	-6.1	1.3	-5.7

2013	Jan	-3.3	-7.2	-3.9	-1.2	-6.1	0.6	-4.5
	Feb	-2.4	-8.3	-2.1	-3.9	-5.4	3.8	-8.2
	Mar	-2.0	-12.3	-1.7	0.4	-4.7	2.5	-4.3
	Apr	-1.4	-6.0	-1.0	-1.9	-0.1	3.6	-4.8
	May	-2.3	-3.0	-2.9	-3.7	-0.7	-1.1	-4.6
	Jun	1.4	-4.5	2.1	2.1	1.6	3.5	-6.2

	Jul	-1.6	-9.7	-0.7	3.2	-0.9	2.3	-8.4

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

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

Percentage changes in the production industries and major components in a month relative to the prior month are shown in Table VH-2. The index of production changed 0.0 percent in Jul 2013, with manufacturing increasing 0.2 percent, consumer goods 5.2 percent and capital goods 2.4 percent. All segments increased in Jun 2013 with exception of energy. There is significant fluctuation in monthly percentage changes. Many segments fell in May and Apr 2013. Capital goods industries fell 1.8 percent in Jan 2013 and increased 1.0 percent in Mar and 3.2 percent in Jun while manufacturing fell 1.4 percent in Jan but increased 0.9 percent in Mar and 2.0 percent in Jun. Performance was stronger in Dec 2012 with growth of manufacturing of 1.0 percent and capital goods of 1.8 percent. Fluctuations of monthly production are quite wide.

Table VH-2, UK, Output of the Production Industries, Chained Volume Indices of Gross Value Added, Latest Month on Previous Month ∆%

		PROD IND	MNG	MFG	CON DUR	CON NDUR	CAP	ENGY
2011	May	1.0	-5.2	1.3	0.7	0.9	2.2	-1.5
	Jun	0.4	-0.2	0.1	4.8	-0.7	1.2	0.4
	Jul	-0.6	1.1	-0.5	-4.5	0.1	-1.1	0.0
	Aug	-0.5	-0.1	-0.7	-2.5	-0.8	-0.3	-0.4
	Sep	0.1	-1.1	0.4	-3.0	-1.8	2.5	-1.0
	Oct	-0.6	1.9	-0.8	-0.5	-0.2	-1.0	-0.7
	Nov	-0.2	-0.9	0.1	0.9	-0.1	1.3	-0.8
	Dec	0.7	-2.9	0.9	0.3	1.1	0.7	-1.6

2012	Jan	-0.7	-2.0	0.0	0.9	0.5	-1.2	-1.4
	Feb	-0.1	3.1	-1.5	-1.2	-1.0	-2.9	4.6
	Mar	-0.4	-0.8	0.6	0.1	-0.3	2.4	-4.7
	Apr	-0.7	-5.5	-1.0	1.8	-2.8	-1.3	0.4
	May	1.0	0.7	1.3	-0.8	0.1	2.3	0.6
	Jun	-2.4	2.4	-2.9	-2.7	-1.3	-1.4	-0.4

	Jul	3.1	5.1	3.1	4.2	1.6	3.6	2.1
	Aug	-0.6	2.6	-1.3	-2.0	-0.1	-2.6	1.2
	Sep	-2.8	-19.2	0.2	1.3	0.6	0.6	-11.1
	Oct	-0.8	-3.4	-1.6	2.0	-3.0	-0.7	-0.7
	Nov	0.7	8.7	-0.1	-2.8	-1.0	0.9	3.8
	Dec	0.7	2.2	1.0	0.2	0.4	1.8	0.8

2013	Jan	-1.0	-0.5	-1.4	-1.0	0.5	-1.8	-0.2
	Feb	0.9	1.9	0.4	-4.0	-0.3	0.2	0.6
	Mar	0.0	-5.0	0.9	4.6	0.5	1.0	-0.7
	Apr	-0.1	1.3	-0.3	-0.5	1.8	-0.1	-0.1
	May	0.0	3.8	-0.7	-2.6	-0.4	-2.4	0.8
	Jun	1.3	0.8	2.0	3.2	1.0	3.2	-2.1

	Jul	0.0	-0.5	0.2	5.2	-0.8	2.4	-0.3

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

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

Weights of components of the production index and contributions by components to the monthly and 12-month percentage changes of volume are provided by the UK Office for National Statistics and shown in Table VH-3. The 12-month rate of output of the production industries of minus 1.6 percent was driven by negative contribution of 1.23 percentage points by mining and quarrying with the subcomponent of oil and gas deducting 1.69 percentage points. The second highest source of decrease is 0.50 percentage points of manufacturing. The contribution of manufacturing is strong because of its share of 68.4 percent in the production index with contraction of 0.7 percent in 12 months. The contributions do not add exactly because of rounding. Manufacturing increased 0.2 percent in Jul 2013, adding 0.18 percentage points. Mining decreased 0.5 percent in Jul 2013, deducting 0.06 percentage points. Decrease of electricity by 2.2 percent in Jul deducted 0.18 percentage points.

Table VH-3, UK, Weights of Components, Volume 12-Month and Month ∆% and Percentage Point Contributions of Production Industries by Components

	Weight %	Volume 12-Month ∆% Ending in Jul 2013	% Point Contrib.	Volume Month ∆% Jul 2013	% Point Contrib.
PROD IND	100.0	-1.6	-1.6	0.0	0.0
MNG	15.1	-9.7	-1.23	-0.5	-0.06
MNG 06	12.4	-17.2	-1.69	0.5	0.04
MFG	68.4	-0.7	-0.50	0.2	0.18
ELEC	8.6	-4.0	-0.33	-2.2	-0.18
WATER & SEW	7.9	5.6	0.48	1.2	0.11

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

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

Table VH-4 provides the breakdown of manufacturing 12-month and monthly growth and percentage contributions.

Table VH-4, UK, Growth Rates of Manufacturing and Percentage Point Contributions to the Index of Production

Sector	Summary Description	% of production	Month on same month a year ago growth (%)	Contribution to production (% points)
IoP	Index of Production	100.0	-1.6	-1.6
B	Total Mining & Quarrying	15.1	-9.7	-1.23
C	Total Manufacturing	68.4	-0.7	-0.50
CA	Food, beverages and tobacco	10.9	-1.6	-0.18
CB	Textiles and leather products	2.1	-1.3	-0.03
CC	Wood, paper and printing	5.5	3.1	0.15
CD	Coke and petroleum	1.7	-0.1	0.00
CE	Chemical Products	4.2	-0.5	-0.02
CF	Pharmaceutical Products	6.4	-3.9	-0.20
CG	Rubber and plastic products	5.7	-2.6	-0.14
CH	Metal products	7.7	-6.2	-0.52
CI	Computer, electronic & optical	4.3	3.2	0.14
CJ	Electrical equipment	2.1	-6.3	-0.15
CK	Machinery and equipment	5.0	-10.7	-0.61
CL	Transport equipment	7.7	6.5	0.61
CM	Other manufacturing & repair	5.4	8.2	0.45
D	Total Electricity & Gas	8.6	-4.0	-0.33
E	Total Water	7.9	5.6	0.48

Sector	Summary Description	% of production	Month on previous month growth (%)	Contribution to production (% points)
IoP	Index of Production	100.0	0.0	0.0
B	Total Mining & Quarrying	15.1	-0.5	-0.06
C	Total Manufacturing	68.4	0.2	0.18
CA	Food, beverages and tobacco	10.9	1.3	0.15
CB	Textiles and leather products	2.1	-1.9	-0.04
CC	Wood, paper and printing	5.5	-0.9	-0.05
CD	Coke and petroleum	1.7	-2.1	-0.03
CE	Chemical Products	4.2	-3.6	-0.16
CF	Pharmaceutical Products	6.4	-4.7	-0.25
CG	Rubber and plastic products	5.7	0.5	0.03
CH	Metal products	7.7	-0.2	-0.02
CI	Computer, electronic & optical	4.3	3.7	0.17
CJ	Electrical equipment	2.1	-6.9	-0.16
CK	Machinery and equipment	5.0	3.7	0.19
CL	Transport equipment	7.7	1.1	0.11
CM	Other manufacturing & repair	5.4	4.5	0.26
D	Total Electricity & Gas	8.6	-2.2	-0.18
E	Total Water	7.9	1.2	0.11

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

The UK’s trade account is shown in Table VH-5. In Jul 2013, the UK ran a deficit in trade of goods and services (total trade) of ₤3085 million. The deficit in trade of goods was ₤9853 million and ₤8835 million in goods excluding oil. A surplus in services of ₤6768 million contributed to the smaller overall deficit in goods and services (-₤9853 million plus ₤6768 million equal to -₤3085 million). Services have contributed to lower trade account deficits and softened the impact of the global recession on the UK economy. Exports of goods and services decreased 4.6 percent in Jul 2013 and increased 1.3 percent in the quarter May-Jul 2013 relative to the same quarter a year earlier with imports decreasing 0.4 percent in Jul and increasing 0.7 percent in May-Jul 2013 relative to the same quarter a year earlier. Excluding oil, UK exports of goods decreased 9.3 percent in Jul 2013 and increased 3.3 percent in May-Jul 2013 relative to a year earlier while imports decreased 2.2 percent in Jul and increased 3.9 percent in May-Jul 2013 relative to a year earlier. The great advantage of the UK similar to the US is the substantial surplus in services. Services exports increased 0.2 percent in Jul and increased 0.2 percent in May-Jul 2013 relative to a year earlier and imports increased 2.0 percent in Jul and decreased 7.2 percent in May-Jul 2013 relative to a year earlier.

Table VH-5, Value of UK Trade in Goods and Services, Balance of Payments Basis, ₤ Million and ∆%

	₤ Million SA Jul 2013	Month ∆% Jul 2013	May-Jul 2013 ∆% May-Jul 2012
Total Trade
Exports	41,100	-4.6	1.1
Imports	44,185	-0.4	0.7
Balance	-3,085
Trade in Goods
Exports	24,800	-7.6	1.6
Imports	34,653	-1.0	3.1
Balance	-9,853
Trade in Goods Excluding Oil
Exports	21,580	-9.3	3.3
Imports	30,415	-2.2	3.9
Balance	-8,835
Trade in Services
Exports	16,300	0.2	0.2
Imports	9,532	2.0	-7.2
Balance	6,768

Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/uktrade/uk-trade/july-2013/index.html

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Twenty Eight Million Unemployed or Underemployed, Seven Million Dropping from Job Searches, Interest Rate Risk, Steepening Yield Curve and Peaking Valuations of Risk Financial Assets, United States International Trade, World Economic Slowdown and Global Recession Risk: Part III

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