Risks of Zero Interest Rates, World Inflation Waves, Recovery without Hiring, World Economic Slowdown and Global Recession Risk: Part IV

 

Risks of Zero Interest Rates, World Inflation Waves, Recovery without Hiring, World Economic Slowdown and Global Recession Risk

Carlos M. Pelaez

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

Executive Summary

I World Inflation Waves

IA Appendix: Transmission of Unconventional Monetary Policy

IA1 Theory

IA2 Policy

IA3 Evidence

IA4 Unwinding Strategy

IB United States Inflation

IC Long-term US Inflation

ID Current US Inflation

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

II Recovery without Hiring

IIA Hiring Collapse

IIB Labor Underutilization

IIC Ten Million Fewer Full-time Job

IID Youth and Middle-Age Unemployment

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/2013/02/weodata/index.aspx) to show GDP in dollars in 2012 and the growth rate of real GDP of the world and selected regional countries from 2013 to 2016. The data illustrate the concept often repeated of “two-speed recovery” of the world economy from the recession of 2007 to 2009. The IMF has lowered its forecast of the world economy to 2.9 percent in 2013 but accelerating to 3.6 percent in 2014, 4.0 percent in 2015 and 4.1 percent in 2016. Slow-speed recovery occurs in the “major advanced economies” of the G7 that account for $34,560 billion of world output of $72,216 billion, or 47.9 percent, but are projected to grow at much lower rates than world output, 2.1 percent on average from 2013 to 2016 in contrast with 3.6 percent for the world as a whole. While the world would grow 15.4 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 15.4 percent would add $11.1 trillion of output to the world economy, or roughly, two times the output of the economy of Japan of $5,960 billion 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 $27,221 billion, or 37.7 percent of world output. The EMDEs would grow cumulatively 21.9 percent or at the average yearly rate of 5.1 percent, contributing $6.0 trillion from 2013 to 2016 or the equivalent of somewhat less than the GDP of $8,221 billion of China in 2012. The final four countries in Table V-1 often referred as BRIC (Brazil, Russia, India, China), are large, rapidly growing emerging economies. Their combined output in 2012 adds to $14,346 billion, or 19.9 percent of world output, which is equivalent to 41.5 percent of the combined output of the major advanced economies of the G7.

Table V-1, IMF World Economic Outlook Database Projections of Real GDP Growth

	GDP USD 2012	Real GDP ∆% 2013	Real GDP ∆% 2014	Real GDP ∆% 2015	Real GDP ∆% 2016
World	72,216	2.9	3.6	4.0	4.1
G7	34,560	1.2	2.0	2.5	2.6
Canada	1,821	1.6	2.2	2.4	2.5
France	2,614	0.2	1.0	1.5	1.7
DE	3,430	0.5	1.4	1.4	1.3
Italy	2,014	-1.8	0.7	1.1	1.4
Japan	5,960	1.9	1.2	1.1	1.2
UK	2,477	1.4	1.9	2.0	2.0
US	16,245	1.6	2.6	3.4	3.5
Euro Area	12,199	-0.4	1.0	1.4	1.5
DE	3,430	0.5	1.4	1.4	1.3
France	2,614	0.2	1.0	1.5	1.7
Italy	2,014	-1.8	0.7	1.1	1.4
POT	212	-1.8	0.8	1.5	1.8
Ireland	211	0.6	1.8	2.5	2.5
Greece	249	-4.2	0.6	2.9	3.7
Spain	1,324	-1.3	0.2	0.5	0.7
EMDE	27,221	4.5	5.1	5.3	5.4
Brazil	2,253	2.5	2.5	3.2	3.3
Russia	2,030	1.5	3.0	3.5	3.5
India	1,842	3.8	5.1	6.3	6.5
China	8,221	7.6	7.3	7.0	7.0

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/2013/02/weodata/index.aspx

Continuing high rates of unemployment in advanced economies constitute another characteristic of the database of the WEO (http://www.imf.org/external/pubs/ft/weo/2013/02/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 V-2 are high for all countries: unusually high for countries with high rates most of the time and unusually high for countries with low rates most of the time. 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	7.3	7.3	7.0	6.6
Canada	7.3	7.2	7.1	7.0	6.9
France	10.3	11.0	11.1	10.9	10.5
DE	5.5	5.6	5.5	5.5	5.5
Italy	10.7	12.5	12.4	12.0	11.2
Japan	4.4	4.2	4.3	4.3	4.3
UK	8.0	7.7	7.5	7.3	7.0
US	8.1	7.6	7.4	6.9	6.4
Euro Area	11.4	12.3	12.2	12.0	11.5
DE	5.5	5.6	5.5	5.5	5.5
France	10.3	11.0	11.1	10.9	10.5
Italy	10.7	12.5	12.4	12.0	11.2
POT	15.7	17.4	17.7	17.3	16.8
Ireland	14.7	13.7	13.3	12.8	12.4
Greece	24.2	27.0	26.1	24.0	21.0
Spain	25.0	26.9	26.7	26.5	26.2
EMDE	NA	NA	NA	NA	NA
Brazil	5.5	5.8	6.0	6.5	6.5
Russia	6.0	5.7	5.7	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/2013/02/weodata/index.aspx

Table V-3 provides the latest available estimates of GDP for the regions and countries followed in this blog from IQ2012 to IIQ2013 available now for all countries. There are preliminary estimates for all countries for IIIQ2013. 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 0.8 percent, which is much lower than 5.1 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 3.7 percent and increased 0.3 percent relative to a year earlier. Japan’s GDP grew 0.1 percent in IVQ2012 at the SAAR of 0.6 percent and increased 0.3 percent relative to a year earlier. Japan grew 1.1 percent in IQ2013 at the SAAR of 4.3 percent and 0.3 percent relative to a year earlier. Japan’s GDP increased 0.9 percent in IIQ2013 at the SAAR of 3.8 percent and increased 1.1 percent relative to a year earlier. Japan’s GDP grew 0.5 percent in IIIQ2013 at the SAAR of 1.9 percent and increased 2.7 pecent relative to a year earlier. China grew at 2.2 percent in IIQ2012, which annualizes to 9.1 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 1.5 percent, which annualizes at 6.1 percent and 7.7 percent relative to a year earlier. In IIQ2013, China grew at 1.9 percent, which annualizes at 7.8 percent and 7.5 percent relative to a year earlier. China grew at 2.2 percent in IIIQ2013, which annualizes at 9.1 percent and 7.8 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 1.2 percent relative to a year earlier. The GDP of the euro area increased 0.3 percent in IIQ2013 and fell 0.6 percent relative to a year earlier. In III 2013, euro area GDP increased 0.1 percent and fell 0.4 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. The GDP of Germany increased 0.3 percent in IIIQ2013 and 1.1 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. US GDP grew at 2.8 percent in SAAR in IIIQ2013, 0.7 percent relative to the prior quarter and 1.6 percent relative to the same quarter a year earlier (http://cmpassocregulationblog.blogspot.com/2013/11/global-financial-risk-mediocre-united.html) with weak hiring (http://cmpassocregulationblog.blogspot.com/2013/10/twenty-eight-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2013/09/recovery-without-hiring-ten-million.html). 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 0.6 percent in IIIQ2012 and changed 0.0 percent relative to a year earlier. UK GDP fell 0.3 percent in IVQ2012 relative to IIIQ2012 and fell 0.2 percent relative to a year earlier. UK GDP increased 0.4 percent in IQ2013 and 0.2 percent relative to a year earlier. UK GDP increased 0.7 percent in IIQ2013 and 1.3 percent relative to a year earlier. In IIIQ2013, UK GDP increased 0.8 percent and 1.5 percent relative to a year earlier. Italy has experienced decline of GDP in nine consecutive quarters from IIIQ2011 to IIIQ2013. Italy’s GDP fell 1.1 percent in IQ2012 and declined 1.8 percent relative to IQ2011. Italy’s GDP fell 0.6 percent in IIQ2012 and declined 2.6 percent relative to a year earlier. In IIIQ2012, Italy’s GDP fell 0.4 percent and declined 2.8 percent relative to a year earlier. The GDP of Italy contracted 0.9 percent in IVQ2012 and fell 3.0 percent relative to a year earlier. In IQ2013, Italy’s GDP contracted 0.6 percent and fell 2.5 percent relative to a year earlier. Italy’s GDP fell 0.3 percent in IIQ2013 and 2.2 percent relative to a year earlier. The GDP of Italy fell 0.1 percent in IIIQ2013 and declined 1.9 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 changed 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 0.1 percent and declined 0.4 percent relative to a year earlier. The GDP of France increased 0.5 percent in IIQ2013 and 0.5 percent relative to a year earlier. France’s GDP contracted 0.1 percent in IIIQ2013 and increased 0.2 percent relative to a year earlier.

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

	IQ2012/IVQ2011	IQ2012/IQ2011
United States	QOQ: 0.9        SAAR: 3.7	3.3
Japan	QOQ: 1.2 SAAR: 5.1	3.4
China	1.4	8.1
Euro Area	-0.1	-0.2
Germany	0.7	1.8
France	0.0	0.4
Italy	-1.1	-1.8
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: -0.8	3.8
China	2.2	7.6
Euro Area	-0.3	-0.5
Germany	-0.1	0.6 1.1 CA
France	-0.3	0.1
Italy	-0.6	-2.6
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: –3.7	0.3
China	2.0	7.4
Euro Area	-0.1	-0.7
Germany	0.2	0.4
France	0.2	0.0
Italy	-0.4	-2.8
United Kingdom	0.6	0.0
	IVQ2012/IIIQ2012	IVQ2012/IVQ2011
United States	QOQ: 0.0 SAAR: 0.1	2.0
Japan	QOQ: 0.1 SAAR: 0.6	0.3
China	1.9	7.9
Euro Area	-0.5	-1.0
Germany	-0.5	0.0
France	-0.2	-0.3
Italy	-0.9	-3.0
United Kingdom	-0.3	-0.2
	IQ2013/IVQ2012	IQ2013/IQ2012
United States	QOQ: 0.3 SAAR: 1.1	1.3
Japan	QOQ: 1.1 SAAR: 4.3	0.3
China	1.5	7.7
Euro Area	-0.2	-1.2
Germany	0.0	-1.6
France	-0.1	-0.4
Italy	-0.6	-2.5
UK	0.4	0.2
	IIQ2013/IQ2013	IIQ2013/IIQ2012
United States	QOQ: 0.6 SAAR: 2.5	1.6
Japan	QOQ: 0.9 SAAR: 3.8	1.1
China	1.9	7.5
Euro Area	0.3	-0.6
Germany	0.7	0.9
France	0.5	0.5
Italy	-0.3	-2.2
UK	0.7	1.3
	IIIQ2013/IIQ2013	III/Q2013/  IIIQ2012
USA	QOQ: 0.7 SAAR: 2.8	1.6
Japan	QOQ: 0.5 SAAR: 1.9	2.7
China	2.2	7.8
Euro Area	0.1	-0.4
Germany	0.3	1.1
France	-0.1	0.2
Italy	-0.1	-1.9
UK	0.8	1.5

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

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

There is evidence of deceleration of growth of world trade and even contraction in recent data. Table V-4 provides two types of data: growth of exports and imports in the latest available months and in the past 12 months; and contributions of net trade (exports less imports) to growth of real GDP. Japan provides the most worrisome data (Section VB and earlier http://cmpassocregulationblog.blogspot.com/2013/11/global-financial-risk-world-inflation.html http://cmpassocregulationblog.blogspot.com/2013/09/duration-dumping-and-peaking-valuations_8763.html http://cmpass ocregulationblog.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/2013/09/recovery-without-hiring-ten-million.html and earlier http://cmpassocregulationblog.blogspot.com/2013/08/duration-dumping-and-peaking-valuations.html and earlier http://cmpassocreulationblog.blogspot.com/2013/02/recovery-without-hiring-united-states.html). In Oct 2013, Japan’s exports grew 18.6 percent in 12 months while imports increased 26.1 percent. The second part of Table V-4 shows that net trade deducted 1.3 percentage points from Japan’s growth of GDP in IIQ2012, deducted 2.1 percentage points from GDP growth in IIIQ2012 and deducted 0.6 percentage points from GDP growth in IVQ2012. Net trade added 0.3 percentage points to GDP growth in IQ2012, 1.6 percentage points in IQ2013 and 0.6 percentage points in IIQ2013. In IIIQ2013, net trade deducted 1.8 percentage points from GDP growth in Japan. In Oct 2013, China exports increased 5.6 percent relative to a year earlier and imports increased 7.6 percent. Germany’s exports increased 1.7 percent in the month of Aug 2013 and fell 5.4 percent in the 12 months ending in Aug 2013. Germany’s imports increased 1.7 percent in the month of Sep and increased 3.6 percent in the 12 months ending in Sep. 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 0.3 percentage points in IIQ2013. Net traded deducted 0.4 percentage points from Germany’s GDP growth in IIIQ2013. Net trade deducted 0.8 percentage points from UK value added in IQ2012, deducted 0.6 percentage points in IIQ2012, added 0.4 percentage points in IIIQ2012 and subtracted 0.2 percentage points in IVQ2012. In IQ2013, net trade added 0.3 percentage points to UK’s growth of value added and contributed 0.0 percentage points in IIQ2013. France’s exports increased 1.8 percent in Sep 2013 while imports increased 3.4. Net traded added 0.1 percentage points from France’s GDP in IIIQ2012 and 0.2 percentage points in IVQ2012. Net trade deducted 0.1 percentage points from France’s GDP growth in IQ2013 and was neutral in IIQ2013, deducting 0.7 percentage points in IIIQ2013. US exports decreased 0.2 percent in Sep 2013 and goods exports increased 1.6 percent in Jan-Sep 2013 relative to a year earlier but net trade deducted 0.03 percentage points from 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 deducted 0.07 percentage points in IIQ2013. Net traded added 0.31 percentage points to US GDP growth in IIIQ2013. US imports increased 1.2 percent in Sep 2013 and goods imports decreased 0.9 percent in Jan-Sep 2013 relative to a year earlier. Industrial production decreased 0.1 percent in Oct 2013 after increasing 0.7 percent in Sep 2013 and increasing 0.5 percent in Aug 2013, as shown in Table I-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 edged down 0.1 percent in October after having increased 0.7 percent in September. Manufacturing production rose 0.3 percent in October for its third consecutive monthly gain. The index for mining fell 1.6 percent after having risen for six consecutive months, and the output of utilities dropped 1.1 percent after having jumped 4.5 percent in September. The level of the index for total industrial production in October was equal to its 2007 average and was 3.2 percent above its year-earlier level. Capacity utilization for the industrial sector declined 0.2 percentage point in October to 78.1 percent, a rate 1.1 percentage points above its level of a year earlier and 2.1 percentage points below its long-run (1972-2012) average.“

In the six months ending in Oct 2013, United States national industrial production accumulated increase of 1.3 percent at the annual equivalent rate of 2.6 percent, which is lower than growth of 3.2 percent in the 12 months ending in Oct 2013. Excluding growth of 0.7 percent in Sep 2013, growth in the remaining five months from May 2012 to Oct 2013 accumulated to 0.6 percent or 1.2 percent annual equivalent. Industrial production fell in two of the past six months. Business equipment accumulated growth of 1.7 percent in the six months from May to Oct 2013 at the annual equivalent rate of 3.4 percent, which is much lower than growth of 5.1 percent in the 12 months ending in Oct 2013. Growth of business equipment accumulated 0.1 percent from Apr to Aug 2013 at the annual equivalent rate of minus 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 the industrial sector declined 0.2 percentage point in October to 78.1 percent, a rate 1.1 percentage points above its level of a year earlier and 2.1 percentage points below its long-run (1972-2012) average.” United States industry apparently decelerated to a lower growth rate. Manufacturing increased 0.3 percent in Oct 2013 after increasing 0.1 percent in Sep 2013 and increasing 0.7 percent in Aug 2013 seasonally adjusted, increasing 3.4 percent not seasonally adjusted in 12 months ending in Oct 2013, as shown in Table I-2. Manufacturing grew cumulatively 1.2 percent in the six months ending in Oct 2013 or at the annual equivalent rate of 2.4 percent. Excluding the increase of 0.7 percent in Aug 2013, manufacturing accumulated growth of 0.5 percent from May 2013 to Oct 2013 or at the annual equivalent rate of 1.0 percent. Manufacturing fell 21.9 from the peak in Jun 2007 to the trough in Apr 2009 and increased 16.8 percent from the trough in Apr 2009 to Dec 2012. Manufacturing grew 21.2 percent from the trough in Apr 2009 to Oct 2013. Manufacturing output in Oct 2013 is 5.3 percent below the peak in Jun 2007.

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	-0.2 Sep	1.6 Jan-Sep	1.2 Sep	-0.9 Jan-Sep
Japan		Oct 2013 18.6 Sep 2013 11.5 Aug 2013 14.7 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		Oct 2013 26.1 Sep 2013 16.5 Aug 2013 16.0 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		5.6 Oct -0.3 Sep 7.2 Aug 5.1 Jul -3.1 Jun 1.0 May 14.7 Apr 10.0 Mar 21.8 Feb		7.6 Oct 7.4 Sep 10.9 Jul -0.7 Jun -0.3 May 16.8 Apr 14.1 Mar -15.2 Feb
Euro Area	2.7 12-M Sep	0.9 Jan-Sep	-0.2 12-M Sep	-3.5 Jan-Sep
Germany	1.7 Sep CSA	3.6 Sep	-1.9 Sep CSA	-0.3 Sep
France Sep	1.8	-1.3	3.4	0.7
Italy Sep	0.6	2.0	1.9	-0.1
UK	0.1 Sep	0.1 Jul-Sep 13 /Jul-Sep 12	0.2 Sep	1.8 Jul-Sep 13/Jul-Sep 12
Net Trade % Points GDP Growth	% Points
USA	IIIQ2013 0.31 IIQ2013 -0.07 IQ2013 -0.28 IVQ2012 +0.68 IIIQ2012 -0.03 IIQ2012 +0.10 IQ2012 +0.44
Japan	0.3 IQ2012 -1.3 IIQ2012 -2.1 IIIQ2012 -0.6 IVQ2012 1.6 IQ2013 0.6 IIQ2013 -1.8 IIIQ2013
Germany	IQ2012 0.8 IIQ2012 0.4 IIIQ2012 0.3 IVQ2012 -0.5 IQ2013 -0.2 IIQ2013 0.3 IIIQ2013 -0.4
France	0.1 IIIQ2012 0.2 IVQ2012 -0.1 IQ2013 0.0 IIQ2013 -0.7 IIIQ2013
UK	-0.8 IQ2012 -0.6 IIQ2012 +0.4 IIIQ2012 -0.2 IVQ2012 0.3 IQ2013 0.0 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 Oct 2013. The share of Asia in Japan’s trade is more than one-half for 53.4 percent of exports and 46.1 percent of imports. Within Asia, exports to China are 18.8 percent of total exports and imports from China 23.0 percent of total imports. While exports to China increased 21.3 percent in the 12 months ending in Oct 2013, imports from China increased 22.0 percent. The largest export market for Japan in Oct 2013 is the US with share of 19.1 percent of total exports, which is almost equal to that of China, and share of imports from the US of 8.2 percent in total imports. Western Europe has share of 10.7 percent in Japan’s exports and of 10.1 percent in imports. Rates of growth of exports of Japan in Oct 2013 are relatively high for several countries and regions with growth of 26.4 percent for exports to the US, 20.6 percent for exports to Mexico, 15.5 percent for exports to Brazil and 29.1 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 Oct 2013 are positive for all trading partners. Imports from Asia increased 23.5 percent in the 12 months ending in Oct 2013 while imports from China increased 22.0 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 Yen

Oct 2013	Exports Millions Yen	12 months ∆%	Imports Millions Yen	12 months ∆%
Total	6,104,509	18.6	7,195,191	26.1
Asia	3,261,087	14.9	3,317,938	23.5
China	1,147,898	21.3	1,654,281	22.0
USA	1,164,142	26.4	586,945	16.2
Canada	76,514	11.8	107,110	12.4
Brazil	47,134	15.5	99,248	14.9
Mexico	87,516	20.6	35,278	6.6
Western Europe	654,440	24.3	724,470	15.0
Germany	166,549	25.5	216,462	26.8
France	58,880	46.3	90,945	1.6
UK	92,372	7.9	53,538	7.8
Middle East	215,339	13.8	1,322,212	51.9
Australia	140,762	29.1	409,549	10.7

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 2.9 percent in 2013 to 5.4 percent in 2015 and 5.1 percent on average from 2013 to 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, USD Billions, USD/Barrel and ∆%

	2013	2014	2015	Average ∆% 2013-2018
World Trade Volume (Goods and Services)	2.9	4.9	5.4	5.1
Exports Goods & Services	3.0	5.1	5.4	5.1
Imports Goods & Services	2.8	4.7	5.4	5.0
Oil Price USD/Barrel	104.49	101.35	NA	NA
Value of World Exports Goods & Services $B	23,164	24,367	NA	NA
Value of World Exports Goods $B	18,709	19,632	NA	NA
Exports Goods & Services
EMDE	3.5	5.8	6.3	5.9
G7	2.3	4.6	4.4	4.4
Imports Goods & Services
EMDE	5.0	5.9	6.7	6.2
G7	1.3	3.9	4.2	4.0
Terms of Trade of Goods & Services
EMDE	-0.5	-0.4	-0.6	-0.5
G7	0.1	-0.1	0.1	0.1
Terms of Trade of Goods
EMDE	-0.6	-0.9	-0.9	-0.8
G7	-0.5	0.2	0.2	-0.007

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/2013/02/weodata/index.aspx

The JP Morgan Global All-Industry Output Index of the JP Morgan Manufacturing and Services PMI^™, produced by JP Morgan and Markit in association with ISM and IFPSM, with high association with world GDP, increased to 55.5 in Oct from 53.6 in Sep, indicating expansion at a faster rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/c79ee00ee91f455481b9003790967656). This index has remained above the contraction territory of 50.0 during 51 consecutive months. The employment index increased from 51.1 in Sep to 52.7 in Oct with input prices rising at a slower rate and new orders increasing at slower rate and output increasing at faster rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/c79ee00ee91f455481b9003790967656). David Hensley, Director of Global Economic Coordination at JP Morgan, finds acceleration in the first month of IVQ2013 (http://www.markiteconomics.com/Survey/PressRelease.mvc/c79ee00ee91f455481b9003790967656). The JP Morgan Global Manufacturing PMI^™, produced by JP Morgan and Markit in association with ISM and IFPSM, was higher at 52.1 in Oct from 51.8 in Sep, which is the highest reading in about two-and-a-half years (http://www.markiteconomics.com/Survey/PressRelease.mvc/2711528c99224748b8842d9cb3e54a6b). New export orders expanded at the fastest pace since Mar 2011 (http://www.markiteconomics.com/Survey/PressRelease.mvc/2711528c99224748b8842d9cb3e54a6b). David Hensley, Director of Global Economic Coordination at JP Morgan finds acceleration of global manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/2711528c99224748b8842d9cb3e54a6b). The HSBC Brazil Composite Output Index, compiled by Markit, increased from 50.7 in Sep to 52.0 in Oct, indicating moderate expansion (http://www.markiteconomics.com/Survey/PressRelease.mvc/48044fa43da14afdb6f777309c47ccfe). The HSBC Brazil Services Business Activity index, compiled by Markit increased marginally from 50.7 in Sep to 52.1 in Oct, indicating moderate improvement in business activity in an eight-month high (http://www.markiteconomics.com/Survey/PressRelease.mvc/48044fa43da14afdb6f777309c47ccfe). Andre Loes, Chief Economist, Brazil, at HSBC, finds that the reading of services of 52.1 is the highest since Feb, indicating stronger growth in IVQ2013 (http://www.markiteconomics.com/Survey/PressRelease.mvc/48044fa43da14afdb6f777309c47ccfe). The HSBC Brazil Purchasing Managers’ Index^TM (PMI^™) increased from 49.9 in Sep to 50.2 in Oct for the first reading above 50 in four months but with only marginal improvement (http://www.markiteconomics.com/Survey/PressRelease.mvc/b34553b098084f75b4bed09bebe6887c). Andre Loes, Chief Economist, Brazil at HSBC, finds acceleration of output with unchanged orders and the highest rate of output inflation in the history of the survey while input costs increased at the fastest rate since Oct 2008 (http://www.markiteconomics.com/Survey/PressRelease.mvc/b34553b098084f75b4bed09bebe6887c).

VA United States. The Markit Flash US Manufacturing Purchasing Managers’ Index^™ (PMI^™) seasonally adjusted increased to 54.3 in Nov from 51.8 in Oct with the three-month average at 52.9 indicating moderate growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/18a5af682bef4cdeafb0caa1e50d9785). New export orders registered 52.6 in Nov up from 51.3 in Oct, indicating marginal expansion. Chris Williamson, Chief Economist at Markit, finds that manufacturing output is growing at 0.6 percent in IVQ2013, which is equivalent to annual rate of 2.3 percent per year (http://www.markiteconomics.com/Survey/PressRelease.mvc/18a5af682bef4cdeafb0caa1e50d9785). The Markit US Manufacturing Purchasing Managers’ Index^™ (PMI^™) decreased to 51.8 in Oct from 52.8 in Sep (http://www.markiteconomics.com/Survey/PressRelease.mvc/ef50b354e0ca4801b08e53072919d1c2). The index of new exports orders increased from 49.0 in Sep to 51.3 in Oct while total new orders decreased from 53.2 in Sep to 52.7 in Oct. Chris Williamson, Chief Economist at Markit, finds that the index suggests standstill of manufacturing in the US with uncertainty in the overall economy and job creation (http://www.markiteconomics.com/Survey/PressRelease.mvc/ef50b354e0ca4801b08e53072919d1c2). The purchasing managers’ index (PMI) of the Institute for Supply Management (ISM) Report on Business^® increased 0.2 percentage points from 56.2 in Sep to 56.4 in Oct, which indicates growth at a higher rate (http://www.ism.ws/ISMReport/MfgROB.cfm?navItemNumber=12942). The index of new orders increased 0.1 percentage points from 60.5 in Sep to 60.6 in Oct. The index of exports increased 5.0 percentage point from 52.0 in Sep to 57.0 in Oct, growing at a faster rate. The Non-Manufacturing ISM Report on Business^® PMI increased 1.0 percentage points from 54.4 in Sep to 55.4 in Oct, indicating growth of business activity/production during 51 consecutive months, while the index of new orders decreased 2.8 percentage points from 59.6 in Sep to 56.8 in Oct (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	Oct 12 months NSA ∆%: 1.0; ex food and energy ∆%: 1.7 Oct month SA ∆%: -0.1; ex food and energy ∆%: 0.1 Blog 11/24/13
Producer Price Index	Oct 12-month NSA ∆%: 0.3; ex food and energy ∆% 1.4 Oct month SA ∆% = -0.2; ex food and energy ∆%: 0.2 Blog 11/24/13
PCE Inflation	Sep 12-month NSA ∆%: headline 0.9; ex food and energy ∆% 1.2 Blog 11/10/13
Employment Situation	Household Survey: Oct Unemployment Rate SA 7.3% Blog calculation People in Job Stress Sep: 28.9 million NSA, 17.7% of Labor Force Establishment Survey: Nov Nonfarm Jobs +204,000; Private +212,000 jobs created  Sep 12-month Average Hourly Earnings Inflation Adjusted ∆%: 0.9 Blog 11/10/13
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 Sep 2013 4.381 million lower by 0.834 million than 5.215 million in Sep 2005 Blog 11/24/13
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 IIIQ2013/IIIQ2012 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 IIIQ2013 SAAR 2.8 Blog 11/10/13
Real Private Fixed Investment	SAAR IIIQ2013 4.1 ∆% IVQ2007 to IIIQ2013: minus 4.0% Blog 11/10/13
Personal Income and Consumption	Sep month ∆% SA Real Disposable Personal Income (RDPI) SA ∆% 0.4 Real Personal Consumption Expenditures (RPCE): 0.1 12-month Sep NSA ∆%: RDPI: 2.0; RPCE ∆%: 1.7 Blog 11/3/13
Quarterly Services Report	IIQ13/IIQ12 SA ∆%: Information 4.1 Financial & Insurance 4.2 Blog 9/8/13
Employment Cost Index	Compensation Private IIIQ2013 SA ∆%: 0.4 Sep 12 months ∆%: 1.9 Blog 11/24/13
Industrial Production	Oct month SA ∆%: -0.1 Oct 12 months SA ∆%: 3.2 Manufacturing Oct SA ∆% 0.3 Oct 12 months SA ∆% 3.3, NSA 3.4 Capacity Utilization: 78.1 Blog 11/17/13
Productivity and Costs	Nonfarm Business Productivity IIIQ2013∆% SAAE 1.9; IIIQ2013/IIIQ2012 ∆% 0.0; Unit Labor Costs SAAE IIIQ2013 ∆% -0.6; IIIQ2013/IIIQ2012 ∆%: 1.9 Blog 11/17/2013
New York Fed Manufacturing Index	General Business Conditions From Oct 1.52 to Nov -2.21 New Orders: From Oct 7.75 to Nov -5.53 Blog 11/24/13
Philadelphia Fed Business Outlook Index	General Index from Oct 19.8 to Nov 6.5 New Orders from Oct 27.5 to Nov 11.8 Blog 11/24/13
Manufacturing Shipments and Orders	New Orders SA Sep ∆% 1.7 Ex Transport -0.2 Jan-Sep NSA New Orders 2.4 Ex transport 1.5 Blog 11/10/13
Durable Goods	Sep New Orders SA ∆%: 3.7; ex transport ∆%: -0.1 Jan-Sep 13/Jan-Sep 12 New Orders NSA ∆%: 4.6; ex transport ∆% 3.2 Blog 10/27/13
Sales of New Motor Vehicles	Jan-Oct 2013 12,994,572; Jan-Oct 2012 11,992,071. Oct 13 SAAR 15.23 million, Sep 13 SAAR 16.28 million, Oct 2012 SAAR 14.40 million Blog 11/3/13
Sales of Merchant Wholesalers	Jan-Sep 2013/Jan-Sep 2012 NSA ∆%: Total 3.6; Durable Goods: 3.9; Nondurable Goods: 3.3 Blog 11/24/13
Sales and Inventories of Manufacturers, Retailers and Merchant Wholesalers	Sep 13/Sep 12-M NSA ∆%: Sales Total Business 4.2; Manufacturers 2.5 Retailers 3.5; Merchant Wholesalers 6.8 Blog 11/24/13
Sales for Retail and Food Services	Jan-Oct 2013/Jan-Oct 2012 ∆%: Retail and Food Services 4.2; Retail ∆% 4.3 Blog 11/24/13
Value of Construction Put in Place	Aug SAAR month SA ∆%: 0.6 Aug 12-month NSA: 6.5 Jan-Aug 2013 ∆% 5.9 Blog 10/27/13
Case-Shiller Home Prices	Aug 2013/Aug 2012 ∆% NSA: 10 Cities 12.8; 20 Cities: 12.8 ∆% Aug SA: 1.9 Cities 0.9 ; 20 Cities: 0.9 Blog 11/3/13
FHFA House Price Index Purchases Only	Aug SA ∆% 0.3; 12 month NSA ∆%: 8.5 Blog 10/27/13
New House Sales	Aug 2013 month SAAR ∆%: 7.9 Jan-Aug 2013/Jan-Aug 2012 NSA ∆%: 20.4 Blog 9/29/13
Housing Starts and Permits	Aug Starts month SA ∆%: 0.9 ; Permits ∆%: -3.8 Jan-Aug 2013/Jan-Aug 2012 NSA ∆% Starts 22.6; Permits  ∆% 21.2 Blog 9/22/13
Trade Balance	Balance Sep SA -$41,778 million versus Aug -$38,701 million Exports Sep SA ∆%: -0.2 Imports Sep SA ∆%: 1.2 Goods Exports Jan-Sep 2013/2012 NSA ∆%: 1.6 Goods Imports Jan-Sep 2013/2012 NSA ∆%: -0.9 Blog 11/17/13
Export and Import Prices	Oct 12-month NSA ∆%: Imports -2.0; Exports -2.1 Blog 11/17/13
Consumer Credit	Sep ∆% annual rate: Total 5.4; Revolving minus 2.9; Nonrevolving 8.7 Blog 11/10/13
Net Foreign Purchases of Long-term Treasury Securities	Sep Net Foreign Purchases of Long-term US Securities: $25.5 billion Major Holders of Treasury Securities: China $1294 billion; Japan $1178 billion; Total Foreign US Treasury Holdings Jul $5653 billion Blog 11/24/13
Treasury Budget	Fiscal Year 2014/2013 ∆% Oct: Receipts 7.9; Outlays minus 4.6; Individual Income Taxes minus 2.9 Deficit Fiscal Year 2011 $1,296 billion Deficit Fiscal Year 2012 $1,087 billion Blog 11/17/2013
CBO Budget and Economic Outlook	2012 Deficit $1087 B 6.8% GDP Debt 11,281 B 70.1% GDP 2013 Deficit $642 B, Debt 12,036 B 72.5% GDP Blog 8/26/12 11/18/12 2/10/13 9/22/13
Commercial Banks Assets and Liabilities	Sep 2013 SAAR ∆%: Securities -8.7 Loans 1.2 Cash Assets 59.9 Deposits 8.0 Blog 11/3/13
Flow of Funds	IIQ2013 ∆ since 2007 Assets +6079.8 MM Real estate -$2325.1 MM Financial +7835.2 MM Net Worth +$6902.3 MM Blog 9/29/13
Current Account Balance of Payments	IIQ2013 -178,171 MM %GDP 2.4 Blog 9/22/13

Links to blog comments in Table USA:

11/17/13 http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-unwinding-monetary-policy.html

11/10/13 http://cmpassocregulationblog.blogspot.com/2013/11/global-financial-risk-mediocre-united.html

11/3/2013 http://cmpassocregulationblog.blogspot.com/2013/11/global-financial-risk-world-inflation.html

10/27/13 http://cmpassocregulationblog.blogspot.com/2013/10/twenty-eight-million-unemployed-or.html

10/20/13 http://cmpassocregulationblog.blogspot.com/2013/10/world-inflation-waves-regional-economic.html

9/29/13 http://cmpassocregulationblog.blogspot.com/2013/09/mediocre-and-decelerating-united-states.html

9/22/13 http://cmpassocregulationblog.blogspot.com/2013/09/duration-dumping-and-peaking-valuations.html

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

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

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

The Bureau of Labor Statistics (BLS) of the US Department of Labor provides the quarterly employment cost index (ECI). The ECI is highly useful in several ways including: (1) how costs of employees may affect hiring decisions and thus the overall economy; (2) impact of employment costs on inflation and thus monetary policy; and (3) relation of employee costs to inflation on issues such as welfare of the working population and their ability to consume that could affect economic growth. The BLS estimates total compensation composed of wages and salaries, which are about 70 percent of total compensation, and benefits, accounting for the remaining 30 percent (http://www.bls.gov/news.release/pdf/eci.pdf 1). There is vast theoretical and empirical literature on how benefits interact with wage determination. The ECI is considered initially with current data in Table VA-1 and subsequently with charts of the BLS on evolution over the past decade. The BLS provides data for the entire civilian population, the private sector and state/local government. The data are available quarterly and for the 12 months of the ending month of the quarter. Total compensation 12-month percentage changes have moderated for the entire civilian population, the private sector and state and local government. In the 12 months ending in Sep 2013, total compensation increased 1.9 percent for the private sector, which is marginally higher than inflation of 1.2 percent in the 12 months ending in Sep 2013 (http://www.bls.gov/cpi/data.htm), 1.9 percent for the entire civilian population and 1.7 percent for state and local government. Wages and salaries in the 12 months ending in Sep 2013 increased at relatively subdued rates of 1.8 percent for the private sector, which is slightly above inflation of 1.2 percent in the 12 months ending in Sep 2013 (http://www.bls.gov/cpi/data.htm), 1.6 percent for the entire civilian population and only 0.9 percent for state/local workers. Wages have been losing or gaining slightly relative to headline CPI inflation of 1.2 percent in the 12 months ending in Sep 2013 (http://www.bls.gov/cpi/data.htm). Compensation benefits of the private sector increased at 2.0 percent in the 12 months ending in Sep 2013, which is close to 1.8 percent for wages and salaries.

Table VA-1, Employment Cost Index Quarterly and 12- Month Changes %

	IIQ13 SA	IIIQ13 SA	12 M Sep 12 NSA	12 M  Dec 12 NSA	12 M  Mar 13 NSA	12 M  Jun 13 NSA	12 M Sep 13 NSA
Civilian
Comp	0.5	0.4	1.9	1.9	1.9	1.9	1.9
Wages/ Salaries	0.4	0.3	1.7	1.7	1.6	1.7	1.6
Benefits	0.4	0.7	2.4	2.4	2.4	2.2	2.2
Private
Comp	0.6	0.4	1.9	1.8	1.9	1.9	1.9
Wages/ Salaries	0.6	0.3	1.8	1.7	1.7	1.9	1.8
Benefits	0.4	0.6	2.2	2.0	2.0	1.9	2.0
State local Govt
Comp	0.3	0.4	1.8	1.9	1.9	1.8	1.7
Wages/ Salaries	0.2	0.3	1.1	1.1	1.0	1.0	0.9
Benefits	0.6	0.5	3.2	3.4	3.5	3.3	2.9

Notes: Civilian includes private industry plus state and local government; SA: seasonally adjusted; NSA: not seasonally adjusted; Comp: compensation; Govt: government

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

A series of charts of the BLS provides evolution of the ECI during the past decade. Percentage changes in 12 months of total civilian compensation in Chart VA-1 were in a range of around 3 to 4 percent before the global recession, declining to less than 2 percent with the contraction and increasing above 2 percent in the expansion. Recently, rates have fallen, stagnated, fell again, recovered and stabilized.

Chart VA-1, US, ECI, Total Compensation, All Civilian, 12-Month Percent Change, 2001-2013

Source: US Bureau of Labor Statistics

http://www.bls.gov/ncs/ect/

Chart VA-2 provides 12 months percentage rates of change of wages and salaries for the entire civilian population. The rates collapsed with the global recession and have flattened around 1.5 percent since 2010 while inflation has accelerated and decelerated following world inflation waves (Section I and earlier) http://cmpassocregulationblog.blogspot.com/2013/11/global-financial-risk-world-inflation.html).

Chart VA-2, US, ECI, Wages and Salaries, All Civilian 12-Month Percent Change, 2001-2013

Source: US Bureau of Labor Statistics

http://www.bls.gov/ncs/ect/

Twelve-month percentage changes of benefits of the total civilian population in Chart VA-3 were much higher in the first part of the 2000s, surpassing relatively subdued inflation but declined to less than 2 percent with the global recession. After 2010, there is a clear rising trend of benefit above 3 percent with decline in recent months of 2011 and then stagnation and declines in 2012-2013.

Chart VA-3, US, ECI, Total Benefits, All Civilian 12 Months Percent Change, 2001-2013

Source: US Bureau of Labor Statistics

http://www.bls.gov/ncs/ect/

ECI total compensation 12-months percentage changes from 2001 to 2013 for the private sector are shown in Chart VA-4. Behavior is similar as for total civilian compensation. Private-sector compensation had stabilized around 2 percent with inflation rising to 2.7 percent in the 12 months ending in Mar 2012. Compensation of 1.9 percent in the 12 months ending in Mar 2013 exceeded 12-month inflation of 1.5 percent. Increase of compensation of 1.9 percent in the 12 months ending in Mar 2013 was higher than 12-month CPI inflation at 1.5 percent. Compensation increased 1.9 percent in the 12 months ending in Jun 2013, almost equal to 12-month CPI inflation of 1.8 percent. Compensation at 1.9 percent in Sep 2013 exceeded 12-month CPI inflation of 1.2 percent.

Chart VA-4, US, ECI, Total Compensation, Private Industry 12 Months Percent Change, 2001-2013

Source: US Bureau of Labor Statistics

http://www.bls.gov/ncs/ect/

There is different behavior of 12 months percentage rates of private-sector wages and salaries in Chart VA-5. Rates fell in the first part of the decade and then rose into 2007. Rates of change in 12 months of wages and salaries in the private sector fell during the global contraction to barely above 1 percent and have not rebounded sufficiently while inflation has returned in waves.

Chart VA-5, US, ECI, Wages and Salaries, Private Industry, 12 Months Percent Change, 2001-2013

Source: US Bureau of Labor Statistics

http://www.bls.gov/ncs/ect/

Chart VA-6 provides 12-month percentage rates of change of the consumer price index of the US. Inflation has risen sharply into 2011 with 3.0 percent in the 12 months ending in Dec while wage and salary increases in the private sector have risen by 1.6 percent in the 12 months ending in Dec. Wages and salaries rose 1.8 percent in the 12 months ending in Mar 2012 while inflation was 2.7 percent in the 12 months ending in Mar 2012. Wage and salaries of the private sector increased 1.8 percent in the 12 months ending in Jun 2012, which is almost equal to inflation of 1.7 percent. Wages and salaries increased 1.8 percent in the 12 months ending in Sep 2012 while inflation was 2.0 percent. Wages and salaries increased 1.7 percent in Dec 2012 while inflation was 1.7 percent. Wages and salaries increased 1.7 percent in the 12 months ending in Mar 2013 while inflation was 1.5 percent. Wages and salaries increased 1.9 percent in the 12 months ending in Jun 2013 while inflation was 1.8 percent. The increase of wages and salaries of 1.8 percent in the 12 months ending in Sep 2013 exceeded inflation of 1.2 percent.

Chart VA-6, US, Consumer Price Index, 12-Month Percentage Change, NSA, 2001-2013

Source: US Bureau of Labor Statistics

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

Growth of benefits has been more dynamic than total compensation and wages and salaries, as shown in Chart VA-7. In 2004, the 12 month rate of change exceeded 7 percent. Rates of increase of benefits costs then fell even before the global recession, touching 1 percent in late 2010, rose sharply above 3 percent in 2011 and have fallen in recent months to around 2 percent.

Chart VA-7, US, ECI, Total Benefits, Private Industry, 12 Months Percent Change, 2001-2013

Source: US Bureau of Labor Statistics

http://www.bls.gov/ncs/ect/

Behavior at the margin is provided by rates of change in a quarter relative to the prior quarter, as shown in Chart VA-8. Quarterly rates of change of total civilian compensation were high in the early 2000s, fell sharply with the global recession, recovered mildly and stagnated in recent quarters.

Chart VA-8, US, Employment Cost Index All Civilian Total Compensation Three-Month % Change, 2001-2013

Source: US Bureau of Labor Statistics

http://www.bls.gov/ncs/ect/

Chart VA-9 provides the quarterly rates of change of wages and salaries of the entire civilian population. The rates of change sank below 0.5 percent per quarter and have remained subdued since the global recession.

Chart VA-9, US, ECI, Wages and Salaries, All Civilian, Three-Month % Change, 2001-2013

Source: US Bureau of Labor Statistics

http://www.bls.gov/ncs/ect/

Quarterly rates of change of benefits of the total civilian population in Chart VA-10 had declined before the global recession. The rate collapsed in recent quarters.

Chart VA-10, US, ECI, Total Benefits, All Civilian, Three-Month % Change, 2001-2013

Source: US Bureau of Labor Statistics

http://www.bls.gov/ncs/ect/

Quarterly rates of change of total compensation of the private sector in Chart VA-11 have not returned to the levels before the contraction except with sporadic jump in 2011 followed by contraction and stagnation in recent quarters.

Chart VA-11, US, ECI, Total Compensation, Private Industry, Three-Month % Change, 2001-2013

Source: US Bureau of Labor Statistics

http://www.bls.gov/ncs/ect/

Quarterly rates of change of wages and salaries of the private sector in Chart VA-12 show significant fluctuation. Quarterly rates of change have fallen below 0.5 percent in the current expansion.

Chart VA-12, US, ECI, Wages and Salaries, Private Industry, Three-Month % Change, 2001-2013

Source: US Bureau of Labor Statistics

http://www.bls.gov/ncs/ect/

The three-month rates of change of benefits of private industry in Chart VA-13 have fluctuated widely with the only negative change in 2007. The 12-month rate of private-sector benefits fell in past months.

VA-13, US, ECI, Total Benefits, Private Industry, Three-Month % Change, 2001-2013

Source: US Bureau of Labor Statistics

http://www.bls.gov/ncs/ect/

The Empire State Manufacturing Survey Index in Table VA-2 provides continuing deterioration that started in Jun 2012 well before Hurricane Sandy in Oct 2012. The current general index has been in negative contraction territory from minus 3.78 in Aug 2012 to minus 7.78 in Jan 2012 and minus 1.43 in May 2013. The current general index deteriorated to 2.21 in Nov 2013, which is again in contratction territory. The index of current orders has also been in negative contraction territory from minus 4.63 in Aug 2012 to minus 7.18 in Jan 2013 and minus 6.69 in Jun 2013. The index of current new orders decreased to minus 5.53 in Nov 2013. Number of workers and hours worked have registered negative or declining readings since Sep 2012 with moderate stability at 0.00 for number of workers in Nov 2013 and contraction in the average workweek to minus 5.26 in Nov 2013. There is marginal contraction in the general index for the next six months at minus 3.95 in Nov 2013 and strengthening new orders at 40.27 in Nov 2013.

Table VA-2, US, New York Federal Reserve Bank Empire State Manufacturing Survey Index SA

	General Index	New Orders	Shipments	# Workers	Average Work-week
Current
Nov 2013	-2.21	-5.53	-0.53	0.00	-5.26
Oct	1.52	7.75	13.12	3.61	3.61
Sep	6.29	2.35	16.43	7.53	1.08
Aug	8.24	0.27	1.47	10.84	4.82
Jul	9.46	3.77	8.96	3.26	-7.61
Jun	7.84	-6.69	-11.77	0.00	-11.29
May	-1.43	-1.17	-0.02	5.68	-1.14
Apr	3.05	2.20	0.75	6.82	5.68
Mar	9.24	8.18	7.76	3.23	0.00
Feb	10.04	13.31	13.08	8.08	-4.04
Jan	-7.78	-7.18	-3.08	-4.30	-5.38
Dec 2012	-7.30	-3.44	11.93	-9.68	-10.75
Nov	-4.31	2.93	14.18	-14.61	-7.87
Oct	-6.75	-7.21	-6.48	-1.08	-4.30
Sep	-7.54	-10.60	7.30	4.26	-1.06
Aug	-3.78	-4.63	6.37	16.47	3.53
Jul	7.08	-2.27	11.52	18.52	0.00
Jun	4.15	2.28	6.34	12.37	3.09
May	14.52	8.99	23.11	20.48	12.05
Apr	6.40	4.81	4.51	19.28	6.02
Mar	18.00	6.55	15.97	13.58	18.52
Feb	18.31	7.93	19.90	11.76	7.06
Jan	12.12	11.21	18.94	12.09	6.59
Dec 2011	9.60	6.35	23.77	2.33	-2.33
Nov	1.82	-0.97	11.34	-3.66	2.44
Oct	-7.39	1.51	2.46	3.37	-4.49
Sep	-4.75	-4.31	-4.48	-5.43	-2.17
Six Months
Nov 2013	-3.95	40.27	37.80	22.37	-3.95
Oct	2.41	37.04	32.18	7.23	2.41
Sep	8.60	38.17	37.84	4.30	-2.15
Aug	3.61	30.01	30.02	8.43	-6.02
Jul	1.09	31.12	34.44	1.09	-1.09
Jun	11.29	19.77	20.21	1.61	-9.68
May	4.55	28.84	25.18	11.36	1.14
Apr 2013	5.68	36.23	39.28	25.00	7.95
Mar	2.15	34.94	41.60	19.35	2.15
Feb	8.08	29.11	26.82	15.15	11.11
Jan	10.75	25.11	23.86	7.53	3.23
Dec 2012	1.08	17.19	22.46	10.75	5.38
Nov	5.62	15.96	25.67	-1.12	0.00
Oct	4.30	22.79	17.39	0.00	-11.83
Sep	5.32	27.85	23.35	8.51	2.13
Aug	2.35	14.34	21.16	3.53	-8.24
Jul	3.70	19.85	21.60	6.17	-4.94
Jun	1.03	26.02	22.18	16.49	2.06
May	12.05	31.26	26.00	12.05	8.43
Apr	19.28	38.95	40.75	27.71	10.84
Mar	13.58	39.18	41.64	32.10	20.99
Feb	15.29	39.25	40.92	29.41	18.82
Jan	23.08	45.70	44.12	28.57	17.58
Dec 2011	3.49	42.20	40.36	24.42	22.09
Nov	6.10	30.89	33.01	14.63	8.54
Oct	4.49	19.71	22.65	6.74	-2.25
Sep	8.70	23.52	22.89	0.00	-6.52

Source: http://www.newyorkfed.org/survey/empire/empiresurvey_overview.html

The Business Outlook Survey Diffusion Index of the Federal Reserve Bank of Philadelphia in Table VA-3 also shows improvement after prior deterioration. The general index moved out contraction of 5.2 in May 2013 to 6.5 in Nov 2013 together with renewed expansion at 11.8 for new orders. Employment segments show deterioration in Nov 2013 with 1.1 for number of workers and deterioration to minus 8.6 for hours worked. Expectations for the next six months are brighter with the general index at 47.5 in Nov 2013 and the index of new orders at 42.7.

Table VA-3, FRB of Philadelphia Business Outlook Survey Diffusion Index

	General Index	New Orders	Shipments	# Workers	Hours Worked
11-Jan	15	19.1	11.1	13.9	8
11-Feb	25.6	15.7	24	19.6	6.9
11-Mar	36.1	33.2	28.1	16.1	7.3
11-Apr	13.7	12.6	23	9.9	15.1
11-May	4	6.8	5.4	22.2	2.8
11-Jun	-1.1	-1.2	5.7	3.4	3.7
11-Jul	9.4	4.7	9	12.6	-0.8
11-Aug	-19	-18.6	-4.7	-0.5	-7.6
11-Sep	-10	-4.5	-7.4	9.4	-2.8
11-Oct	9.7	8.8	11.2	7.8	5.2
11-Nov	5	3.6	6.9	10.9	6.8
11-Dec	4.2	5.9	6.2	8	-0.3
12-Jan	4.7	9	4.4	9.6	3.9
12-Feb	5	5.3	8.6	0.9	5.7
12-Mar	8.6	-0.7	0.2	5.9	-0.6
12-Apr	6.5	-0.8	0.5	13.4	-3.4
12-May	-4.9	-0.6	2.7	-0.2	-6.4
12-Jun	-12.8	-13.1	-13.8	2.3	-16.9
12-Jul	-9.1	-2.1	-7.5	-4.7	-13.9
12-Aug	-1.7	-0.8	-5.9	-7.6	-9.9
12-Sep	1.4	2.5	-10.4	-4.9	-2.9
12-Oct	4.2	-0.5	-3.5	-7.6	-6.5
12-Nov	-8.9	-4.7	-6.3	-6.9	-7.4
12-Dec	4.6	4.9	14.7	-0.2	0.4
13-Jan	-5.8	-4.3	0.4	-5.2	-8.3
13-Feb	-12.5	-7.8	2.4	0.9	-1.6
13-Mar	2.0	0.5	3.5	2.7	-12.9
13-Apr	1.3	-1.0	9.1	-6.8	-2.1
13-May	-5.2	-7.9	-8.5	-8.7	-12.4
13-Jun	12.5	16.6	4.1	-5.4	0.8
13-Jul	19.8	10.2	14.3	7.7	6.6
13-Aug	9.3	5.3	-0.9	3.5	-2.6
13-Sep	22.3	21.2	21.2	10.3	12.2
13-Oct	19.8	27.5	20.4	15.4	8.5
13-Nov	6.5	11.8	5.6	1.1	-8.6

Future	General Index	New Orders	Shipments	# Workers	Hours Worked
10-Dec	42.1	41.9	14.5	28	22.0
11-Jan	35.9	39.8	10.3	29.1	19.6
11-Feb	38.6	42.7	14.2	22.6	11.8
11-Mar	53.6	52.3	12.6	25.2	13
11-Apr	26.6	33.5	8.8	32.3	15.9
11-May	22.4	26.1	3.8	20.9	12.5
11-Jun	9.6	7.7	-4.7	7.2	4.2
11-Jul	35	31	8	16.2	6.6
11-Aug	26.4	22.8	3.5	13.9	2.4
11-Sep	26.6	27	6	13.4	5.7
11-Oct	29.8	31	5.3	17.5	8.2
11-Nov	36.2	34	8.9	27.9	4.5
11-Dec	37.7	31.6	4.4	7.9	2
12-Jan	43.9	46.1	13	17.8	6.8
12-Feb	32.2	26.3	5.7	20.2	8.7
12-Mar	34.4	28.6	6	19.2	8
12-Apr	34.8	29.6	5.6	23.6	6.9
12-May	30.2	26	10.1	11.8	1.2
12-Jun	35.5	35.6	6	19.1	5
12-Jul	30.8	24.7	6.5	15.3	14.6
12-Aug	25.3	17.3	4.8	14.5	8.8
12-Sep	52	42.8	12.6	21.2	13.8
12-Oct	22.6	22.7	8.6	9.8	10.5
12-Nov	23.2	24.9	2.7	7	8.2
12-Dec	28.3	28	2.7	11.2	14.4
13-Jan	32.5	38.9	2.9	10.7	8.9
13-Feb	38	30.3	4.3	14.9	6.5
13-Mar	34.5	31.2	6.6	8.1	3.4
13-Apr	24.3	26.5	-2.1	8.2	6.6
13-May	34.5	31.7	16.9	10	14.1
13-Jun	41.5	37.6	17.8	27.3	7.5
13-Jul	58.8	51.2	25.8	36.2	14.6
13-Aug	39.5	40.1	12.3	22.3	15
13-Sep	62.2	58.3	18.5	31	16.2
13-Oct	63.7	53.8	17.8	27.2	9.3
13-Nov	47.5	42.7	14.3	26.9	17.2

Source: Federal Reserve Bank of Philadelphia

http://philadelphiafed.org/index.cfm

Chart VA-14 of the Federal Reserve Bank of Philadelphia is very useful, providing current and future general activity indexes from Jan 1995 to Nov 2013. The shaded areas are the recession cycle dates of the National Bureau of Economic Research (NBER) (http://www.nber.org/cycles.html). The Philadelphia Fed index dropped during the initial period of recession and then led the recovery, as industry overall. There was a second decline of the index into 2011 followed now by what hopefully appeared as renewed strength from late 2011 into Jan 2012 with decline to negative territory of the current activity index in Nov 2012 and return to positive territory in Dec 2012 with decline of current conditions into contraction in Jan-Feb 2013 and rebound to mild expansion in Mar-Apr 2013. The index of current activity moved into expansion in Jun-Oct 2013 with weakness in Nov 2013.

Chart VA-14, Federal Reserve Bank of Philadelphia Business Outlook Survey, Current and Future Activity Indexes

Source: Federal Reserve Bank of Philadelphia

http://www.philadelphiafed.org/index.cfm

The index of current new orders of the Business Outlook Survey of the Federal Reserve Bank of Philadelphia in Chart VA-15 illustrates the weakness of the cyclical expansion. The index weakened in 2006 and 2007 and then fell sharply into contraction during the global recession. There have been twelve readings into contraction from Jan 2012 to May 2013 and generally weak readings with some exceptions. The index of new orders moved into expansion in Jun-Oct 2013 with moderation in Nov 2013.

Chart VA-15, Federal Reserve Bank of Philadelphia Current New Orders Diffusion Index

Source: Federal Reserve Bank of Philadelphia

http://www.philadelphiafed.org/index.cfm

Sales of manufacturers increased 0.1 percent in Sep 2013 after increasing 0.2 percent in Aug and increased 2.5 percent in the 12 months ending in Sep, as shown in Table VA-4. Retailers’ sales changed 0.0 percent in Sep after increasing 0.2 percent in Aug and increased 3.5 percent in 12 months ending in Sep 2013. Sales of merchant wholesalers increased 0.6 percent in Sep, increased 0.4 percent in Aug and increased 6.8 percent in 12 months ending in Sep. These data are not adjusted for price changes such that they reflect increases in both quantities and prices.

Table VA-4, US, Percentage Changes for Sales of Manufacturers, Retailers and Merchant Wholesalers

	Sep 13/   Aug 13 ∆% SA	Sep 2013 Millions of Dollars NSA	Aug 13/ Jul 13  ∆% SA	Sep 13/ Sep 12 ∆% NSA
Total Business	0.2	1,280,900	0.3	4.2
.Manufacturers	0.1	499,036	0.2	2.5
Retailers	0.0	358,654	0.2	3.5
Merchant Wholesalers	0.6	423,210	0.4	6.8

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

Chart VA-16 of the US Census Bureau provides total US sales of manufacturing, retailers and wholesalers seasonally adjusted (SA) in millions of dollars. Seasonal adjustment softens adjacent changes for purposes of comparing short-term variations free of seasonal factors. There was sharp drop in the global recession followed by sharp recovery with decline and recovery in the final segment above the peak before the global recession. Data are not adjusted for price changes.

Chart VA-16, US, Total Business Sales of Manufacturers, Retailers and Merchant Wholesalers, SA, Millions of Dollars, Jan 1992-Sep 2013

US Census Bureau

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

Chart VA-17 of the US Census Bureau provides total US sales of manufacturing, retailers and wholesalers not seasonally adjusted (NSA) in millions of dollars. The series without adjustment shows sharp jagged behavior because of monthly fluctuations following seasonal patterns. There is sharp recovery from the global recession in a robust trend, which is mixture of price and quantity effects because data are not adjusted for price changes. There is stability in the final segment with monthly marginal strength.

Chart VA-17 US, Total Business Sales of Manufacturers, Retailers and Merchant Wholesalers, NSA, Millions of Dollars, Jan 1992-Sep 2013

US Census Bureau

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

Businesses added cautiously to inventories to replenish stocks. Retailers added 0.9 percent to inventories in Sep 2013 and 0.4 percent in Aug 2013 with growth of 5.7 percent in 12 months, as shown in Table VA-5. Total business increased inventories by 0.6 percent in Sep, 0.4 percent in Aug and 3.2 percent in 12 months. Inventories sales/ratios of total business continued at a level close to 1.29 under careful management to avoid costs and risks. Inventory/sales ratios of manufacturers and retailers are higher than for merchant wholesalers. There is stability in inventory/sales ratios in individual months and relative to a year earlier.

Table VA-5, US, Percentage Changes for Inventories of Manufacturers, Retailers and Merchant Wholesalers and Inventory/Sales Ratios

Inventory Change	Sep 13 Millions of Dollars NSA	Sep 13/ Aug 13 ∆% SA	Aug 13/  Jul 13 ∆% SA	Sep 13/  Sep 12 ∆% NSA
Total Business	1,677,973	0.6	0.4	3.2
Manufacturers	633,074	0.4	0.2	1.7
Retailers	540,431	0.9	0.4	5.7
Merchant Wholesalers	504,468	0.4	0.8	2.6
Inventory/ Sales Ratio NSA	Sep 13 Billions of Dollars NSA	Sep 2013 SA	Aug 2013 SA	Sep 2012 SA
Total Business	1,677,973	1.29	1.29	1.29
Manufacturers	633,074	1.30	1.29	1.29
Retailers	540,431	1.42	1.40	1.38
Merchant Wholesalers	504,468	1.18	1.18	1.20

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

Chart VA-18 of the US Census Bureau provides total business inventories of manufacturers, retailers and merchant wholesalers seasonally adjusted (SA) in millions of dollars from Jan 1992 to Sep 2013. The impact of the two recessions of 2001 and IVQ2007 to IIQ2009 is evident in the form of sharp reductions in inventories. Inventories have surpassed the peak before the global recession. Data are not adjusted for price changes.

Chart VA-18, US, Total Business Inventories of Manufacturers, Retailers and Merchant Wholesalers, SA, Millions of Dollars, Jan 1992-Sep 2013

US Census Bureau

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

Chart VA-19 provides total business inventories of manufacturers, retailers and merchant wholesalers not seasonally adjusted (NSA) from Jan 1992 to Sep 2013 in millions of dollars. The recessions of 2001 and IVQ2007 to IIQ2009 are evident in the form of sharp reductions of inventories. There is sharp upward trend of inventory accumulation after both recessions. Total business inventories are higher than in the peak before the global recession.

Chart VA-19, US, Total Business Inventories of Manufacturers, Retailers and Merchant Wholesalers, NSA, Millions of Dollars, Jan 1992-Sep 2013

US Census Bureau

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

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

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

This is the pure inventory cycle.

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

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

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

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

Chart VA-20 shows the increase in the inventory/sales ratios during the recession of 2007-2009. The inventory/sales ratio fell during the expansions. The inventory/sales ratio declined to a trough in 2011, climbed and then stabilized at current levels in 2012 and beginning of 2013.

Chart VA-20, Total Business Inventories/Sales Ratios 2002 to 2013

Source: US Census Bureau

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

Sales and inventories of merchant wholesalers except manufacturers’ sales branches and offices are shown in Table VA-6 for Jan-Sep 2013 NSA and percentage changes from the prior month SA and for Jan-Sep 2013 relative to Jan-Sep 2012. These data are volatile, aggregating diverse categories of durable and nondurable goods without adjustment for price changes. Total sales for the US rose 3.6 percent in Jan-Sep 2013 relative to Jan-Sep 2012 and increased 0.6 percent in Sep 2013 relative to Aug 2013. The value of total sales is quite high at $3795.4 billion, approaching five trillion dollars in a year. Value in the breakdown is useful in identifying relative importance of individual categories. Sales of durable goods in Jan-Sep 2013 reached $1749.2 billion, over two trillion dollars for a year, increasing 2.1 percent in Sep 2013 relative to Aug 2013 and increasing 3.9 percent in Jan-Sep 2013 relative to Jan-Sep 2012. Sales of automotive products reached $301.9 billion in Jan-Sep 2013, increasing 8.5 percent in the month and increasing 3.1 percent relative to a year earlier. There is strong performance of 10.3 percent in machinery but lower of 4.8 percent in electrical products. Sales of nondurable goods rose 3.3 percent over a year earlier. The influence of commodity prices returned as suggested by decrease of 3.0 percent in Sep 2013 and increase of 4.8 percent in Jan-Sep 2013 relative to a year earlier in farm products with decrease of 2.8 percent in petroleum products in Sep 2013 and increase of 1.2 percent relative to a year earlier. The final three columns in Table VA-4 provide the value of inventories and percentage changes from the prior month and relative to the same month a year earlier. US total inventories of wholesalers increased 0.4 percent in Sep 2013 and increased 2.6 percent relative to a year earlier. Inventories of durable goods of $314.4 billion are 62.3 percent of total inventories of $504.5 billion and rose 5.0 percent relative to a year earlier. Automotive inventories decreased 1.2 percent relative to a year earlier. Machinery inventories of $91.1 billion rose 8.7 percent relative to a year earlier. Inventories of nondurable goods of $190.1 billion are 37.7 percent of the total and decreased 1.2 percent relative to a year earlier. Inventories of farm products increased 1.1 percent in Sep relative to Aug and decreased 38.2 percent relative to a year earlier. Inventories of petroleum products decreased 2.1 percent in Sep and decreased 0.9 percent relative to a year earlier.

Table VA-6, US, Sales and Inventories of Merchant Wholesalers except Manufacturers’ Sales Branches and Offices, Month ∆%

2013	Sales $ Billions Jan-Sep 2013 NSA	Sales Sep ∆% SA	Sales∆% Jan-Sep 2013 from Jan-Sep 2012  NSA	INV $ Billions Sep 2013 NSA	INV Sep ∆% SA	INV  ∆% Sep 2013 from Sep 2012 NSA
US Total	3795.4	0.6	3.6	504.5	0.4	2.6
Durable	1749.2	2.1	3.9	314.4	0.3	5.0
Automotive	301.9	8.5	3.1	47.8	-3.0	-1.2
Prof. Equip.	355.0	-0.3	2.5	39.0	2.3	8.6
Computer Equipment	205.9	-3.9	1.7	17.7	5.6	12.6
Electrical	275.9	3.8	4.8	39.2	0.6	6.5
Machinery	308.5	0.4	10.3	91.1	1.6	8.7
Not Durable	2046.2	-0.7	3.3	190.1	0.5	-1.2
Drugs	314.4	-1.8	4.8	38.3	-0.5	7.4
Apparel	109.2	3.3	0.0	23.9	0.5	5.6
Groceries	440.5	1.3	4.7	34.8	2.1	9.0
Farm Products	174.8	-3.0	4.8	15.7	1.1	-38.2
Petroleum	555.8	-2.8	1.2	22.3	-2.1	-0.9

Note: INV: inventories

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

Chart VA-21 of the US Census Bureau provides wholesale trade NSA from Jan 1992 to Sep 2013. The jagged curve of wholesale trade sales without adjustment shows strong seasonal variations. There is a strong long-term trend interrupted by sharp drop during the global recession. Growth resumed along a stronger upward trend and the level in Dec 2012 surpasses the peak before the global recession with stability in the final segment.

Chart VA-21, US, Wholesale Trade Sales, Monthly, NSA, Jan 1992-Sep 2013, Millions of Dollars

Source: US Census Bureau

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

Chart VA-22 of the US Census Bureau provides US wholesale trade sales with seasonal adjustment from Jan 1992 to Sep 2013. The elimination of seasonality permits enhanced comparison of adjacent sales. The final segment identifies another drop followed by increase to a higher level with stability.

Chart VA-22, US, Wholesale Trade Sales, Monthly, SA, Jan 1992-Sep 2013, Millions of Dollars

Source: US Census Bureau

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

Inventory/sales ratios of merchant wholesalers except manufacturers’ sales branches and offices are shown in Table VA-7. The total for the US has remained almost without change at 1.18 in Sep 2013, 1.18 in Aug 2013 and 1.20 in Sep 2012. Inventory/sales ratios are higher in durable goods industries but remain relatively stable with 1.55 in Sep 2013, 1.58 in Aug 2013 and 1.58 in Sep 2012. Computer equipment operates with low inventory/sales ratios of 0.74 in Sep 2013, 0.67 in Aug 2013 and 0.68 in Sep 2012 because of the capacity to fill orders on demand. As expected because of perishable nature, nondurable inventory/sales ratios are quite low with 0.84 in Sep 2013 and 0.83 in Aug 2013, which are close to 0.87 in Sep 2012. There are exceptions such as 1.81 in Sep 2013 in apparel that is close to 1.86 in Aug 2013 and higher than 1.74 in Sep 2012.

Table VA-7, Inventory/Sales Ratios of Merchant Wholesalers except Manufacturers’ Sales Branches and Offices, % SA

	Sep 2013	Aug 2013	Sep 2012
US Total	1.18	1.18	1.20
Durable	1.55	1.58	1.58
Automotive	1.36	1.52	1.46
Prof. Equip.	0.94	0.92	0.92
Comp. Equip.	0.74	0.67	0.68
Electrical	1.18	1.22	1.19
Machinery	2.56	2.53	2.70
Not Durable	0.84	0.83	0.87
Drugs	1.05	1.04	1.06
Apparel	1.81	1.86	1.74
Groceries	0.69	0.69	0.69
Farm Products	0.97	0.93	1.43
Petroleum	0.37	0.37	0.36

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

Inventories of merchant wholesalers except manufacturers’ sales branches in millions of dollars SA are provided in Chart VA-23 of the US Census Bureau. There is evident acceleration in inventory building in the final segment at a sharper slope than before the global recession with recent downward turn.

Chart VA-23, US, Inventories of Merchant Wholesalers, Millions of Dollars, NSA, Jan 1992-Sep 2013

Source: US Census Bureau

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

Inventories of merchant wholesalers except manufacturers’ sales branches in millions of dollars SA are provided in Chart VA-24 of the US Census Bureau. There is evident acceleration in inventory building in the final segment at a sharper slope than before the global recession with recent downward turn.

Chart VA-24, US, Inventories of Merchant Wholesalers, Millions of Dollars, SA, Jan 1992-Sep 2013

Source: US Census Bureau

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

Chart VA25 provides the chart of the US Census Bureau with inventories/sales ratios of merchant wholesalers from 2004 to 2013 seasonally adjusted. Inventory/sales ratios rise during contractions as merchants are caught with increasing inventories because of weak sales and fall during expansions as merchants attempt to fill sales with existing stocks. There is an increase in the inventory/sales ratio in 2012 but not yet significantly higher with declining trend in the final segment followed by an increase and new decline.

Chart VA-25, US, Monthly Inventories/Sales Ratios of Merchant Wholesalers, SA, 2004-2013

Source: US Census Bureau

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

Sales of retail and food services increased 0.4 percent in Oct 2013 after changing 0.0 percent in Sep 2013 seasonally adjusted (SA), growing 4.2 percent in Jan-Oct 2013 relative to Jan-Oct 2012 not seasonally adjusted (NSA), as shown in Table VA-8. Excluding motor vehicles and parts, retail sales increased 0.2 percent in Oct 2013, increasing 0.3 percent in Sep 2013 SA and increasing 3.2 percent NSA in Jan-Oct 2013 relative to a year earlier. Sales of motor vehicles and parts increased 1.3 percent in Oct 2013 after decreasing 1.2 percent in Sep 2013 SA and increasing 8.9 percent NSA in Jan-Oct 2013 relative to a year earlier. Gasoline station sales decreased 0.6 percent SA in Oct 2013 after increasing 0.2 percent in Sep 2013 in oscillating prices of gasoline that are moderating, decreasing 0.7 percent in Jan-Oct 2013 relative to a year earlier.

Table VA-8, US, Percentage Change in Monthly Sales for Retail and Food Services, ∆%

	Oct/Sep ∆% SA	Sep/Aug ∆% SA	Jan-Oct 2013 Million Dollars NSA	Jan-Oct 2013 from Jan-Oct 2012 ∆% NSA
Retail and Food Services	0.4	0.0	4,165,953	4.2
Excluding Motor Vehicles and Parts	0.2	0.3	3,360,339	3.2
Motor Vehicles & Parts Dealers	1.3	-1.2	805,614	8.9
Retail	0.3	0.0	3,707,170	4.3
Building Materials	-1.9	-0.1	264,003	6.6
Food and Beverage	0.0	0.7	536,108	2.9
Grocery	0.1	0.8	479,665	2.4
Health & Personal Care Stores	0.5	1.5	234,432	2.0
Clothing & Clothing Accessories Stores	-1.4	-0.9	194,528	3.5
Gasoline Stations	-0.6	0.2	460,818	-0.7
General Merchandise Stores	0.2	0.1	523,211	0.6
Food Services & Drinking Places	1.0	0.2	458,783	3.7

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

Chart VA-26 of the US Bureau of the Census shows percentage change of retail and food services sales. Auto sales have been increasing monthly, and particularly relative to a year earlier, but with weakness in the total excluding auto sales and declines or mild growth in general merchandise.

Chart VA-26, US, Percentage Change of Retail and Food Services Sales

Source: US Census Bureau

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

Chart VA-27 of the US Census Bureau provides total sales of retail trade and food services seasonally adjusted (SA) from Jan 1992 to Oct 2013 in millions of dollars. The impact on sales of the shallow recession of 2001 was much milder than the sharp contraction in the global recession from IVQ2007 to IIQ2009. There is flattening in the final segment of the series followed by another increase. Data are not adjusted for price changes.

Chart VA-27, US, Total Sales of Retail Trade and Food Services, SA, Jan 1992-Oct 2013, Millions of Dollars

Source: US Census Bureau

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

Chart VA-29 of the US Census Bureau provides total sales of retail trade and food services not seasonally adjusted (NSA) in millions of dollars from Jan 1992 to Oct 2013. Data are not adjusted for seasonality, which explains sharp jagged behavior, or price changes. There was contraction during the global recession from IVQ2007 to IIQ2009 with strong rebound to a higher level and stability followed by strong increase in the final segment.

Chart VA-28, US, Total Sales of Retail Trade and Food Services, NSA, Jan 1992-Oct 2013, Millions of Dollars

Source: US Census Bureau

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

Risk aversion channels funds toward US long-term and short-term securities that finance the US balance of payments and fiscal deficits benefitting from risk flight to US dollar denominated assets. There are now temporary interruptions because of fear of rising interest rates that erode prices of US government securities because of mixed signals on monetary policy and exit from the Fed balance sheet of three trillion dollars of securities held outright. Net foreign purchases of US long-term securities (row C in Table VA-9) improved from minus $9.8 billion in Aug 2013 to $25.5 billion in Sep 2013. Foreign (residents) purchases minus sales of US long-term securities (row A in Table VA-9) in Aug 2013 of minus $8.5 billion increased to $62.3 billion in Sep 2013. Net US (residents) purchases of long-term foreign securities (row B in Table VA-9) decreased from minus $1.3 billion in Aug 2013 to minus $36.8 billion in Sep 2013. In Sep 2013,

C = A + B = $62.3 billion - $36.8 billion = $25.5 billion

There are minor rounding errors. There is increasing demand in Table IIA2-8 in Sep in A1 private purchases by residents overseas of US long-term securities of $77.6 billion of which increases in A11 Treasury securities of $51.0 billion, increase in A12 of $10.1 billion in agency securities, increase by $5.4 billion of corporate bonds and increase of $11.1 billion in equities. Worldwide risk aversion causes flight into US Treasury obligations with significant oscillations. Official purchases of securities in row A2 decreased $15.3 billion with decrease of Treasury securities of $23.2 billion in Sep 2013. Official purchases of agency securities increased $4.7 billion in Jul. Row D shows decrease in Sep 2013 of $28.2 billion in purchases of short-term dollar denominated obligations. Foreign private holdings of US Treasury bills decreased $23.5 billion (row D11) with foreign official holdings decreasing $2.8 billion while the category “other” decreased $2.0 billion. Foreign private holdings of US Treasury bills increased $7.5 billion in Aug in what could be decrease of duration exposures. Risk aversion of default losses in foreign securities dominates decisions to accept zero interest rates in Treasury securities with no perception of principal losses. In the case of long-term securities, investors prefer to sacrifice inflation and possible duration risk to avoid principal losses with significant oscillations in risk perceptions.

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

	Sep 2012 12 Months	Sep 2013 12 Months	Aug 2013	Sep 2013
A Foreign Purchases less Sales of US LT Securities	525.6	246.5	-8.5	62.3
A1 Private	310.9	140.8	-3.7	77.6
A11 Treasury	222.1	66.5	0.1	51.0
A12 Agency	124.3	39.7	8.7	10.1
A13 Corporate Bonds	-68.5	15.6	1.4	5.4
A14 Equities	33.2	19.0	-13.8	11.1
A2 Official	214.6	105.7	-4.8	-15.3
A21 Treasury	195.3	7.0	-10.9	-23.2
A22 Agency	7.3	75.3	8.1	4.7
A23 Corporate Bonds	3.2	17.5	1.0	1.9
A24 Equities	8.9	5.9	-3.1	1.4
B Net US Purchases of LT Foreign Securities	63.0	-203.8	-1.3	-36.8
B1 Foreign Bonds	83.1	-54.3	11.1	-29.8
B2 Foreign Equities	-20.1	-149.5	-12.4	-7.0
C Net Foreign Purchases of US LT Securities	588.5	42.7	-9.8	25.5
D Increase in Foreign Holdings of Dollar Denominated Short-term	39.1	-60.0	-5.8	-28.2
D1 US Treasury Bills	43.9	-33.9	17.5	-26.2
D11 Private	47.5	-20.4	7.5	-23.5
D12 Official	-3.5	-13.6	10.0	-2.8
D2 Other	-4.8	-26.1	-23.3	-2.0

C = A + B;

A = A1 + A2

A1 = A11 + A12 + A13 + A14

A2 = A21 + A22 + A23 + A24

B = B1 + B2

D = D1 + D2

Sources: United States Treasury

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

Table VA-10 provides major foreign holders of US Treasury securities. China is the largest holder with $1293.8 billion in Sep 2013, increasing 12.2 percent from $1153.6 billion in Sep 2012 while increasing $25.7 billion from Aug 2013 or 2.0 percent. Japan increased its holdings from $1128.5 billion in Sep 2012 to $1178.1 billion in Sep 2013 or by 4.4 percent. Japan increased its holdings from $1149.1 billion in Aug 2013 to $1178.1 billion in Sep 2013 by $29.0 billion or 2.5 percent. Total foreign holdings of Treasury securities rose from $5472.7 billion in Sep 2012 to $5652.9 billion in Sep 2013, or 3.3 percent. Foreign holdings of Treasury securities fell from $5721.3 in Mar 2013 to $5708.4 in Apr 2013 or 0.2 percent. Foreign holdings of US Treasury securities fell from $5595.4 billion in Jun 2013 to $5593.9 billion in Jul 2013, by $1.5 billion or 0.0 percent. The US continues to finance its fiscal and balance of payments deficits with foreign savings (see Pelaez and Pelaez, The Global Recession Risk (2007)). A point of saturation of holdings of US Treasury debt may be reached as foreign holders evaluate the threat of reduction of principal by dollar devaluation and reduction of prices by increases in yield, including possibly risk premium. Shultz et al (2012) find that the Fed financed three-quarters of the US deficit in fiscal year 2011, with foreign governments financing significant part of the remainder of the US deficit while the Fed owns one in six dollars of US national debt. Concentrations of debt in few holders are perilous because of sudden exodus in fear of devaluation and yield increases and the limit of refinancing old debt and placing new debt. In their classic work on “unpleasant monetarist arithmetic,” Sargent and Wallace (1981, 2) consider a regime of domination of monetary policy by fiscal policy (emphasis added):

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

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

	Sep 2013	Aug 2013	Sep 2012
Total	5652.9	5595.8	5472.7
China	1293.8	1268.1	1153.6
Japan	1178.1	1149.1	1128.5
Caribbean Banking Centers	300.9	301.9	261.1
Brazil	249.2	252.9	251.2
Oil Exporters	245.7	246.5	267.2
Taiwan	185.9	183.6	201.7
Switzerland	177.2	181.2	193.5
Belgium	172.5	166.8	133.2
United Kingdom	158.3	159.2	137.9
Luxembourg	141.1	143.8	147.5
Russia	140.5	136.0	163.5
Hong Kong	126.5	126.5	137.1
Foreign Official Holdings	4014.3	3973.6	3958.1
A. Treasury Bills	370.2	373.0	383.8
B. Treasury Bonds and Notes	3644.1	3600.6	3574.4

Source: United States Treasury

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

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 2.6 and 3.0 percent, with the all items CPI less fresh food of 0.6 to 1.0 percent. The critical difference is forecast of the CPI excluding fresh food of 2.8 to 3.6 percent in 2014 and 1.6 to 2.9 percent in 2015. The new monetary policy of the Bank of Japan aims to increase inflation to 2 percent. These forecasts are biannual in Apr and Oct. The Cabinet Office, Ministry of Finance and Bank of Japan released on Jan 22, 2013, a “Joint Statement of the Government and the Bank of Japan on Overcoming Deflation and Achieving Sustainable Economic Growth” (http://www.boj.or.jp/en/announcements/release_2013/k130122c.pdf) with the important change of increasing the inflation target of monetary policy from 1 percent to 2 percent:

“The Bank of Japan conducts monetary policy based on the principle that the policy shall be aimed at achieving price stability, thereby contributing to the sound development of the national economy, and is responsible for maintaining financial system stability. The Bank aims to achieve price stability on a sustainable basis, given that there are various factors that affect prices in the short run.

The Bank recognizes that the inflation rate consistent with price stability on a sustainable basis will rise as efforts by a wide range of entities toward strengthening competitiveness and growth potential of Japan's economy make progress. Based on this recognition, the Bank sets the price stability target at 2 percent in terms of the year-on-year rate of change in the consumer price index.

Under the price stability target specified above, the Bank will pursue monetary easing and aim to achieve this target at the earliest possible time. Taking into consideration that it will take considerable time before the effects of monetary policy permeate the economy, the Bank will ascertain whether there is any significant risk to the sustainability of economic growth, including from the accumulation of financial imbalances.”

The Bank of Japan also provided explicit analysis of its view on price stability in a “Background note regarding the Bank’s thinking on price stability” (http://www.boj.or.jp/en/announcements/release_2013/data/rel130123a1.pdf http://www.boj.or.jp/en/announcements/release_2013/rel130123a.htm/). The Bank of Japan also amended “Principal terms and conditions for the Asset Purchase Program” (http://www.boj.or.jp/en/announcements/release_2013/rel130122a.pdf): “Asset purchases and loan provision shall be conducted up to the maximum outstanding amounts by the end of 2013. From January 2014, the Bank shall purchase financial assets and provide loans every month, the amount of which shall be determined pursuant to the relevant rules of the Bank.”

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

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

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

Fiscal Year Date of Forecast	Real GDP	CPI All Items Less Fresh Food	Excluding Effects of Consumption Tax Hikes
2013
Oct 2013	+2.6 to +3.0 [+2.7]	+0.6 to +1.0 [+0.7]
Jul 2013	+2.5 to +3.0 [+2.8]	+0.5 to +0.8 [+0.6]
2014
Oct 2013	+0.9 to +1.5 [+1.5]	+2.8 to +3.6 [+3.3]	+0.8 to +1.6 [+1.3]
Jul 2013	+0.8 to +1.5 [+1.3]	+2.7 to +3.6 [+3.3]	+0.7 to +1.6 [+1.3]
2015
Oct 2013	+1.3 to +1.8 [+1.5]	+1.6 to +2.9 [+2.6]	+0.9 to +2.2 [+1.9]
Jul 2013	+1.3 to +1.9 [+1.5]	+1.6 to +2.9 [+2.6]	+0.9 to +2.2 [+1.9]

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

Source: Policy Board, Bank of Japan

http://www.boj.or.jp/en/mopo/outlook/gor1310b.pdf

Private-sector activity in Japan expanded with the Markit Composite Output PMI^™ Index increasing from 53.2 in Sep to 56.0 in Oct, which is the highest reading in the six-year history of the survey (http://www.markiteconomics.com/Survey/PressRelease.mvc/4d6234f82c1546af972d0f1efd234068). Claudia Tillbrooke, Economist at Markit and author of the report, finds that the survey data suggest continuing strong growth of the economy of Japan (http://www.markiteconomics.com/Survey/PressRelease.mvc/4d6234f82c1546af972d0f1efd234068). The Markit Business Activity Index of Services increased from 53.0 in Sep to 55.3 in Oct (http://www.markiteconomics.com/Survey/PressRelease.mvc/4d6234f82c1546af972d0f1efd234068). Claudia Tillbrooke, Economist at Markit and author of the report, finds growth in services with strength in new orders and employment (http://www.markiteconomics.com/Survey/PressRelease.mvc/4d6234f82c1546af972d0f1efd234068). The Markit/JMMA Purchasing Managers’ Index^™ (PMI™), seasonally adjusted, increased from 52.5 in Sep to 54.2 in Oct, which is the highest level since May 2010 (http://www.markiteconomics.com/Survey/PressRelease.mvc/53c9d4335c3340399112967379f52a18). New orders grew at the highest rate in four years in anticipation of the increase in the sales tax next year. New export orders recovered from decline in Aug, growing at high rates in Sep and Oct with respondents pointing to yen devaluation. Claudia Tillbrooke, Economist at Markit and author of the report, finds improving manufacturing conditions at the highest levels in more than three years with impulse originating in new orders (http://www.markiteconomics.com/Survey/PressRelease.mvc/53c9d4335c3340399112967379f52a18).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	Oct ∆% -0.1 12 months ∆% 2.5 Blog 11/24/13
Consumer Price Index	Sep NSA ∆% 0.3; Sep 12 months NSA ∆% 1.1 Blog 10/27/13
Real GDP Growth	IIIQ2013 ∆%: 0.5 on IIQ2013;  IIIQ2013 SAAR 2.7; ∆% from quarter a year earlier: 1.2 % Blog 6/16/13 8/18/13 9/15/13 11/17/13
Employment Report	Sep Unemployed 2.58 million Change in unemployed since last year: minus 170 thousand Unemployment rate: 4.0 % Blog 11/3/13
All Industry Indices	Sep month SA ∆% 0.4 12-month NSA ∆% 2.2 Blog 11/24/13
Industrial Production	Sep SA month ∆%: 1.5 12-month NSA ∆% 5.4 Blog 11/3/13
Machine Orders	Total Sep ∆% 13.2 Private ∆%: -0.9 Sep ∆% Excluding Volatile Orders -2.1 Blog 11/17/13
Tertiary Index	Sep month SA ∆% -0.2 Sep 12 months NSA ∆% 1.1 Blog 11/17/13
Wholesale and Retail Sales	Sep 12 months: Total ∆%: 2.6 Wholesale ∆%: 2.4 Retail ∆%: -0.3 Blog 11/3/13
Family Income and Expenditure Survey	Sep 12-month ∆% total nominal consumption 5.2, real 3.7 Blog 11/3/13
Trade Balance	Exports Oct 12 months ∆%: 18.6 Imports Oct 12 months ∆% 26.1 Blog 11/24/13

Links to blog comments in Table JPY:

11/17/13 http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-unwinding-monetary-policy.html

11/3/2013 http://cmpassocregulationblog.blogspot.com/2013/11/global-financial-risk-world-inflation.html

10/27/13 http://cmpassocregulationblog.blogspot.com/2013/10/twenty-eight-million-unemployed-or.html

9/15/13 http://cmpassocregulationblog.blogspot.com/2013/09/recovery-without-hiring-ten-million.html

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

The indices of all industry activity of Japan, which approximates GDP or economic activity, fell to levels close to the worst point of the recession, showing the brutal impact of the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Table VB-1 with the latest revisions shows the quarterly index, which permits comparison with the movement of real GDP. The first row provides weights of the various components of the index: AG (agriculture) 1.4 percent (not shown), CON (construction) 5.7 percent, IND (industrial production) 18.3 percent, TERT (services) 63.2 percent, and GOVT (government) 11.4 percent. GDP increased 0.5 percent in IIIQ2013 (Table VB-1 http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-unwinding-monetary-policy.html), industry increased 1.8 percent, the tertiary sector decreased 0.2 percent, government decreased 0.5 percent and construction increased 5.4 percent. The report shows that the all industry index increased 0.5 percent in IIQ2013. Industry added 0.27 percentage points to growth of the all industry index and the tertiary index deducted 0.13 percentage points. Japan had already experienced a very weak quarter in IVQ2010, with decline of GDP of 0.4 percent (Table VB-1 http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-unwinding-monetary-policy.html), when it was unexpectedly hit by the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. GDP fell 2.0 percent in IQ2011 and 0.8 percent in IIQ2011. GDP was flat in IQ2011 relative to a year earlier and fell 1.5 percent in IIQ2011 relative to a year earlier (Tables VB-1 and VB-4 http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-unwinding-monetary-policy.html). The all industry activity index fell in all quarters of 2012 with exception of growth of 0.1 percent in IQ2012. Weakness in industry was the driver of decline.

Table VB-1, Japan, Indices of All Industry Activity Percentage Change from Prior Quarter SA ∆%

	CON	IND	TERT	GOVT	ALL IND	REAL GDP
Weight %	5.7	18.3	63.2	11.4	100.0
2013
IIIQ2013	5.4	1.8	-0.2	-0.5	0.5	0.5
Cont to IIIQ % Change	0.27	0.31	-0.13	-0.06
IIQ2013	4.7	1.5	0.7	-0.5	1.0	0.9
IQ2013	-0.5	0.6	0.2	0.1	0.0	1.1
2012
IVQ2012	3.0	-1.8	0.3	0.1	-0.1	0.1
IIIQ	1.6	-3.3	0.0	0.0	-0.4	-0.9
IIQ	1.3	-2.1	0.0	0.0	-0.2	-0.2
IQ	2.0	1.6	0.0	0.2	0.1	1.2

AG: indices of agriculture, forestry and fisheries has weight of 1.4% and is not included in official report or in this table; CON: indices of construction industry activity; IND: indices of industrial production; TERT: indices of tertiary industry activity; GOVT: indices of government services, etc.; ALL IND: indices of all industry activity

Source: Japan, Ministry of Economy, Trade and Industry (METI)

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

http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-unwinding-monetary-policy_8749.html

There are more details in Table VB-2. In Sep 2013, the all industry activity index increased 0.4 percent with industry increasing 1.3 percent and services decreasing 0.2 percent while construction increased 1.4 percent and government increased 0.4 percent. Industry added 0.23 percentage points and services deducted 0.13 percentage points while construction added 0.07 percentage points and government added 0.05 percentage points. The all industry activity index is stronger in 2013 with growth of 0.5 percent in Dec 2012, 0.4 percent in Feb 2013, 0.4 percent in Mar 2013, 0.1 percent in Apr 2013 and 1.1 percent in May 2013. After decline of 0.8 percent in Jun 2013, the all industry index rose 0.4 percent in Jul 2013, 0.3 percent in Aug 2013 and 0.4 percent in Sep 2013. Industry is recovering with growth of 1.4 percent in Dec 2012, 0.9 percent in Feb 2013, 0.1 percent in Mar 2013, 0.9 percent in Apr 2013 and 1.9 percent in May 2013. After decline of 3.0 percent in Jun 2003, industry grew 3.4 percent in Jul 2013 and declined 0.9 percent in Aug 2013. Industry rebounded with 1.3 percent in Sep 2013. The highest risk to Japan is if weakening world growth would affect Japanese exports.

Table VB-2, Japan, Indices of All Industry Activity Percentage Change from Prior Month SA ∆%

	CON	IND	TERT	GOVT	ALL IND
Sep 2013	1.4	1.3	-0.2	0.4	0.4
Cont to Sep % Change	0.07	0.23	-0.13	0.05
Aug 2013	0.0	-0.9	0.6	-0.6	0.3
Jul	0.7	3.4	-0.4	-0.2	0.4
Jun	3.9	-3.0	-0.7	0.1	-0.8
May	5.2	1.9	1.2	-0.1	1.1
Apr	-0.1	0.9	-0.5	0.2	0.1
Mar	0.6	0.1	0.2	-0.9	0.4
Feb	-1.3	0.9	1.3	-0.2	0.4
Jan	-1.4	-0.7	-0.8	0.6	-0.7
Dec 2012	0.9	1.4	0.2	-0.3	0.5
Nov	3.0	-0.9	-0.1	0.3	-0.2
Oct	-0.1	0.3	0.2	0.2	0.2
Sep	1.2	-2.2	0.0	-0.3	-0.4
Aug	0.1	-1.4	0.2	0.1	0.0
Jul	-1.0	-0.5	-0.3	-0.1	-0.3
Jun	1.7	-0.9	0.0	0.1	0.1
May	3.0	-1.8	0.5	0.0	-0.1
Apr	-1.1	-0.4	-0.2	0.0	-0.1
Mar	-0.5	-0.2	-0.3	0.1	-0.2
Feb	0.7	-0.2	0.2	-0.2	0.1
Jan	2.6	0.8	-0.8	0.4	-0.7

AG: indices of agriculture, forestry and fisheries has weight of 1.4% and is not included in official report or in this table; CON: indices of construction industry activity; IND: indices of industrial production; TERT: indices of tertiary industry activity; GOVT: indices of government services, etc.; ALL IND: indices of all industry activity

Sources: Japan, Ministry of Economy, Trade and Industry (METI)

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

Percentage changes from a year earlier in calendar years and relative to the same quarter a year earlier of the all industry activity indices are provided in Table VB-3. The first row shows that services contribute 63.2 percent of the total index and industry contributes 18.3 percent for joint contribution of 81.5 percent. The all industry activity index increased 1.6 percent in IIIQ2013 relative to a year earlier and GDP increased 2.7 percent relative to a year earlier (Table VB-4 http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-unwinding-monetary-policy.html). Industry increased 2.2 percent relative to a year earlier while the tertiary sector increased 1.0 percent, adding combined 1.04 percentage points to growth of the all industry activity index of 1.6 percent while construction added 0.59 percentage points and government deducted 0.10 percentage points. The fall of industrial production in 2009 was by a catastrophic 21.9 percent. Japan emerged from the crisis with industrial growth of 16.4 percent in 2010. Quarterly data show that industry is the most dynamic sector of the Japanese economy. The all-industry index increased 1.2 percent in 2012 and real GDP increased 1.9 percent. Industry increased 0.1 percent, adding 0.02 percentage points, while the tertiary sector increased 1.4 percent, adding 0.93 percentage points. The Tōhoku or Great East Earthquake and Tsunami of Mar 11, 201, declining world trade and revaluation of the yen in fear of world financial risks interrupted the recovery of the Japanese economy from the global recession.

Table VB-3, Japan, Indices of All Industry Activity Percentage Change from Earlier Calendar Year and Same Quarter Year Earlier NSA ∆%

	CON	IND	TERT	GOVT	ALL IND	REAL GDP
Weight %	5.7	18.3	63.2	11.4	100.0
Calendar Year
2012	3.2	0.1	1.4	0.3	1.2	1.9
Cont to 2012 % Change	0.14	0.02	0.93	0.04
2011	-2.0	-2.3	0.1	-0.2	-0.5	-0.6
2010	-7.0	16.4	1.3	-0.7	3.1	4.7
2009	-5.6	-21.9	-5.2	0.1	-7.7	-5.5
2008	-7.6	-3.4	-1.0	-1.4	-1.9	-1.0
2013
IIIQ	13.1	2.2	1.0	-0.8	1.6	2.7
Cont to IIIQ % Change	0.59	0.38	0.66	-0.10
IIQ	8.8	-3.1	1.2	-0.3	0.5	1.1
IQ2013	5.4	-7.8	-0.2	0.7	-1.2	0.3
2012
IVQ	6.7	-5.9	0.7	-0.1	-0.3	0.3
IIIQ	3.1	-4.2	0.5	0.4	-0.2	0.3
IIQ	4.9	5.5	2.1	0.6	2.6	3.8
IQ	-1.1	6.2	2.4	0.3	2.6	3.4

AG: indices of agriculture, forestry and fisheries has weight of 1.4% and is not included in official report or in this table; CON: indices of construction industry activity; IND: indices of industrial production; TERT: indices of tertiary industry activity; GOVT: indices of government services, etc.; ALL IND: indices of all industry activity

Source: Japan, Ministry of Economy, Trade and Industry (METI)

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

http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-unwinding-monetary-policy_8749.html

Percentage changes of a month relative to the same month a year earlier for the indices of all industry activity of Japan are shown in Table VB-4. The all industry activity index increased 2.2 percent in Sep 2013 relative to Sep 2012. Industry increased 5.1 percent in Sep 2013 relative to a year earlier, adding 0.90 percentage points to growth of the all industry activity index. The tertiary sector increased 1.1 percent, adding 0.73 percentage points. Construction added 0.63 percentage points to the index and government deducted 0.11 percentage points.

Table VB-4, Japan, Indices of All Industry Activity Percentage Change from Same Month Year Earlier NSA ∆%

	CON	IND	TERT	GOVT	ALL IND
Sep 2013	13.0	5.1	1.1	-0.9	2.2
Cont to Sep % Change	0.63	0.90	0.73	-0.11
Aug	13.0	-0.5	0.7	-0.5	0.9
Jul	13.2	1.8	1.3	-1.1	1.5
Jun	11.2	-4.6	0.5	0.3	0.0
May	8.9	-1.0	1.7	-0.4	1.2
Apr	6.3	-3.4	1.3	-0.9	0.4
Mar	5.4	-7.1	0.7	0.1	-0.7
Feb	4.3	-10.1	-1.6	1.9	-2.4
Jan	6.8	-6.1	0.1	-0.1	-0.7
Dec 2012	8.7	-7.5	-0.1	0.6	-0.9
Nov	7.6	-5.7	1.0	0.3	0.0
Oct	3.5	-4.7	1.3	-1.1	0.1
Sep	2.9	-7.7	0.1	0.7	-1.2
Aug	2.6	-4.4	0.6	0.9	-0.1
Jul	3.8	-0.2	0.8	-0.3	0.6
Jun	6.7	-1.5	0.8	0.9	0.6
May	5.3	6.1	3.1	-0.4	3.3
Apr	2.6	13.6	2.4	1.3	4.1
Mar	3.0	16.2	4.2	0.5	5.8
Feb	-2.5	2.8	2.4	-0.7	1.8
Jan	-3.4	-1.6	0.4	0.4	-0.1

AG: indices of agriculture, forestry and fisheries has weight of 1.4% and is not included in official report or in this table; CON: indices of construction industry activity; IND: indices of industrial production; TERT: indices of tertiary industry activity; GOVT: indices of government services, etc.; ALL IND: indices of all industry activity

Source: Japan, Ministry of Economy, Trade and Industry (METI)

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

The structure of exports and imports of Japan is in Table VB-5. Japan imports all types of raw materials and fuels at rapidly increasing prices caused by the carry trade from zero interest rates to commodities, oscillating under shocks of risk aversion. Mineral fuels account for 32.0 percent of Japan’s imports and increased 45.9 percent in the 12 months ending in Oct 2013 because of alternating carry trades into commodity futures in accordance with risk aversion. Weakness of world demand depresses prices of industrial goods. Manufactured products contribute 12.4 percent of Japan’s exports with increase of 13.3 percent in the 12 months ending in Oct 2013. Machinery contributes 18.4 percent of Japan’s exports with increase of 15.0 percent in the 12 months ending in Oct 2013. Electrical machinery contributes 17.9 percent of Japan’s exports with increase of 2.8 percent in the 12 months ending in Oct 2013. Exports of transport equipment with share of 23.8 percent in total exports increased 24.0 percent in the 12 months ending in Oct 2013 but had been increasing sharply largely because of the low level after the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. The breakdown of transport equipment in Table VB-5 shows increase of the major categories of motor vehicles of 31.3 percent: cars increased 35.1 percent with increase of 14.1 percent in the minor category of buses and trucks, increase of 17.5 percent for parts of motor vehicles, increase of 21.2 percent for motorcycles and increase of 5.0 percent for ships. The result of rising commodity prices and stable or declining prices of industrial products is pressure on Japan’s terms of trade with oscillations when risk aversion causes reversal of carry trades from zero interest rates to commodity prices. Data in Table VB-5 are in millions of yen that have been affected by recent depreciation of the yen relative to the USD with invoicing of many products in dollars.

Table VB-5, Japan, Structure and Growth of Exports and Imports % and ∆% Millions Yens

Oct 2013	Value JPY Millions	% of Total	12 Months ∆%	Contribution Degree %
Exports	6,104,509	100.0	18.6	18.6
Foodstuffs	39,488	0.6	29.2	0.2
Raw Materials	98,578	1.6	9.0	0.2
Mineral Fuels	148,545	2.4	80.8	1.3
Chemicals	647,489	10.6	19.7	2.1
Manufactured Goods	759,452	12.4	13.3	1.7
Machinery	1,123,979	18.4	15.0	2.9
Electrical Machinery	1,090,166	17.9	15.0	2.8
Transport Equipment	1,453,293	23.8	24.0	5.5
Motor Vehicles	956,302	15.7	31.3	4.4
Cars	832,830	13.6	35.1	4.2
Buses & Trucks	111,341	1.8	14.1	0.3
Parts of Motor Vehicles	313,453	5.1	17.5	0.9
Motorcycles	24,376	0.4	21.2	0.1
Ships	103,058	1.7	5.0	0.1
Other	743,520	12.2	16.9	2.1
Imports	7,195,191	100.0	26.1	26.1
Foodstuffs	562,980	7.8	9.6	0.9
Raw Materials	456,446	6.3	8.9	0.7
Mineral Fuels	2,301,663	32.0	45.9	12.7
Chemicals	571,904	7.9	10.7	1.0
Manufactured Goods	568,933	7.9	21.2	1.7
Machinery	526,819	7.3	24.1	1.8
Electrical Machinery	970,840	13.5	27.9	3.7
Transport Equipment	226,384	3.1	14.6	0.5
Other	1,099,222	14.0	22.1	3.2

Source: Japan, Ministry of Finance http://www.customs.go.jp/toukei/info/index_e.htm

Table VB-6 provides Japan’s exports, imports and trade balance in five-year intervals from 1950 to 1975 and then yearly from 1979 to 2012. Exports grew at the average yearly rate of 3.2 percent while imports grew at 3.3 percent per year in the years from 1979 to 2012. Abstracting from the global recession and the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011, exports grew at the average annual rate of 4.8 percent between 1979 and 2007 and imports at 4.0 percent. The global recession had a brutal impact on Japan’s trade. Exports fell 35.5 percent from 2007 to 2009 while imports fell 29.6 percent. Japan had the first trade deficit in 2011 since 1980 and the highest deficit in 2012.

Table VB-6, Japan, Exports and Imports Calendar Year 1979-2010 Billion Yen

Years	Exports	Imports	Balance
1950	298	348	-50
1955	723	889	-166
1960	1,459	1,616	-157
1965	3,042	2,940	102
1970	6,954	6,797	157
1975	16,545	17,170	-625
1979	22,531	24,245	-1,714
1980	29,382	31,995	-2,613
1981	33,468	31,464	2,004
1982	34,432	32,656	1,776
1983	34,909	30,014	4,895
1984	40,325	32,321	8,004
1985	41,955	31,084	10,871
1986	35,289	21,550	13,739
1987	33,315	21,736	11,579
1988	33,939	24,006	9,933
1989	37,822	28,978	8,844
1990	41,456	33,855	7,601
1991	42,359	31,900	10,459
1992	43,012	29,527	13,485
1993	40,202	26,826	13,376
1994	40,497	28,104	12,393
1995	41,530	31,548	9,982
1996	44,731	37,993	6,738
1997	50,937	40,956	9,981
1998	50,645	36,653	13,992
1999	47,547	35,268	12,279
2000	51,654	40,938	10,716
2001	48,979	42,415	6,564
2002	52,108	42,227	9,881
2003	54,548	44,362	10,186
2004	61,169	49,216	11,953
2005	65,656	56,949	8,707
2006	75,246	67,344	7,902
2007	83,931	73,135	10,796
2008	81,018	78,955	2,063
2009	54,170	51,499	2,671
2010	67,399	60,764	6,635
2011	65,546	68,111	-2,565
2012	63,748	70,689	-6,941

Source: Japan, Ministry of Finance http://www.customs.go.jp/toukei/info/index_e.htm

The geographical breakdown of exports and imports of Japan with selected regions and countries is provided in Table VB-7 for Oct 2013. The share of Asia in Japan’s trade is more than one-half for 53.4 percent of exports and 46.1 percent of imports. Within Asia, exports to China are 18.8 percent of total exports and imports from China 23.0 percent of total imports. While exports to China increased 21.3 percent in the 12 months ending in Oct 2013, imports from China increased 22.0 percent. The largest export market for Japan in Oct 2013 is the US with share of 19.1 percent of total exports, which is almost equal to that of China, and share of imports from the US of 8.2 percent in total imports. Western Europe has share of 10.7 percent in Japan’s exports and of 10.1 percent in imports. Rates of growth of exports of Japan in Oct 2013 are relatively high for several countries and regions with growth of 26.4 percent for exports to the US, 20.6 percent for exports to Mexico, 15.5 percent for exports to Brazil and 29.1 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 Oct 2013 are positive for all trading partners. Imports from Asia increased 23.5 percent in the 12 months ending in Oct 2013 while imports from China increased 22.0 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 VB-7, Japan, Value and 12-Month Percentage Changes of Exports and Imports by Regions and Countries, ∆% and Millions of Yen

Oct 2013	Exports Millions Yen	12 months ∆%	Imports Millions Yen	12 months ∆%
Total	6,104,509	18.6	7,195,191	26.1
Asia	3,261,087	14.9	3,317,938	23.5
China	1,147,898	21.3	1,654,281	22.0
USA	1,164,142	26.4	586,945	16.2
Canada	76,514	11.8	107,110	12.4
Brazil	47,134	15.5	99,248	14.9
Mexico	87,516	20.6	35,278	6.6
Western Europe	654,440	24.3	724,470	15.0
Germany	166,549	25.5	216,462	26.8
France	58,880	46.3	90,945	1.6
UK	92,372	7.9	53,538	7.8
Middle East	215,339	13.8	1,322,212	51.9
Australia	140,762	29.1	409,549	10.7

Source: Japan, Ministry of Finance http://www.customs.go.jp/toukei/info/index_e.htm

Table VB-8 provides the trade balance of Japan by countries and regions in Oct 2013. The significantly large deficits of JPY 1,106,873 million with the Middle East, JPY 506,383 million with China, JPY 268,787 million with Australia and JPY 70,030 million with Western Europe do not compensate surpluses of JPY 25,981 of JPY 533,117 million with the US, JPY 52,338 with Mexico and JPY 38,834 with the UK.

Table VB-8, Japan, Trade Balance, Millions of Yen

Oct 2013	Millions of Yen
Total	-1,090,682
Asia	-56,851
China	-506,383
USA	577,197
Canada	-30,596
Brazil	-52,114
Mexico	52,338
Western Europe	-70,030
Germany	-49,913
France	-32,065
UK	38,834
Middle East	-1,106,873
Australia	-268,787

Source: Japan, Ministry of Finance http://www.customs.go.jp/toukei/info/index_e.htm

Long-term economic growth in Japan significantly improved by increasing competitiveness in world markets. Net trade of exports and imports is an important component of the GDP accounts of Japan. Table VB-9 provides quarterly data for net trade, exports and imports of Japan. Net trade had strong positive contributions to GDP growth in Japan in all quarters from IQ2007 to IIQ2009 with exception of IVQ2008, IIIQ2008 and IQ2009. The US recession is dated by the National Bureau of Economic Research (NBER) as beginning in IVQ2007 (Dec) and ending in IIQ2009 (Jun) (http://www.nber.org/cycles/cyclesmain.html). Net trade contributions helped to cushion the economy of Japan from the global recession. Net trade deducted from GDP growth in seven of the nine quarters from IVQ2010 IQ2012. The only strong contribution of net trade was 3.9 percent in IIIQ2011. Net trade added 1.6 percentage points to GDP growth in IQ2013 and 0.6 percentage points in IIQ2013 but deducted 1.8 percentage points in IIIQ2013. Private consumption assumed the role of driver of Japan’s economic growth but should moderate as in most mature economies.

Table VB-9, Japan, Contributions to Changes in Real GDP, Seasonally Adjusted Annual Rates (SAAR), %

	Net Trade	Exports	Imports
2013
I	1.6	2.2	-0.7
II	0.6	1.7	-1.1
III	-1.8	-0.4	-1.5
2012
I	0.3	1.6	-1.3
II	-1.3	-0.3	-0.9
III	-2.1	-2.3	0.2
IV	-0.6	-1.8	1.2
2011
I	-1.2	-0.5	-0.7
II	-4.3	-4.7	0.4
III	3.9	5.8	-1.9
IV	-3.1	-1.9	-1.2
2010
I	2.1	3.4	-1.3
II	0.1	2.7	-2.6
III	0.5	1.4	-0.9
IV	-0.5	0.1	-0.6
2009
I	-4.5	-16.4	12.0
II	7.5	4.7	2.8
III	2.2	5.2	-3.1
IV	2.7	4.1	-1.4
2008
I	1.1	2.1	-1.0
II	0.5	-1.6	2.1
III	0.0	0.2	-0.1
IV	-11.5	-10.2	-1.3
2007
I	1.1	1.7	-0.5
II	0.8	1.6	-0.8
III	2.0	1.4	0.6
IV	1.4	2.1	-0.7

Source: Japan Economic and Social Research Institute, Cabinet Office

http://www.esri.cao.go.jp/index-e.html http://www.esri.cao.go.jp/en/sna/sokuhou/sokuhou_top.html

There was milder increase in Japan’s export corporate goods price index during the global recession in 2008 but similar sharp decline during the bank balance sheets effect in late 2008, as shown in Chart VB-1 of the Bank of Japan. Japan exports industrial goods whose prices have been less dynamic than those of commodities and raw materials. As a result, the export CGPI on the yen basis in Chart VB-1 trends down with oscillations after a brief rise in the final part of the recession in 2009. The export corporate goods price index on the yen basis fell from 104.9 in Jun 2009 to 94.0 in Jan 2012 or minus 10.4 percent and increased to 106.4 in Oct 2013 for a gain of 13.2 percent relative to Jan 2012 and 1.4 percent relative to Jun 2009. The choice of Jun 2009 is designed to capture the reversal of risk aversion beginning in Sep 2008 with the announcement of toxic assets in banks that would be withdrawn with the Troubled Asset Relief Program (TARP) (Cochrane and Zingales 2009). Reversal of risk aversion in the form of flight to the USD and obligations of the US government opened the way to renewed carry trades from zero interest rates to exposures in risk financial assets such as commodities. Japan exports industrial products and imports commodities and raw materials.

Chart VB-1, Japan, Export Corporate Goods Price Index, Monthly, Yen Basis, 2008-2013

Source: Bank of Japan

http://www.stat-search.boj.or.jp/index_en.html

Chart VB-1A provides the export corporate goods price index on the basis of the contract currency. The export corporate goods price index on the basis of the contract currency increased from 97.9 in Jun 2009 to 103.1 in Apr 2012 or 5.3 percent but dropped to 100.2 in Apr 2013 or minus 2.8 percent relative to Apr 2012 and gained 1.0 percent to 98.9 in Oct 2013 relative to Jun 2009.

Chart VB-1A, Japan, Export Corporate Goods Price Index, Monthly, Contract Currency Basis, 2008-2013

Source: Bank of Japan

http://www.stat-search.boj.or.jp/index_en.html

Japan imports primary commodities and raw materials. As a result, the import corporate goods price index on the yen basis in Chart VB-2 shows an upward trend after declining from the increase during the global recession in 2008 driven by carry trades from fed funds rates. The index increases with carry trades from zero interest rates into commodity futures and declines during risk aversion from late 2008 into beginning of 2008 originating in doubts about soundness of US bank balance sheets. More careful measurement should show that the terms of trade of Japan, export prices relative to import prices, declined during the commodity shocks originating in unconventional monetary policy. The decline of the terms of trade restricted potential growth of income in Japan. The import corporate goods price index on the yen basis increased from 93.5 in Jun 2009 to 113.1 in Apr 2012 or 21.0 percent and to 122.6 in Oct 2013 or gain of 8.4 percent relative to Apr 2012 and 31.1 percent relative to Jun 2009.

Chart VB-2, Japan, Import Corporate Goods Price Index, Monthly, Yen Basis, 2008-2013

Source: Bank of Japan

http://www.stat-search.boj.or.jp/index_en.html

Chart VB-2A provides the import corporate goods price index on the contract currency basis. The import corporate goods price index on the basis of the contract currency increased from 86.2 in Jun 2009 to 119.5 in Apr 2012 or 38.6 percent and to 112.8 in Oct 2013 or minus 5.6 percent relative to Apr 2012 and gain of 30.9 percent relative to Jun 2009. There is evident deterioration of the terms of trade of Japan: the export corporate goods price index on the basis of the contract currency increased 1.0 percent from Jun 2009 to Oct 2013 while the import corporate goods price index increased 30.9 percent. Prices of Japan’s exports of corporate goods, mostly industrial products, increased only 5.3 percent from Jun 2009 to Apr 2012, while imports of corporate goods, mostly commodities and raw materials increased 38.6 percent. Unconventional monetary policy induces carry trades from zero interest rates to exposures in commodities that squeeze economic activity of industrial countries by increases in prices of imported commodities and raw materials during periods without risk aversion. Reversals of carry trades during periods of risk aversion decrease prices of exported commodities and raw materials that squeeze economic activity in economies exporting commodities and raw materials. Devaluation of the dollar by unconventional monetary policy could increase US competitiveness in world markets but economic activity is squeezed by increases in prices of imported commodities and raw materials. Unconventional monetary policy causes instability worldwide instead of the mission of central banks of promoting financial and economic stability.

Chart VB-2A, Japan, Import Corporate Goods Price Index, Monthly, Contract Currency Basis, 2008-2013

Source: Bank of Japan

http://www.stat-search.boj.or.jp/index_en.html

Table VB-10 provides the Bank of Japan’s Corporate Goods Price indexes of exports and imports on the yen and contract bases from Jan 2008 to Oct 2013. There are oscillations of the indexes that are shown vividly in the four charts above. For the entire period from Jan 2008 to Oct 2013, the export index on the contract currency basis decreased 0.3 percent and decreased 7.9 percent on the yen basis. For the entire period from Jan 2008 to Oct 2013, the import index increased 12.0 percent on the contract currency basis and increased 3.0 percent on the yen basis. The charts show sharp deteriorations in relative prices of exports to prices of imports during multiple periods. Price margins of Japan’s producers are subject to periodic squeezes resulting from carry trades from zero interest rates of monetary policy to exposures in commodities.

Table VB-10, Japan, Exports and Imports Corporate Goods Price Index, Contract Currency Basis and Yen Basis

Month	Exports Contract Currency	Exports Yen	Imports Contract Currency	Imports Yen
2008/01	99.2	115.5	100.7	119.0
2008/02	99.8	116.1	102.4	120.6
2008/03	100.5	112.6	104.5	117.4
2008/04	101.6	115.3	110.1	125.2
2008/05	102.4	117.4	113.4	130.4
2008/06	103.5	120.7	119.5	140.3
2008/07	104.7	122.1	122.6	143.9
2008/08	103.7	122.1	123.1	147.0
2008/09	102.7	118.3	117.1	137.1
2008/10	100.2	109.6	109.1	121.5
2008/11	98.6	104.5	97.8	105.8
2008/12	97.9	100.6	89.3	93.0
2009/01	98.0	99.5	85.6	88.4
2009/02	97.5	100.1	85.7	89.7
2009/03	97.3	104.2	85.2	93.0
2009/04	97.6	105.6	84.4	93.0
2009/05	97.5	103.8	84.0	90.8
2009/06	97.9	104.9	86.2	93.5
2009/07	97.5	103.1	89.2	95.0
2009/08	98.3	104.4	89.6	95.8
2009/09	98.3	102.1	91.0	94.7
2009/10	98.0	101.2	91.0	94.0
2009/11	98.4	100.8	92.8	94.8
2009/12	98.3	100.7	95.4	97.5
2010/01	99.4	102.2	97.0	100.0
2010/02	99.7	101.6	97.6	99.8
2010/03	99.7	101.8	97.0	99.2
2010/04	100.5	104.6	99.9	104.6
2010/05	100.7	102.9	101.7	104.9
2010/06	100.1	101.6	100.0	102.3
2010/07	99.4	99.0	99.9	99.8
2010/08	99.1	97.3	99.5	97.5
2010/09	99.4	97.0	100.0	97.2
2010/10	100.1	96.4	100.5	95.8
2010/11	100.7	97.4	102.6	98.2
2010/12	101.2	98.3	104.4	100.6
2011/01	102.1	98.6	107.2	102.6
2011/02	102.9	99.5	109.0	104.3
2011/03	103.5	99.6	111.8	106.3
2011/04	104.1	101.7	115.9	111.9
2011/05	103.9	99.9	118.8	112.4
2011/06	103.8	99.3	117.5	110.5
2011/07	103.6	98.3	118.3	110.2
2011/08	103.6	96.6	118.6	108.1
2011/09	103.7	96.1	117.0	106.2
2011/10	103.0	95.2	116.6	105.6
2011/11	101.9	94.8	115.4	105.4
2011/12	101.5	94.5	116.1	106.2
2012/01	101.8	94.0	115.0	104.2
2012/02	102.4	95.8	115.8	106.4
2012/03	102.9	99.2	118.3	112.9
2012/04	103.1	98.7	119.5	113.1
2012/05	102.3	96.3	118.1	109.8
2012/06	101.4	95.0	115.2	106.7
2012/07	100.6	94.0	112.0	103.5
2012/08	100.9	94.1	112.4	103.6
2012/09	101.0	94.1	114.7	105.2
2012/10	101.1	94.8	113.8	105.2
2012/11	100.9	95.9	113.2	106.5
2012/12	100.7	98.0	113.4	109.5
2013/01	101.0	102.4	113.8	115.4
2013/02	101.5	105.9	114.8	120.2
2013/03	101.3	106.6	115.1	122.0
2013/04	100.2	107.5	114.1	123.8
2013/05	99.6	109.1	112.6	125.3
2013/06	99.2	106.1	112.0	121.2
2013/07	99.0	107.4	111.6	122.9
2013/08	98.9	106.0	111.7	121.3
2013/09	99.0	107.2	112.9	123.9
2013/10	98.9	106.4	112.8	122.6

Source: Bank of Japan http://www.boj.or.jp/en/

http://www.stat-search.boj.or.jp/index_en.html#

Chart VB-3 provides the monthly corporate goods price index (CGPI) of Japan from 1970 to 2013. Japan also experienced sharp increase in inflation during the 1970s as in the episode of the Great Inflation in the US. Monetary policy focused on accommodating higher inflation, with emphasis solely on the mandate of promoting employment, has been blamed as deliberate or because of model error or imperfect measurement for creating the Great Inflation (http://cmpassocregulationblog.blogspot.com/2011/05/slowing-growth-global-inflation-great.html http://cmpassocregulationblog.blogspot.com/2011/04/new-economics-of-rose-garden-turned.html http://cmpassocregulationblog.blogspot.com/2011/03/is-there-second-act-of-us-great.html and Appendix I The Great Inflation; see Taylor 1993, 1997, 1998LB, 1999, 2012FP, 2012Mar27, 2012Mar28, 2012JMCB and http://cmpassocregulationblog.blogspot.com/2012/06/rules-versus-discretionary-authorities.html). A remarkable similarity with US experience is the sharp rise of the CGPI of Japan in 2008 driven by carry trades from policy interest rates rapidly falling to zero to exposures in commodity futures during a global recession. Japan had the same sharp waves of consumer price inflation during the 1970s as in the US (see Chart IV-3 and associated table at http://cmpassocregulationblog.blogspot.com/2013/10/twenty-eight-million-unemployed-or_561.html and at http://cmpassocregulationblog.blogspot.com/2013/09/increasing-interest-rate-risk_1.html http://cmpassocregulationblog.blogspot.com/2012/07/recovery-without-jobs-stagnating-real_09.html).

Chart VB-3, Japan, Domestic Corporate Goods Price Index, Monthly, 1970-2013

Source: Bank of Japan

http://www.stat-search.boj.or.jp/index_en.html

The producer price index of the US from 1970 to 2013 in Chart VB-4 shows various periods of more rapid or less rapid inflation but no bumps. The major event is the decline in 2008 when risk aversion because of the global recession caused the collapse of oil prices from $148/barrel to less than $80/barrel with most other commodity prices also collapsing. The event had nothing in common with explanations of deflation but rather with the concentration of risk exposures in commodities after the decline of stock market indexes. Eventually, there was a flight to government securities because of the fears of insolvency of banks caused by statements supporting proposals for withdrawal of toxic assets from bank balance sheets in the Troubled Asset Relief Program (TARP), as explained by Cochrane and Zingales (2009). The bump in 2008 with decline in 2009 is consistent with the view that zero interest rates with subdued risk aversion induce carry trades into commodity futures.

Chart VB-4, US, Producer Price Index Finished Goods, Monthly, 1970-2013

Source: US Bureau of Labor Statistics

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

Further insight into inflation of the corporate goods price index (CGPI) of Japan is provided in Table VB-11. Petroleum and coal with weight of 5.7 percent increased 0.9 percent in Oct 2013 and increased 12.7 percent in 12 months. Japan exports manufactured products and imports raw materials and commodities such that the country’s terms of trade, or export prices relative to import prices, deteriorate during commodity price increases. In contrast, prices of production machinery, with weight of 3.1 percent, increased 0.2 percent in Oct 2013 and decreased 1.3 percent in 12 months. In general, most manufactured products have been experiencing negative or low increases in prices while inflation rates have been high in 12 months for products originating in raw materials and commodities. Ironically, unconventional monetary policy of zero interest rates and quantitative easing that intended to increase aggregate demand and GDP growth deteriorated the terms of trade of advanced economies with adverse effects on real income. There are now inflation effects of the intentional policy of devaluing the yen.

Table VB-11, Japan, Corporate Goods Prices and Selected Components, % Weights, Month and 12 Months ∆%

Oct 2013	Weight	Month ∆%	12 Month ∆%
Total	1000.0	-0.1	2.5
Food, Beverages, Tobacco, Feedstuffs	137.5	0.0	0.5
Petroleum & Coal	57.4	0.9	12.7
Production Machinery	30.8	0.2	-1.3
Electronic Components	31.0	0.1	-1.3
Electric Power, Gas & Water	52.7	-3.5	11.8
Iron & Steel	56.6	0.9	3.5
Chemicals	92.1	0.1	3.9
Transport Equipment	136.4	-0.1	-0.5

Source: Bank of Japan http://www.boj.or.jp/en/ http://www.boj.or.jp/en/statistics/pi/cgpi_release/cgpi1310.pdf

Percentage point contributions to change of the corporate goods price index (CGPI) in Oct 2013 are provided in Table VB-12 divided into domestic, export and import segments. In the domestic CGPI, decreasing 0.1 percent in Oct 2013, the energy shock is evident in the deduction of 0.24 percentage points by electric power, gas and water in new reversal of carry trades of exposures in commodity futures. The exports CGPI decreased 0.1 percent on the basis of the contract currency with deduction of 0.05 percentage points by transportation equipment. The imports CGPI decreased 0.1 percent on the contract currency basis. Metals and related products deducted 0.15 percentage points. Shocks of risk aversion cause unwinding carry trades that result in declining commodity prices with resulting downward pressure on price indexes. The volatility of inflation adversely affects financial and economic decisions worldwide.

Table VB-12, Japan, Percentage Point Contributions to Change of Corporate Goods Price Index

Groups Oct 2013	Contribution to Change Percentage Points
A. Domestic Corporate Goods Price Index	Monthly Change:  -0.1%
Electric Power, Gas & Water	-0.24
Agriculture, Forestry & Fishery Products	-0.05
Nonferrous Metals	-0.01
Petroleum & Coal Products	0.07
Iron & Steel	0.05
Plastic Products	0.01
Scrap & Waste	0.01
B. Export Price Index	Monthly Change:   -0.1 % contract currency
Transportation Equipment	-0.05
Textiles	-0.03
General Purpose, Production & Business Oriented Machinery	-0.02
Chemicals & Related Products	0.05
C. Import Price Index	Monthly Change: –0.1 % contract currency basis
Metals & Related Products	-0.15
Transportation Equipment	-0.02
Wood, Lumber & Related Products	-0.01
Textiles	0.02
Chemicals & Related Products	0.02
Petroleum, Coal & Natural Gas	0.02

Source: Bank of Japan

http://www.boj.or.jp/en/

http://www.boj.or.jp/en/statistics/pi/cgpi_release/cgpi1310.pdf

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 2012 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. The index increased to 55.4 in Sep 2013 and 56.3 in Oct 2013.

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

	Total Index	New Orders	Interm. Input Prices	Subs Prices	Exp
Oct 2013	56.3	51.6	56.1	51.4	60.5
Sep	55.4	53.4	56.7	50.6	60.1
Aug	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 climbing to 55.4 in Sep 2013 and 56.3 in Oct 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 and 51.1 in Sep 2013 with marginal improvement to 51.4 in Oct 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 and 52.8 in Sep 2013 with marginal decline to 52.5 in Oct 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 and fell to 49.1 in Sep 2013 with marginal improvement to 49.2 in Oct 2013.

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

	IPM	PI	NOI	INV	EMP	SDEL
Oct 2013	51.4	54.4	52.5	48.6	49.2	50.8
Sep	51.1	52.9	52.8	48.5	49.1	50.8
Aug	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, 51.1 in Sep 2013 and 51.4 in Oct 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 IIIQ2013 relative to the same period in 2012 was 7.7 percent, as shown in Table VC-GDP. Secondary industry accounts for 45.3 percent of GDP in IIIQ2013. In IIQ2013, industry alone accounts for 38.5 percent in IIQ2013 and construction with the remaining 6.8 percent in the first three quarters of 2012. Tertiary industry accounts for 45.5 percent of cumulative GDP in IIIQ2013 and primary industry for 9.2 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-GDP provides quarter-on-quarter growth rates of GDP and their annual equivalent. China’s GDP growth decelerated significantly from annual equivalent 10.8 percent in IIQ2011 to 7.4 percent in IVQ2011 and 5.7 percent in IQ2012, rebounding to 9.1 percent in IIQ2012, 8.2 percent in IIIQ2012 and 7.8 percent in IVQ2012. Annual equivalent growth in IQ2013 fell to 6.1 percent and to 7.8 percent in IIQ2013, rebounding to 9.1 percent in IIIQ2013.

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

Cumulative GDP IIIQ2013	Value Current CNY Billion	2013 Year-on-Year Constant Prices ∆%
GDP	38,676.2	7.7
Primary Industry	3,566.9	3.4
Farming	3,566.9	3.4
Secondary Industry	17,511.8	7.8
Industry	14,900.0	7.6
Construction	2,611.8	9.7
Tertiary Industry	17,597.5	8.4
Transport, Storage, Post	21,449.9	7.2
Wholesale, Retail Trades	3,056.7	10.4
Hotel & Catering Services	772.7	5.1
Financial Intermediation	2,623.8	10.4
Real Estate	2,454.6	7.3
Other	6,094.8	7.6
Growth in Quarter Relative to Prior Quarter	∆% on Prior Quarter	∆% Annual Equivalent
2013
IIIQ2013	2.2	9.1
IIQ2013	1.9	7.8
IQ2013	1.5	6.1
2012
IVQ2012	1.9	7.8
IIIQ2012	2.0	8.2
IIQ2012	2.2	9.1
IQ2012	1.4	5.7
2011
IVQ2011	1.8	7.4
IIIQ2011	2.2	9.1
IIQ2011	2.6	10.8
IQ2011	2.3	9.5

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

Growth of China’s GDP in IIIQ2013 relative to the same period in 2012 was 7.8 percent, as shown in Table VC-GDPA. Secondary industry accounts for 45.3 percent of GDP of which industry alone for 38.5 percent in cumulative IIIQ2013 and construction with the remaining 6.8 percent in the first three quarters of 2013. Tertiary industry accounts for 45.5 percent of GDP in the cumulative to IIIQ2013 and primary industry for 9.2 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, 7.5 percent in IIQ2013 and 7.8 percent in IIIQ2013.

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

	IQ 2013	IIQ 2013	IIIQ 2013
GDP	7.7	7.5	7.8
Primary Industry	3.4	3.0	3.4
Secondary Industry	7.8	7.6	7.8
Tertiary Industry	8.3	8.3	8.4
GDP ∆% Relative to a Prior Quarter	1.5	1.9	2.2
	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	2.6	2.2	1.8	1.4	2.2	2.0	1.9
	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/982f1d1602014fc4a5f7ef4b4394f8e3) is slowing. The overall Flash HSBC China Manufacturing PMI^™ decreased from 50.9 in Oct to 50.4 in Nov, which is moderately above the contraction frontier of 50.0, while the Flash HSBC China Manufacturing Output Index decreased from 51.3 in Oct to 51.1 in Nov, moving into moderate expansion territory. Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds that the flash manufacturing index slowed because of weakness in new export orders and replenishment of stocks (http://www.markiteconomics.com/Survey/PressRelease.mvc/982f1d1602014fc4a5f7ef4b4394f8e3). 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 51.2 in Sep to 51.8 in Oct, indicating moderate growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/59995475378d43528ffca417425078de). 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/59995475378d43528ffca417425078de). The HSBC Business Activity index increased from 52.4 in Sep to 52.6 in Oct (http://www.markiteconomics.com/Survey/PressRelease.mvc/59995475378d43528ffca417425078de). Hongbin Ku, Chief Economist, China & Co-Head of Asian Economic Research at HSBC, finds strength in services with recovery of manufacturing and improving labor markets (http://www.markiteconomics.com/Survey/PressRelease.mvc/59995475378d43528ffca417425078de). The HSBC Purchasing Managers’ Index^™ (PMI^™), compiled by Markit, increased to 50.9 in Oct from 50.2 in Sep, indicating marginally improving manufacturing in China (http://www.markiteconomics.com/Survey/PressRelease.mvc/3308d2cd1c824ec1a9842f2fbc17645b). New export orders posted the strongest increase in about a year with demand from the US. Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds China moving in the path of moderate recovery of growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/3308d2cd1c824ec1a9842f2fbc17645b). Table CNY provides the country data table for China.

Table CNY, China, Economic Indicators

Price Indexes for Industry	Oct 12-month ∆%: minus 1.5 Oct month ∆%: 0.0 Blog 11/17/13
Consumer Price Index	Oct month ∆%: 0.1 Oct 12 months ∆%: 3.2 Blog 11/17/13
Value Added of Industry	Oct month ∆%: 0.86 Jan-Oct 2013/Jan-Oct 2012 ∆%: 9.7 Oct 12-Month ∆%: 10.3 Blog 11/17/13
GDP Growth Rate	Year IIIQ2013 ∆%: 7.8 Quarter IIQ2013 AE ∆%: 9.1 Blog 10/27/13
Investment in Fixed Assets	Total Jan-Oct 2013 ∆%: 20.1 Real estate development: 19.2 Blog 11/17/13
Retail Sales	Oct month ∆%: 1.19 Oct 12 month ∆%: 13.3 Jan-Oct ∆%: 13.0 Blog 11/17/13
Trade Balance	Oct balance $31.1 billion Exports 12M ∆% 5.6 Imports 12M ∆% 7.6 Cumulative Oct: $200.46 billion Blog 11/10/13

Links to blog comments in Table CNY:

11/17/13 http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-unwinding-monetary-policy.html

11/10/13 http://cmpassocregulationblog.blogspot.com/2013/11/global-financial-risk-mediocre-united.html

10/27/13 http://cmpassocregulationblog.blogspot.com/2013/10/twenty-eight-million-unemployed-or.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 3.3 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 1.6 percent in 2011. EUROSTAT estimates growth of GDP of the euro area of minus 0.7 percent in 2012 and minus 0.4 percent in 2013 but 1.1 percent in 2014 and 1.7 percent in 2015.

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

Year	HICP ∆%	Unemployment %	GDP ∆%
1999	1.2	NA	2.9
2000	2.2	9.4	3.8
2001	2.4	8.3	2.0
2002	2.3	8.6	0.9
2003	2.1	9.0	0.7
2004	2.2	9.3	2.2
2005	2.2	9.1	1.7
2006	2.2	8.4	3.3
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	1.6
2012	2.5	11.4	-0.7
2013*			-0.4
2014*			1.1
2015*			1.7

*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 2012 in current US dollars in the dataset of the World Economic Outlook (WEO) of the International Monetary Fund (IMF) is $12,199.1 billion or 16.9 percent of world GDP of $72,216.4 billion (http://www.imf.org/external/pubs/ft/weo/2012/02/weodata/index.aspx). The sum of the GDP of France $2613.9 billion with the GDP of Germany of $3429.5 billion, Italy of $2014.1 billion and Spain $1323.5 billion is $9381.0 billion or 76.9 percent of total euro area GDP and 13.0 percent of World 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, 2014 and 2015 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
2015*	1.7	1.9	1.7	1.2	1.7
2014*	1.1	1.7	0.9	0.7	0.5
2013*	-0.4	0.5	0.2	-1.8	-1.3
2012	-0.7	0.7	0.0*	-2.5	-1.6
2011	1.6	3.3	2.0	0.5	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	3.3	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, decreased from 51.9 in Oct to 51.5 in Nov, which is a three month low after a high in 27 months in Sep (http://www.markiteconomics.com/Survey/PressRelease.mvc/e05fef5f15ae4a84bc2a2da46660a8f3). Chris Williamson, Chief Economist at Markit, finds that the Markit Flash Eurozone PMI index suggests that the index is consistent with modest growth of GDP of 0.2 percent based on the first two months of IVQ2013 (http://www.markiteconomics.com/Survey/PressRelease.mvc/e05fef5f15ae4a84bc2a2da46660a8f3). The Markit Eurozone PMI^® Composite Output Index, combining services and manufacturing activity with close association with GDP, decreased from 52.2 in Sep to 51.9 in Oct in the fourth consecutive monthly expansion (http://www.markiteconomics.com/Survey/PressRelease.mvc/71569592047842d8b4a3070d32eff19e). Chris Williamson, Chief Economist at Markit, finds growth in IVQ2013 at the rate of about 0.2 percent similar to IIIQ2013 (http://www.markiteconomics.com/Survey/PressRelease.mvc/71569592047842d8b4a3070d32eff19e). The Markit Eurozone Services Business Activity Index increased from 50.7 in Aug to 52.2 in Sep (http://www.markiteconomics.com/Survey/PressRelease.mvc/71569592047842d8b4a3070d32eff19e). The Markit Eurozone Manufacturing PMI^® increased to 51.3 in Oct from 51.3 in Sep (http://www.markiteconomics.com/Survey/PressRelease.mvc/15ea3e8c87c84f588424617cd2576d3a). New orders increased for the fourth consecutive month close to the highest rate in 27 months in Aug. Chris Williamson, Chief Economist at Markit, finds industrial growth in the euro area at an annual rate between 2 and 3 percent (http://www.markiteconomics.com/Survey/PressRelease.mvc/15ea3e8c87c84f588424617cd2576d3a). Table EUR provides the data table for the euro area.

Table EUR, Euro Area Economic Indicators

GDP	IIIQ2013 ∆% 0.1; IIIQ2013/IIIQ2012 ∆% -0.4 Blog 11/17/13
Unemployment	Sep 2013: 12.2 % unemployment rate Sep 2013: 19.447 million unemployed Blog 11/3/13
HICP	Oct month ∆%: -0.1 12 months Oct ∆%: 0.7 Blog 11/17/13
Producer Prices	Euro Zone industrial producer prices Sep ∆%: 0.1 Sep 12-month ∆%: -0.9 Blog 11/10/13
Industrial Production	Sep month ∆%: -0.5; Sep 12 months ∆%: 1.1 Blog 11/17/13
Retail Sales	Sep month ∆%: minus 0.6 Sep 12 months ∆%: 0.3 Blog 11/10/13
Confidence and Economic Sentiment Indicator	Sentiment 97.8 Oct 2013 Consumer minus 14.5 Oct 2013 Blog 11/3/13
Trade	Jan-Sep 2013/Jan-Sep 2012 Exports ∆%: 0.9 Imports ∆%: -3.5 Sep 2013 12-month Exports ∆% 2.7 Imports ∆% -0.2 Blog 11/24/13

Links to blog comments in Table EUR:

11/17/13 http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-unwinding-monetary-policy.html

11/10/13 http://cmpassocregulationblog.blogspot.com/2013/11/global-financial-risk-mediocre-united.html

11/3/2013 http://cmpassocregulationblog.blogspot.com/2013/11/global-financial-risk-world-inflation.html

Euro zone trade growth continues to be relatively strong as shown in Table VD-1 but with deceleration at the margin. Exports grew at 0.9 percent and imports fell 3.5 percent in Jan-Sep 2013 relative to Jan-Sep 2012. The 12-month rate of growth of exports was minus 2.7 percent in Sep 2013 while imports fell 0.2 percent. In Aug 2013, exports increased 2.7 percent in 12 months and imports decreased 0.2 percent. At the margin, rates of growth of trade are declining in part because of moderation of commodity prices.

Table VD-1, Euro Zone, Exports, Imports and Trade Balance, Billions of Euros and Percent, NSA

	Exports	Imports
Jan-Sep 2013	1,407.1	1,297.6
Jan-Sep 2012	1,394.4	1,344.2
∆%	0.9	-3.5
Sep 2013	158.0	144.9
Sep 2012	153.8	145.2
∆%	2.7	-0.2
Aug 2013	143.5	136.6
Aug 2012	152.6	147.5
∆%	-6.0	-7.4
Trade Balance	Jan-Sep 2013	Jan-Se[ 2012
€ Billions	109.6	50.2

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

The structure of trade of the euro zone in Jan-Aug 2013 is provided in Table VD-2. Data are still not available for trade structure for Sep 2013. Manufactured exports increased 0.3 percent in Jan-Aug 2013 relative to Jan-Aug 2012 while imports decreased 2.9 percent. The trade surplus in manufactured products was higher than the trade deficit in primary products in Jan-Aug 2013 but only marginally higher in Jan-Aug 2012 partly because of the commodity shock caused by carry trades.

Table VD-2, Euro Zone, Structure of Exports, Imports and Trade Balance, € Billions, NSA, ∆%

	Primary	Manufactured	Other	Total
Exports
Jan-Aug 2013 € B	199.4	1,013.7	36.0	1,249.1
Jan-Aug 2012 € B	194.6	1,010.5	35.4	1,240.6
∆%	2.5	0.3	1.7	0.7
Imports
Jan-Aug 2013 € B	420.9	709.7	22.1	1,152.7
Jan-Aug 2012  € B	445.6	730.9	22.5	1,199.0
∆%	-5.5	-2.9	-1.8	-3.9
Trade Balance € B
Jan-Aug 2013	-221.5	304.1	14.0	96.5
Jan-Aug 2012	-251.0	279.6	12.9	41.6

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

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/PressServices/Press/pr/2013/11/PE13_381_811.html

The Flash Germany Composite Output Index of the Markit Flash Germany PMI^®, combining manufacturing and services, increased from 53.2 in Oct to 54.3 in Nov for the highest reading in ten months. The index of manufacturing output reached 54.0 in Nov from 53.6 in Oc, which is a three-month high, while the index of services increased to 54.5 in Nov from 52.9 in Oct for a nine-month high. The overall Flash Germany Manufacturing PMI^® increased from 51.7 in Oct to 52.5 in Nov, which is a 29-month high (http://www.markiteconomics.com/Survey/PressRelease.mvc/e5eae384809e48d6bf621cfbec90f758). New work volumes increased marginally. Tim Moore, Senior Economist at Markit, finds potential for growth of around 0.5 percent in the calendar year (http://www.markiteconomics.com/Survey/PressRelease.mvc/e5eae384809e48d6bf621cfbec90f758). The Markit Germany Composite Output Index of the Markit Germany Services PMI^®, combining manufacturing and services with close association with Germany’s GDP, was unchanged from 52.2 in Sep to 52.2 in Oct (http://www.markiteconomics.com/Survey/PressRelease.mvc/92b2f24be3384e999a9cde3204e471db). Tim Moore, Senior Economist at Markit and author of the report, finds strengthening conditions in Germany (http://www.markiteconomics.com/Survey/PressRelease.mvc/92b2f24be3384e999a9cde3204e471db). The Germany Services Business Activity Index decreased from 53.7 in Sep to 52.9 in Oct (http://www.markiteconomics.com/Survey/PressRelease.mvc/92b2f24be3384e999a9cde3204e471db). The Markit/BME Germany Purchasing Managers’ Index^® (PMI^®), showing close association with Germany’s manufacturing conditions, increased from 51.1 in Sep to 51.7 in Oct, in movement away from contraction territory below 50.0 during four consecutive months (http://www.markiteconomics.com/Survey/PressRelease.mvc/64e06121429145c6af653a8c13f0b3b9). New export orders increased moderately for the third consecutive month. Tim Moore, Senior Economist at Markit and author of the report, finds improvement in manufacturing conditions with increasing export sales (http://www.markiteconomics.com/Survey/PressRelease.mvc/64e06121429145c6af653a8c13f0b3b9).Table DE provides the country data table for Germany.

Table DE, Germany, Economic Indicators

GDP	IIIQ2013 0.3 ∆%; III/Q2013/IIIQ2012 ∆% 1.1 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 11/17/13 11/24/13
Consumer Price Index	Aug month NSA ∆%: 0.0 Aug 12-month NSA ∆%: 1.5 Blog 10/13/13
Producer Price Index	Oct month ∆%: -0.2 CSA, -0.2 12-month NSA ∆%: -0.7 Blog 11/24/13
Industrial Production	MFG Sep month CSA ∆%: minus 1.1 12-month NSA: 5.0 Blog 10/13/13
Machine Orders	MFG Sep month ∆%: 3.3 Sep 12-month ∆%: 11.0 Blog 11/10/13
Retail Sales	Sep Month ∆% -0.4 12-Month ∆% 0.2 Blog 11/3/13
Employment Report	Unemployment Rate SA Sep 5.2% Blog 11/3/13
Trade Balance	Exports Sep 12-month NSA ∆%: 3.6 Imports Sep 12 months NSA ∆%: -0.3 Exports Sep month CSA ∆%: 1.7; Imports Sep month SA minus 1.9 Blog 11/17/13

Links to blog comments in Table DE:

11/17/13 http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-unwinding-monetary-policy.html

11/10/13 http://cmpassocregulationblog.blogspot.com/2013/11/global-financial-risk-mediocre-united.html

11/3/2013 http://cmpassocregulationblog.blogspot.com/2013/11/global-financial-risk-world-inflation.html

10/13/13 http://cmpassocregulationblog.blogspot.com/2013/10/imf-view-collapse-of-united-states.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

Table VE-1 provides percentage change of Germany’s GDP in one quarter relative to the prior quarter from 2001 to 2013. Germany’s GDP contracted during four consecutive quarters from IIQ2008 to IQ2009. The deepest contraction was 4.1 percent in IQ2009. Growth was quite strong from IIIQ2009 to IQ2011 for cumulative growth of 7.5 percent in seven quarters or at the average rate of 1.0 percent per quarter, which is equivalent to 4.2 percent per year. Economic growth decelerated in IIQ2011 to 0.1 percent and 0.4 percent in IIIQ2011. The economy grew 0.1 percent in IVQ2011 and grew 0.7 percent in IQ2012 but contracted 0.1 percent in IIQ2012. GDP growth in IIIQ2012 was 0.2 percent relative to IIQ2012. Germany’s GDP contracted 0.5 percent in IVQ2012 relative to IIIQ2012. GDP changed 0.0 percent in IQ2013 and increased 0.7 percent in IIQ2013. Growth of GDP was 0.3 percent in IIIQ2013. The Federal Statistical Office of Germany (Destatis) finds that growth in IIQ213 originated mostly in domestic demand with contributions by consumption of households and government and fixed capital formation while net trade (balance of exports less imports) deducted from growth (https://www.destatis.de/EN/PressServices/Press/pr/2013/11/PE13_381_811.html).

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

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

Seasonal and calendar adjusted Source: Statistisches Bundesamt Deutschland (Destatis)

https://www.destatis.de/EN/PressServices/Press/pr/2013/11/PE13_394_811.html

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

Table VE-2 provides percentage changes of Germany’s GDP in a quarter relative to the same quarter a year earlier. Growth was weak in the recovery from the recession of 2001 through 2005, as in most of the euro area (see Pelaez and Pelaez, The Global Recession Risk (2007), 116-46). Germany’s economy then grew robustly in 2006 and 2007 until the global recession after 2007. Germany recovered with strong growth in 2010 and vigorous 5.7 percent in IQ2011. The economy decelerated in the final three quarters of 2011, growing 1.8 percent in IQ2012 relative to IQ2011. Growth decelerated further to 0.6 percent in IIQ2012 without calendar adjustment and 1.1 percent with calendar adjustment and to 0.4 percent in IIIQ2012. Growth in IVQ2012 relative to IVQ2011 was 0.0 percent. GDP fell 1.6 percent in IQ2013 relative to a year earlier and increased 0.9 percent in IIQ2013 relative to a year earlier. GDP increased 1.1 percent in IIIQ2013 relative to a year earlier.

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

	IQ	IIQ	IIIQ	IV
2013	-1.6	0.9	1.1
2012	1.8	0.6	0.4	0.0
2011	5.7	3.4	2.9	1.6
2010	2.7	4.7	4.4	4.2
2009	-6.5	-7.5	-5.0	-1.6
2008	2.1	3.1	1.1	-1.9
2007	4.3	3.4	3.3	2.2
2006	4.3	2.4	3.5	4.6
2005	-0.8	1.2	1.2	1.0
2004	1.5	1.6	0.6	0.9
2003	0.0	-1.1	-0.5	0.1

Price adjusted NSA Source: Statistisches Bundesamt Deutschland (Destatis)

https://www.destatis.de/EN/PressServices/Press/pr/2013/11/PE13_394_811.html

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

There are strong calendar effects in economic activity in Germany. Table VE-3 provides Germany’s percentage change in a quarter relative to the same quarter a year earlier adjusting for price changes and calendar effects. Germany’s GDP increased 1.1 percent in IIQ2012 calendar-adjusted in contrast with only 0.6 percent without calendar adjustment. GDP growth adjusting for calendar effects was 0.9 percent in IIIQ2012 relative to IIIQ2011 and 0.4 percent without calendar adjustment. Growth in IVQ2012 was 0.3 percent calendar and price adjusted in contrast with 0.0 percent without calendar adjustment. Growth in IQ2013 was minus 0.3 percent relative to a year earlier with adjustment for calendar effects and minus 1.6 percent without adjustment. GDP without calendar adjustment increased 0.9 percent in IIQ2013 relative to a year earlier and 0.5 percent with calendar adjustment. In IIIQ2013, growth without calendar adjustment was 1.1 percent in contrast with 0.6 percent calendar adjusted.

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

	IQ	IIQ	IIIQ	IV
2013	-0.3	0.5	0.6
2012	1.3	1.1	0.9	0.3
2011	5.3	3.3	3.0	2.1
2010	2.6	4.3	4.4	4.1
2009	-6.7	-6.3	-5.1	-2.3

Source: Statistisches Bundesamt Deutschland (Destatis)

https://www.destatis.de/EN/PressServices/Press/pr/2013/11/PE13_394_811.html

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

Table VE-4 provides annual growth rates of the German economy from 1992 to 2012, price adjusted chain-linked and price and calendar-adjusted chain-linked. Germany’s GDP fell 5.1 percent in 2009 after growing below trend at 1.1 percent in 2008. Recovery has been robust in contrast with other advanced economies. The German economy grew at 4.0 percent in 2010, 3.3 percent in 2011 and 0.7 percent in 2012.

Table VE-4, Germany, GDP Year ∆%

	Price Adjusted Chain-Linked	Price- and Calendar-Adjusted Chain Linked
2012	0.7	0.9
2011	3.3	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/2013/11/PE13_394_811.html

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

The Statistisches Bundesamt (Federal Statistical Office of Germany) provides the analysis of percentage point contributions to GDP on growth from a quarter a year earlier, shown in Table VE-5. The original data are adjusted for price but not for seasonality. There is strong internal demand, or consumption and investment, which is uncommon in advanced economies. Consumption provided 0.4 percentage points in IVQ2012 with growth of 0.5 percent; deducted 0.1 percentage points in IQ2013 with growth of minus 0.2 percent; added 0.8 percentage points in IIQ2013with growth of 1.1 percent; and added 1.0 percentage points in IIIQ2013 with growth of 1.2 percent. Growth of fixed capital formation (GFCF) deducted 0.8 percentage points to growth of GDP in IVQ2012 and decreased 4.0 percent; deducted 1.2 percentage points in IQ2013 and declined 7.7 percent relative to a year earlier; added 0.1 percentage points in IIQ2013 and grew 0.4 percent; and added 0.4 percentage points in IIIQ2013 with growth of 1.9 percent. Domestic uses added 1.6 percentage points in IIIQ2013 and grew 1.7 percent. Net exports contributed 0.8 percentage points in IVQ2012; deducted 0.5 percentage points in IQ2013; added 0.1 percentage points in IIQ2013; and deducted 0.5 percentage points in IIIQ2013. The rates of growth of exports and imports fell from over 10 percent to single digits and negative changes in IVQ2012 and IQ2013, rebounding with growth of exports of 1.1 percent in IIQ2013 and of imports of 1.2 percent. Exports grew 0.7 percent in IIIQ2013 and imports 1.9 percent. GDP per person in employment grew minus 0.3 percent in IIQ2013 and 0.5 percent in IIIQ2013.

Table VE-5, Germany, Percentage Point Contributions of Use of Gross Domestic Product on Growth from Same Quarter of Prior Year, Price Adjusted  

	IVQ 12  PP	∆% IVQ 12	IQ13 PP	∆% IQ 13	IIQ 13 PP	∆% IIQ 13	IIIQ 13 PP	∆% IIIQ 13
Consumption Total	0.4	0.5	-0.1	-0.2	0.8	1.1	1.0	1.2
Households Consumption	0.3	0.5	-0.2	-0.4	0.7	1.2	0.9	1.5
Government Consumption	0.1	0.6	0.1	0.3	0.1	0.6	0.1	0.4
Gross Capital Formation	-1.1	-6.6	-0.9	-4.7	0.0	0.2	0.6	3.5
Gross Fixed Capital Formation (GFCF)	-0.8	-4.0	-1.2	-7.7	0.1	0.4	0.4	1.9
GFCF in Machinery & Equipment	-0.5	-6.2	-0.6	-8.9	0.0	-0.4	0.1	1.0
GFCF in Construction	-0.3	-3.1	-0.7	-8.0	0.1	0.5	0.2	2.2
Change in Inventories	-0.3		0.3		-0.1		0.2
Domestic Uses	-0.7	-0.7	-1.0	-1.1	0.9	0.9	1.6	1.7
Net Exports	0.8		-0.5		0.1		-0.5
Exports		0.5		-2.9		1.1		0.7
Imports		-1.0		-2.2		1.2		1.9
GDP		0.0		-1.6		0.9		1.1
GDP per Person in Employment		-0.8		-2.2		0.3		0.5
GDP per Hour Worked		0.5		0.5		-0.3		-0.1

PP: Percentage Points

Source: Statistisches Bundesamt Deutschland (Destatis

https://www.destatis.de/EN/PressServices/Press/pr/2013/11/PE13_394_811.html

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

Table VE-6 provides segments of Germany’s GDP with growth in IIIQ2013 and contributions to growth in percentage points. The impulse of growth of GDP in IIIQ2013 originated in 0.5 percentage points added by gross capital formation of which 0.3 percentage points by gross fixed capital formation and 0.2 percentage points by change in inventories. Consumption added 0.1 percentage points.

Table VE-6, Germany, Percentage Point Contributions of Use of Gross Domestic Product on Growth from Prior Quarter, Price Adjusted  

	IIIQ2013 PP	∆% IIIQ2013
Consumption Total	0.1	0.2
Households Consumption	0.1	0.1
Government Consumption	0.1	0.5
Gross Capital Formation	0.5	3.0
Gross Fixed Capital Formation (GFCF)	0.3	1.6
GFCF in Machinery & Equipment	0.0	0.5
GFCF in Construction	0.2	2.4
Change in Inventories	0.2
Domestic Uses	0.7	0.7
Net Exports	-0.4
Exports		0.1
Imports		0.8
GDP		0.3
GDP per Person in Employment		0.2
GDP per Hour Worked		-0.2

PP Percentage Points

Source: Statistisches Bundesamt Deutschland (Destatis)

https://www.destatis.de/EN/PressServices/Press/pr/2013/11/PE13_394_811.html

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

Percentage changes from year earlier of gross value added by economic sectors in Germany are in Table VE-7. Inndustry ex construction and manufacturing experienced sharp reductions in yearly growth rates from double digits in 2010, upper single digits in 2011, contractions in 2012 and IQ2013 and mild growth in IIQ2013 and IIIQ2013. Finance and insurance rebounded from decline of 1.7 percent in 2007 to growth from 2010 to 2012 and IQ2013 but sharp decline in IIQ2013 and IIIQ2013. Business services also grew at relatively higher rates from minus 12.3 percent in 2007 to 5.5 percent in 2010, 3.1 percent in 2011, 2.9 percent in 2012, 1.6 percent in IQ2013, 3.9 percent in IIQ2013 and 3.8 percent in IIIQ2013.

Table VE-7, Germany, Percentage Change from Year Earlier of Gross Value Added by Economic Sector, Price Adjusted NSA

	2012	IVQ2012	IQ2013	IIQ   2013	IIIQ 2013
Agriculture	1.6	-0.6	-1.2	0.0	0.0
Industry ex Construction	-0.4	-1.7	-4.3	0.5	0.8
Manufacturing	-0.7	-2.6	-4.5	0.8	0.9
Construction	-2.4	-6.4	-9.0	-0.6	1.3
Trade, Transport, Accommodation & Food Services	0.6	-0.3	-2.5	1.2	2.6
Information & Communications	2.0	0.5	1.8	2.1	0.9
Finance & Insurance	1.8	6.5	1.2	-5.2	-5.6
Real Estate	1.6	1.2	1.0	1.5	1.5
Business Services	2.9	2.0	1.6	3.9	3.8
Public Services, Education & Health	0.9	0.6	0.0	0.5	0.4
Other Services	1.4	-0.1	-2.0	-0.7	-1.1
Total Gross Value Added	0.8	0.0	-1.5	0.8	1.1

Source: Statistisches Bundesamt Deutschland (Destatis)

https://www.destatis.de/EN/PressServices/Press/pr/2013/11/PE13_394_811.html

Chart VE-1 of the Statistisches Bundesamt Deutschland (Federal Statistics Agency of Germany) provides GDP at current prices from 2005 to 2013. The German economy is productive with significant dynamism over the long term. There are fluctuations in an increasing trend since 2009.

Chart VE-1, Germany, GDP, Current Prices, Billion Euro

Source: Statistisches Bundesamt Deutschland (Destatis)

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

Table VE-1A provides US GDP in current prices at seasonally adjusted annual rates (SAAR) from 2005 to 2013. There is sharp decline with the recession beginning in IVQ2007 and upward trend during the expansion after IIIQ2009.

Chart VE-1A, US, Gross Domestic Product, Current Prices, Seasonally Adjusted at Annual Rates, Billions of Dollars, 2005-2013

Sources: Bureau of Economic Analysis

http://www.bea.gov/iTable/index_nipa.cfm

Chart VE-2 of the Statistisches Bundesamt Deutschland (Federal Statistics Agency of Germany) provides the index of price-adjusted chain-linked GDP of Germany from 2009 to 2013. Germany was growing rapidly before the global contraction and rebounded with significant strength along a strong upward trend that could be flattening.

Chart VE-2, Germany, Index of Price-Adjusted Chain-Linked GDP, 2000=100

Source: Statistisches Bundesamt Deutschland (Destatis)

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

Chart VE-2A provides US real GDP, seasonally adjusted at annual rates (SAAR) in billions of chained dollars of 2005 from 2009 to 2013. US economic growth has been at only 2.3 percent on average in the cyclical expansion in the 17 quarters from IIIQ2009 to IIIQ2013. Boskin (2010Sep) measures that the US economy grew at 6.2 percent in the first four quarters and 4.5 percent in the first 12 quarters after the trough in the second quarter of 1975; and at 7.7 percent in the first four quarters and 5.8 percent in the first 12 quarters after the trough in the first quarter of 1983 (Professor Michael J. Boskin, Summer of Discontent, Wall Street Journal, Sep 2, 2010 http://professional.wsj.com/article/SB10001424052748703882304575465462926649950.html). There are new calculations using the revision of US GDP and personal income data since 1929 by the Bureau of Economic Analysis (BEA) (http://bea.gov/iTable/index_nipa.cfm http://www.bea.gov/newsreleases/national/gdp/2013/pdf/gdp3q13_adv.pdf

http://bea.gov/newsreleases/national/gdp/2013/pdf/gdp2q13_adv.pdf http://bea.gov/newsreleases/national/pi/2013/pdf/pi0613.pdf) and the first estimate of GDP for IIIQ2013 (http://www.bea.gov/newsreleases/national/gdp/2013/pdf/gdp3q13_adv.pdf). The average of 7.7 percent in the first four quarters of major cyclical expansions is in contrast with the rate of growth in the first four quarters of the expansion from IIIQ2009 to IIQ2010 of only 2.7 percent obtained by diving GDP of $14,738.0 billion in IIQ2010 by GDP of $14,356.9 billion in IIQ2009 {[$14,738.0/$14,356.9 -1]100 = 2.7%], or accumulating the quarter on quarter growth rates (http://cmpassocregulationblog.blogspot.com/2013/11/global-financial-risk-mediocre-united.html and earlier http://cmpassocregulationblog.blogspot.com/2013/09/mediocre-and-decelerating-united-states.html). The expansion from IQ1983 to IVQ1985 was at the average annual growth rate of 5.7 percent and at 7.8 percent from IQ1983 to IVQ1983 (ahttp://cmpassocregulationblog.blogspot.com/2013/11/global-financial-risk-mediocre-united.html and earlier http://cmpassocregulationblog.blogspot.com/2013/09/mediocre-and-decelerating-united-states.html). As a result, there are 28.9 million unemployed or underemployed in the United States for an effective unemployment rate of 17.7 percent (http://cmpassocregulationblog.blogspot.com/2013/11/global-financial-risk-mediocre-united.html and earlier http://cmpassocregulationblog.blogspot.com/2013/10/twenty-eight-million-unemployed-or.html). Zero interest rates and quantitative easing have not provided the impulse for growth and were not required in past successful cyclical expansions. The US missed the opportunity to recover employment as in past cyclical expansions from contractions.

Chart VE-2A, US, Real Gross Domestic Product, Seasonally Adjusted at Annual Rates, Billions of Chained 2009 Dollars, 2009-2013

Sources: Bureau of Economic Analysis http://www.bea.gov/iTable/index_nipa.cfm

Table VE-8 provides Germany’s GDP of €675.22 billion in IIQ2013 and €703.58 billion in IIIQ2013 and its uses. Private consumption is 57.7 percent of GDP in IIIQ2013 and gross capital formation 18.7 percent with government consumption of 18.4 percent and net exports 5.1 percent. Germany’s savings ratio has been in the range of 8.5 percent to 11.5 percent. Structural reforms in the early 2000s provided strength and dynamism to Germany’s economic performance.

Table VE-8, Germany, GDP and Uses, Euro Billions and %

	IIQ2013	IIIQ2013
GDP Euro Billions	675.22	703.58
Percent Distribution of Uses
Gross Capital Formation	15.9	18.7
Household and NPISH Consumption	58.2	57.7
Balance of Exports and Imports	6.7	5.1
Government Consumption	19.2	18.4
Memo: Savings Ratio %	9.5	8.5
2012	10.3
2011	10.4
2010	10.9
2009	10.9
2008	11.5

Source: Statistisches Bundesamt Deutschland (Destatis)

https://www.destatis.de/EN/PressServices/Press/pr/2013/11/PE13_394_811.html

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

Chart VE-3 provides US personal savings as a percentage of disposable personal income from IQ1980 to IQ2013. The US savings ratio recovered during the global recession but fell again because of financial repression of zero interest rates.

Chart VE-3, US, Personal Savings as Percent of Disposable Personal Income, Quarterly, 1980-2013

Sources: Bureau of Economic Analysis http://www.bea.gov/iTable/index_nipa.cfm

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=20131114

The Markit Flash France Composite Output Index decreased from 50.5 in Oct to 48.5 in Nov for a five-month low (http://www.markiteconomics.com/Survey/PressRelease.mvc/7c0ea79cfd254761bc386fa76177d900). Jack Kennedy, Senior Economist at Markit and author of the report, finds that the data point to risk of decline of 0.1 percent of GDP in France in IVQ2013 after decline of 0.1 percent in IIIQ2013 (http://www.markiteconomics.com/Survey/PressRelease.mvc/7c0ea79cfd254761bc386fa76177d900). The Markit France Composite Output Index, combining services and manufacturing with close association with French GDP, did not change from 50.5 in Sep to 50.5 in Ict, indicating moderate expansion (http://www.markiteconomics.com/Survey/PressRelease.mvc/5190492877554ca99d240fb4e6c9a623). Jack Kennedy, Senior Economist at Markit and author of the France Services PMI^®, finds stabilization of the economy of France (http://www.markiteconomics.com/Survey/PressRelease.mvc/5190492877554ca99d240fb4e6c9a623). The Markit France Services Activity index decreased from 51.0 in Sep to 50.9 in Aug (http://www.markiteconomics.com/Survey/PressRelease.mvc/5190492877554ca99d240fb4e6c9a623). The Markit France Manufacturing Purchasing Managers’ Index^® decreased marginally to 49.1 in Oct from 49.8 in Sep, which indicates marginal deterioration in conditions in manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/f2d0f5b4f2d04a61a36714f852faa6d5). Jack Kennedy, Senior Economist at Markit and author of the France Manufacturing PMI^®, finds that export business rose at the highest pace since May 2011 (http://www.markiteconomics.com/Survey/PressRelease.mvc/f2d0f5b4f2d04a61a36714f852faa6d5). Table FR provides the country data table for France.

Table FR, France, Economic Indicators

CPI	Oct month ∆% -0.1 12 months ∆%: 0.6 11/17/13
PPI	Sep month ∆%: 0.3 Sep 12 months ∆%: -0.8 Blog 11/3/13
GDP Growth	IIIQ2013/IIQ2013 ∆%: minus 0.1 IIIQ2013/IIIQ2012 ∆%: 0.2 Blog 3/31/13 5/19/12 6/30/13 9/29/13 11/17/13
Industrial Production	Sep ∆%: Manufacturing minus 0.7 12-Month ∆%: Manufacturing minus 1.3 Blog 11/17/13
Consumer Spending	Manufactured Goods Sep ∆%: -0.2 Sep 12-Month Manufactured Goods ∆%: -0.1 Blog 11/3/13
Employment	Unemployment Rate: IIQ2013 10.5% Blog 9/8/13
Trade Balance	Sep Exports ∆%: month 1.8, 12 months -1.3 Sep Imports ∆%: month 3.4, 12 months 0.7 Blog 11/17/13
Confidence Indicators	Historical averages 100 Sep Mfg Business Climate 98 Blog 10/27/13

Links to blog comments in Table FR:

11/17/13 http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-unwinding-monetary-policy.html

11/3/2013 http://cmpassocregulationblog.blogspot.com/2013/11/global-financial-risk-world-inflation.html

10/27/13 http://cmpassocregulationblog.blogspot.com/2013/10/twenty-eight-million-unemployed-or.html

9/29/13 http://cmpassocregulationblog.blogspot.com/2013/09/mediocre-and-decelerating-united-states.html

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

6/30/13 http://cmpassocregulationblog.blogspot.com/2013/06/tapering-quantitative-easing-policy-and.html

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

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 0.6 percent in IVQ2011 to minus 3.0 percent in IVQ2012, minus 2.5 percent in IQ2013, minus 2.2 percent in IIQ2013 and minus 1.9 percent in IIIQ2013. The aggregate demand components of consumption and gross fixed capital formation (GFCF) have been declining at faster rates. The rates of decline of GDP, consumption and GFCF were somewhat milder in IIQ2013 than in IQ2013 and the final three quarters of 2012.

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

	GDP	Imports	Consumption	GFCF	Exports
2013
IIIQ2013	-1.9
II	-2.2	-4.6	-2.4	-5.9	0.2
IQ	-2.5	-5.0	-2.7	-7.1	-0.4
2012
IVQ	-3.0	-6.8	-4.3	-7.9	1.7
IIIQ	-2.8	-8.1	-4.3	-8.1	2.5
IIQ	-2.6	-7.5	-3.8	-8.3	2.5
IQ	-1.8	-8.9	-3.3	-7.6	2.1
2011
IVQ	-0.6	-6.9	-1.8	-3.2	3.1
IIIQ	0.5	0.1	-0.7	-2.1	5.6
IIQ	1.1	3.1	0.6	-0.7	7.0
IQ	1.4	8.8	0.9	0.6	10.9
2010
IVQ	2.3	15.3	1.1	0.8	13.2
IIIQ	1.8	13.2	1.3	2.4	12.0
IIQ	1.8	13.5	0.8	1.1	12.0
IQ	0.9	7.2	0.8	-2.0	7.3
2009
IVQ	-3.5	-6.4	0.2	-7.8	-9.3
IIIQ	-5.0	-12.2	-0.8	-12.6	-16.4
IIQ	-6.6	-17.9	-1.5	-13.6	-21.4
IQ	-6.9	-17.2	-1.7	-12.6	-22.8
2008
IVQ	-3.0	-8.2	-0.9	-8.3	-10.3
IIIQ	-1.9	-5.0	-0.8	-4.5	-3.9
IIQ	-0.2	-0.1	-0.3	-1.5	0.4
IQ	0.5	1.7	0.1	-1.0	2.9

GFCF: Gross Fixed Capital Formation

Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/98480

http://www.istat.it/it/archivio/103477

The Markit/ADACI Business Activity Index decreased from 52.7 in Sep to 50.5 in Oct, (http://www.markiteconomics.com/Survey/PressRelease.mvc/cd59620a6b7a4ecd80e55ca91d034bad). Phil Smith, Economist at Markit and author of the Italy Services PMI^®, finds the index suggesting stabilizing economy with some potential for the first increase in GDP in over two years (http://www.markiteconomics.com/Survey/PressRelease.mvc/cd59620a6b7a4ecd80e55ca91d034bad). The Markit/ADACI Purchasing Managers’ Index^® (PMI^®), decreased marginally from 50.8 in Sep to 50.7 in Sep for the fourth consecutive reading above 50.0 with strong increase in foreign orders (http://www.markiteconomics.com/Survey/PressRelease.mvc/6b3139c705f54ef7b6a5aacf0d3dd01a). Phil Smith, Economist at Markit and author of the Italian Manufacturing PMI^®, finds growth at a slower rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/6b3139c705f54ef7b6a5aacf0d3dd01a). Table IT provides the country data table for Italy.

Table IT, Italy, Economic Indicators

Consumer Price Index	Oct month ∆%: -0.2 Oct 12-month ∆%: 0.8 Blog 11/17/13
Producer Price Index	Sep month ∆%: 0.0 Sep 12-month ∆%: -2.2 Blog 11/3/13
GDP Growth	IIIQ2013/IIQ2013 SA ∆%: minus 0.1 IIIQ2013/IIIQ2012 NSA ∆%: minus 1.9 Blog 3/17/13 6/16/13 8/11/13 9/15/13 11/17/13
Labor Report	Sep 2013 Participation rate 63.6% Employment ratio 55.4% Unemployment rate 12.5% Blog 11/3/13
Industrial Production	Sep month ∆%: 0.2 12 months CA ∆%: -3.0 Blog 11/17/13
Retail Sales	Sep month ∆%: -0.3 Sep 12-month ∆%: -2.8 Blog 11/24/13
Business Confidence	Mfg Oct 97.3, Jun 90.9 Construction Oct 80.8, Jun 71.6 Blog 11/3/13
Trade Balance	Balance Sep SA €2131 million versus Aug €2506 Exports Sep month SA ∆%: 0.6; Imports Sep month ∆%: 1.9 Exports 12 months Sep NSA ∆%: 2.0 Imports 12 months NSA ∆%: -0.1 Blog 11/24/13

Links to blog comments in Table IT:

11/17/13 http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-unwinding-monetary-policy.html

11/3/2013 http://cmpassocregulationblog.blogspot.com/2013/11/global-financial-risk-world-inflation.html

9/15/13 http://cmpassocregulationblog.blogspot.com/2013/09/recovery-without-hiring-ten-million.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

Exports and imports of Italy and monthly growth rates SA are in Table VG-1. There have been significant fluctuations. Seasonally adjusted exports increased 0.6 percent in Sep 2013 while imports increased 1.9 percent. The SA trade balance decreased from surplus of €2506 million in Aug 2013 to surplus of €2131 million in Sep 2013.

Table VG-1, Italy, Exports, Imports and Trade Balance SA Million Euros and Month SA ∆%

	Exports	∆%	Imports	∆%	Balance
2011
IQ2011	92,722	4.8	102,044	3.2	-9,322
IIQ2011	95,152	2.6	102,670	0.6	-7,518
IIIQ2011	95,094	-0.1	101,327	-1.3	-6,233
IVQ2011	95,267	0.2	97,536	-3.7	-2,269
2012
IQ2012	96,284	1.1	96,844	-0.7	-560
IIQ2012	97,831	1.6	96,353	-0.5	1,478
IIIQ2012	99,210	1.4	96,198	-0.2	3,012
IVQ2012	97,978	-1.2	92,631	-3.7	5,347
2013
IQ2013	97,748	-0.2	91,524	-1.2	6,224
IQ2013	97,974	0.2	89,494	-2.2	8,480
IIIQ2013	97,973	0.0	91,197	1.9	6,776
2011
Sep	31,859	1.0	33,123	-3.3	-1,264
Oct	31,045	-2.6	32,577	-1.6	-1,532
Nov	31,491	1.4	32,880	0.9	-1,389
Dec	32,731	3.9	32,079	-2.4	652
2012
Jan	31,799	-2.8	32,326	0.8	-527
Feb	32,074	0.9	32,670	1.1	-596
Mar	32,411	1.1	31,848	-2.5	563
Apr	32,456	0.1	32,669	2.6	-213
May	33,058	1.9	32,857	0.6	201
Jun	32,317	-2.2	30,827	-6.2	1,490
Jul	32,959	2.0	32,011	3.8	948
Aug	33,577	1.9	32,947	2.9	630
Sep	32,674	-2.7	31,240	-5.2	1,434
Oct	32,732	0.2	31,315	0.2	1,417
Nov	32,813	0.2	30,769	-1.7	2,044
Dec	32,433	-1.2	30,547	-0.7	1,886
2013
Jan	33,122	2.1	31,178	2.1	1,944
Feb	32,120	-3.0	30,123	-3.4	1,997
Mar	32,506	1.2	30,223	0.3	2,283
Apr	32,427	-0.2	29,786	-1.4	2,641
May	32,598	0.5	29,637	-0.5	2,961
Jun	32,949	1.1	30,071	1.5	2,878
Jul	32,281	-2.0	30,142	0.2	2,139
Aug	32,741	1.4	30,235	0.3	2,506
Sep	32,951	0.6	30,820	1.9	2,131

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/103528

Italy’s trade account not seasonally adjusted is in Table VG-2. Values are different because the data are original and not adjusted. Exports increased 2.0 percent in the 12 months ending in Sep 2013 while imports decreased 0.1 percent with actual trade surplus of €794 million. Twelve-month rates of growth picked up again in Aug 2011 with 15.2 percent for exports and 12.6 percent for imports. In Sep 2011, exports grew 10.2 percent relative to a year earlier while imports grew only 3.6 percent. In Oct 2011, exports grew 4.5 percent while imports fell 0.2 percent. In Nov 2011, exports grew 6.5 percent in 12 months while imports grew 0.5 percent. Exports continued to growth of 7.9 percent in the 12 months ending in Aug 2012 while imports fell 1.8 percent. The actual or not seasonally adjusted trade balance deficit fell from €2948 million in Aug 2011 to surplus of €1407 million in Dec 2011 but turned into deficit of €4691 million in Jan 2012. The deficit improved to lower deficit of €1311 million in Feb 2012 and surplus of €1831 million in Mar 2012, returning to deficit of €421 million in Apr and surplus of €833 million in May. In Jun 2012, the actual surplus was €2681 million and then €4673 million in Jul 2012, which was the highest in 2012 but deteriorated to actual deficit of €535 million in Aug 2012. Exports fell 20.9 percent and imports 22.1 percent during the global recession in 2009. Growth of exports of 12.2 percent in the 12 months ending in Oct 2012 while imports increased 1.4 percent increased the trade surplus to €2337 million. The trade surplus was €2314 million in Dec 2012 with growth of exports of minus 4.5 percent in 12 months while imports fell 7.8 percent. The trade balance deteriorated to deficit of €1810 million in Jan 2013 even with growth of exports of 8.9 percent in 12 months while imports fell 1.4 percent. The trade balance returned to surplus of €1045 million in Feb 2013 with decline of exports by 2.9 percent and decrease of exports by 9.9 percent. The surplus widened to €3081 million in Mar 2013 with exports declining 6.1 percent and imports falling 10.1 percent. The surplus shrank to €2005 million in Apr 2013 with growth of exports of 4.4 and decline of imports of 3.5 percent. The surplus increased to €3894 million in May 2013 with declines of exports of 1.9 percent and of imports of 10.8 percent. The surplus declined to €3542 million in Jun 2013 with decline of exports of 3.3 percent in 12 months and of imports of 6.3 percent.

Table VG-2, Italy, Exports, Imports and Trade Balance NSA Million Euros and Year-on-Year ∆%

	Exports	∆%	Imports	∆%	Balance
2010	337,346	15.6	367,390	23.4	-30,044
2011	375,904	11.4	401,428	9.3	-25,524
2012	390,182	3.8	380,292	-5.3	9,890
2011
IQ2011	90,128	18.1	103,760	21.7	-13,632
IIQ2011	97,274	13.4	104,303	12.6	-7,029
IIIQ2011	92,567	9.8	96,138	7.3	-3,571
IV trim.	95,935	5.5	97,227	-2.7	-1,292
2012
IQ2012	95,398	5.8	99,568	-4.0	-4,170
IIQ2012	100,172	3.0	97,079	-6.9	3,093
IIIQ2012	94,938	2.6	90,670	-5.7	4,268
IVQ2012	99,674	3.9	92,975	-4.4	6,699
2013
IQ2013	94,695	-0.7	92,379	-7.2	2,316
IIQ2013	99,724	-0.4	90,283	-7.0	9,441
IIIQ2013	95,092	0.2	87,244	-3.8	7,848
2011
Sep	32,996	10.2	34,886	3.6	-1,890
Oct	32,131	4.5	33,245	-0.2	-1,114
Nov	32,440	6.5	34,025	0.5	-1,585
Dec	31,364	5.6	29,957	-8.5	1,407
2012
Jan	27,476	5.0	32,167	-1.2	-4,691
Feb	31,817	7.4	33,128	1.4	-1,311
Mar	36,105	5.1	34,274	-11.0	1,831
Apr	30,548	-1.7	30,969	-8.8	-421
May	35,232	5.0	34,399	-4.1	833
Jun	34,392	5.3	31,711	-8.0	2,681
Jul	37,190	5.3	32,517	-4.5	4,673
Aug	26,166	7.9	26,701	-1.8	-535
Sep	31,583	-4.3	31,452	-9.8	131
Oct	36,037	12.2	33,700	1.4	2,337
Nov	33,688	3.8	31,641	-7.0	2,047
Dec	29,948	-4.5	27,634	-7.8	2,314
2013
Jan	29,913	8.9	31,723	-1.4	-1,810
Feb	30,884	-2.9	29,839	-9.9	1,045
Mar	33,897	-6.1	30,816	-10.1	3,081
Apr	31,878	4.4	29,873	-3.5	2,005
May	34,576	-1.9	30,682	-10.8	3,894
Jun	33,270	-3.3	29,728	-6.3	3,542
Jul	38,136	2.5	32,156	-1.1	5,980
Aug	24,741	-5.4	23,667	-11.4	1,074
Sep	32,215	2.0	31,421	-0.1	794

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/103528

Growth rates of Italy’s trade and major products are in Table VG-3 for the period Jan-Sep 2013 relative to Jan-Sep 2012. Growth rates of cumulative imports relative to a year earlier are negative for energy with minus 16.7 percent and positive with 2.0 percent for durable goods. The higher rate of growth of exports of minus 0.3 percent in Jan-Sep 2013/Jan-Sep 2012 relative to imports of minus 6.1 percent may reflect weak demand in Italy with GDP declining during nine consecutive quarters from IIIQ2011 through IIIQ2013 together with softening commodity prices.

Table VG-3, Italy, Exports and Imports % Share of Products in Total and ∆%

	Exports Share %	Exports ∆% Jan-Sep 2013/ Jan-Sep 2012	Imports Share %	Imports ∆% Jan-Sep 2013/ Jan-Sep 2012
Consumer Goods	29.3	5.8	25.6	0.6
Durable	5.8	1.7	2.9	-10.2
Non-Durable	23.5	6.8	22.6	2.0
Capital Goods	31.6	1.5	19.8	-3.4
Inter- mediate Goods	33.6	-4.1	32.4	-5.5
Energy	5.5	-20.5	22.2	-16.7
Total ex Energy	94.5	0.8	77.8	-3.0
Total	100.0	-0.3	100.0	-6.1

Note: % Share for 2012 total trade.

Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/103528

Table VG-4 provides Italy’s trade balance by product categories in Sep 2013 and cumulative Jan-Sep 2013. Italy’s trade balance excluding energy generated surplus of €4946 million in Sep 2013 and €60,753 million cumulative in Jan-Sep 2013 but the energy trade balance created deficit of €4152 million in Sep 2013 and cumulative €41,148 million in Jan-Sep 2013. The overall surplus in Sep 2013 was €794 million with cumulative surplus of €19,605 million in Jan-Sep 2013. Italy has significant competitiveness in various economic activities in contrast with some other countries with debt difficulties.

Table VG-4, Italy, Trade Balance by Product Categories, € Millions

	Sep 2013	Cumulative Jan-Sep 2013
Consumer Goods	1,526	15,930
Durable	922	9,373
Nondurable	604	6,556
Capital Goods	3,657	38,700
Intermediate Goods	-238	6,123
Energy	-4,152	-41,148
Total ex Energy	4,946	60,753
Total	794	19,605

Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/103528

Professors Ricardo Caballero and Francesco Giavazzi (2012Jan15) find that the resolution of the European sovereign crisis with survival of the euro area would require success in the restructuring of Italy. Growth of the Italian economy would ensure that success. A critical problem is that the common euro currency prevents Italy from devaluing the exchange rate to parity or the exchange rate that would permit export growth to promote internal economic activity, which could generate fiscal revenues for primary fiscal surpluses that ensure creditworthiness. Fiscal consolidation and restructuring are important but of long-term gestation. Immediate growth of the Italian economy would consolidate the resolution of the sovereign debt crisis. Caballero and Giavazzi (2012Jan15) argue that 55 percent of the exports of Italy are to countries outside the euro area such that devaluation of 15 percent would be effective in increasing export revenue. Newly available data in Table VG-5 providing Italy’s trade with regions and countries supports the argument of Caballero and Giavazzi (2012Jan15). Italy’s exports to the European Monetary Union (EMU), or euro area, are only 40.6 percent of the total in Jan-Sep 2013. Exports to the non-European Union area with share of 45.7 percent in Italy’s total exports are growing at 2.1 percent in Jan-Sep 2013 relative to Jan-Sep 2012 while those to EMU are growing at minus 3.2 percent.

Table VG-5, Italy, Exports and Imports by Regions and Countries, % Share and 12-Month ∆%

Aug 2013	Exports % Share	∆% Jan-Sep 2013/ Jan-Sep 2012	Imports % Share	∆% Jan-Sep 2013/ Jan-Sep 2012
EU	54.3	-2.3	53.3	-2.2
EMU 17	40.6	-3.2	42.7	-2.3
France	11.1	-2.9	8.3	-5.0
Germany	12.5	-2.6	14.5	-5.2
Spain	4.7	-7.4	4.5	-4.3
UK	4.9	2.3	2.6	-2.4
Non EU	45.7	2.1	46.7	-10.3
Europe non EU	13.4	-1.5	10.9	4.8
USA	6.8	-1.5	3.3	-12.4
China	2.3	10.5	6.6	-9.3
OPEC	5.7	8.2	10.8	-27.3
Total	100.0	-0.3	100.0	-6.1

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

Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/103528

Table VG-6 provides Italy’s trade balance by regions and countries. Italy had trade deficit of €891 million with the 17 countries of the euro zone (EMU 17) in Sep 2013 and cumulative deficit of €2626 million in Jan-Sep 2013. Depreciation to parity could permit greater competitiveness in improving the trade surplus of €5694 million in Jan-Sep 2013 with Europe non European Union, the trade surplus of €11,048 million with the US and trade surplus with non-European Union of €11,304 million in Jan-Sep 2013. There is significant rigidity in the trade deficits in Jan-Sep 2013 of €10,535 million with China and €5902 million with members of the Organization of Petroleum Exporting Countries (OPEC). Higher exports could drive economic growth in the economy of Italy that would permit less onerous adjustment of the country’s fiscal imbalances, raising the country’s credit rating.

Table VG-6, Italy, Trade Balance by Regions and Countries, Millions of Euro 

Regions and Countries	Trade Balance Sep 2013 Millions of Euro	Trade Balance Cumulative Jan-Sep 2013 Millions of Euro
EU	472	8,300
EMU 17	-891	-2,626
France	977	9,245
Germany	-560	-3,101
Spain	87	660
UK	914	7,418
Non EU	322	11,304
Europe non EU	639	5,694
USA	1,060	11,048
China	-1,449	-10,535
OPEC	-394	-5,902
Total	794	19,605

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

Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/103528

An important part of the analysis of Blanchard (2011WEOSep, 2012WEOApr) is the much more difficult adjustment of economies with need of fiscal consolidation in the presence of weak economic growth. Demand has significantly weakened throughout the advanced economies. There are many sound fundamentals in Italy such as high income and competitive companies. The restraints consist of low economic growth with high debt/GDP ratio. Table VG-8 provides growth of retail sales for Italy. Retail sales fell 0.3 percent in Sep 2013 relative to Aug 2013, decreased 0.4 percent in Jul-Sep 2013 relative to Apr-Jun 2013, decreased 2.8 percent in Sep 2013 relative to Sep 2012 and decreased 2.3 percent cumulatively in Jan-Sep 2013 relative to Jan-Sep 2012. Food retail sales outperform non-food retail sales.

Table VG-7, Italy, Retail Sales ∆%

	Sep 2013/  Aug 2013 SA	Jul-Sep 13/   Apr-Jun 13 SA	Sep 2013/ Sep 2012 NSA	Jan-Sep 2013/ Jan-Sep 2012
Food	-0.2	0.0	-2.2	-1.3
Non-food	-0.3	-0.6	-3.2	-3.0
Total	-0.3	-0.4	-2.8	-2.3

Source: Istituto Nazionale di Statistica http://www.istat.it/it/archivio/104279

Chart VG-1 provides 12-month percentage changes of retail sales at current prices. There is improvement in the final segment from Feb to May 2013 with sharper decline in Jun 2013 and recovery in Jul-Aug 2013. Sales declined again in Sep 2013.

Chart VG-1, Italy, Percentage Changes of Retail Sales in 12 Months

Source: Istituto Nazionale di Statistica

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

A longer perspective of retail sales in Italy is provided by monthly and 12-month percentage changes in 2011, Jan-Dec 2012, Jan-Sep 2013 and annual rates for 2011 and 2012 in Table VG-8. Retail sales did not decline very sharply during the global recession but fell 0.8 percent in 2011 and 1.7 percent in 2012. There is an evident declining trend in 2011 with few monthly increases and similar weakness in 2012 with multiple monthly declines. Negative percentage changes in 12 months have increased to more than 3 percent with decrease of 3.2 percent in the 12 months ending in Mar 2013 and decrease of 3.0 percent in the 12 months ending in Jun 2013. Retail sales fell 0.3 percent in Sep 2013 and the decline in 12 month deteriorated to 2.8 percent.

Table VG-8, Italy, Retail Sales Month and 12-Month ∆%

	Month ∆% SA	12-Month ∆% NSA
Sep 2013	-0.3	-2.8
Aug	0.0	0.2
Jul	-0.2	-0.8
Jun	-0.2	-3.0
May	0.1	-1.2
Apr	0.0	-2.9
Mar	-0.2	-3.2
Feb	-0.2	-4.8
Jan	-0.4	-2.8
Dec 2012	0.0	-3.4
Nov	0.0	-2.4
Oct	-0.7	-3.4
Sep	-0.1	-1.0
Aug	0.0	-0.4
Jul	-0.2	-3.1
Jun	-0.1	0.2
May	-0.1	-1.1
Apr	-1.2	-6.3
Mar	0.3	2.3
Feb	-0.4	0.7
Jan	1.0	-0.9
Dec 2011	-0.9	-3.2
Nov	-0.4	-1.5
Oct	0.6	-0.9
Sep	-0.3	-1.1
Aug	-0.4	0.1
July	0.0	-1.7
Jun	-0.4	-0.6
May	-0.5	-0.3
Apr	0.9	3.3
Mar	-0.2	-1.9
Feb	-0.3	0.1
Jan	-0.2	-0.5
Dec 2010	0.5	0.6
2012		-1.7
2011		-0.8

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/104279

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 5.2 percent in 2009 after dropping 0.8 percent in 2008. Recovery of 1.7 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 0.1 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 3.1 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 relative to 2007.

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

	∆% on Prior Year
1998	3.6
1999	2.9
2000	4.4
2001	2.2
2002	2.3
2003	3.9
2004	3.2
2005	3.2
2006	2.8
2007	3.4
2008	-0.8
2009	-5.2
2010	1.7
2011	1.1
2012	0.1
Average Growth Rates ∆% per Year
1948-2012	2.6
1950-1959	2.7
1960-1969	3.3
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/gva/gross-domestic-product--preliminary-estimate/q3-2013/index.html

The Business Activity Index of the Markit/CIPS UK Services PMI^® increased from 60.3 in Sep to 62.5 in Sep, indicating increase in activity in every month since the beginning of 2013 at the highest rate since May 1997 (http://www.markiteconomics.com/Survey/PressRelease.mvc/886a8bb8c5af427ea8579b03fdb46ffe). Chris Williamson, Chief Economist at Markit, finds continuing improvement in the UK’s economy with possible higher growth of GDP in IVQ2013 at the quarterly rate of 1.3 percent, which would be the highest since the period before the 2007 financial crisis while creation of new jobs exceeds 100,000 per quarter (http://www.markiteconomics.com/Survey/PressRelease.mvc/886a8bb8c5af427ea8579b03fdb46ffe). The Markit/CIPS UK Manufacturing Purchasing Managers’ Index^® (PMI^®) decreased marginally to 56.0 in Oct from 56.3 in Sep with continuing strength of production and new orders above long-term averages (http://www.markiteconomics.com/Survey/PressRelease.mvc/9620f11fc5c748d8aaf417b28e6f9b1b). Respondents indicated increase in new foreign orders at the highest rate since Feb 2011. Rob Dobson, Senior Economist at Markit that compiles the Markit/CIPS Manufacturing PMI^®, finds that manufacturing conditions continue around the levels in Aug with output and new orders close to the fastest pace in 19 years (http://www.markiteconomics.com/Survey/PressRelease.mvc/9620f11fc5c748d8aaf417b28e6f9b1b). Table UK provides the economic indicators for the United Kingdom.

Table UK, UK Economic Indicators

CPI	Oct month ∆%: 0.1 Oct 12-month ∆%: 2.2 Blog 11/17/13
Output/Input Prices	Output Prices: Oct 12-month NSA ∆%: 0.8; excluding food, petroleum ∆%: 0.9 Input Prices: Oct 12-month NSA ∆%: -0.3 Excluding ∆%: -0.4 Blog 11/17/13
GDP Growth	IIIQ2013 prior quarter ∆% 0.8; year earlier same quarter ∆%: 1.5 Blog 3/31/13 4/28/13 5/26/13 7/28/13 8/25/13 9/29/13 10/27/13
Industrial Production	Sep 2013/Sep 2012 ∆%: Production Industries 2.2; Manufacturing 0.8 Blog 11/10/13
Retail Sales	Oct month ∆%: -0.7 Oct 12-month ∆%: 1.8 Blog 11/24/13
Labor Market	Jul-Sep Unemployment Rate: 7.6%; Claimant Count 3.9%; Earnings Growth 0.7% Blog 11/17/13 LMGDP
Trade Balance	Balance SA Aug minus ₤3268 million Exports Sep ∆%: 0.1; Jul-Sep ∆%: 0.1 Imports Sep ∆%: 0.2 Jul-Sep ∆%: 1.8 Blog 11/17/13

Links to blog comments in Table UK:

11/17/13 http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-unwinding-monetary-policy.html

11/10/13 http://cmpassocregulationblog.blogspot.com/2013/11/global-financial-risk-mediocre-united.html

10/27/13 http://cmpassocregulationblog.blogspot.com/2013/10/twenty-eight-million-unemployed-or.html

9/29/13 http://cmpassocregulationblog.blogspot.com/2013/09/mediocre-and-decelerating-united-states.html

8/25/13 http://cmpassocregulationblog.blogspot.com/2013/08/interest-rate-risks-duration-dumping.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 volume of retail sales in the UK decreased 0.7 percent in Oct 2013 and increased 1.8 percent in the 12 months ending in Oct 2013, as shown in Table VH-1. Percentage changes of retail sales in 12 months had been positive in several months since Sep 2011 with exceptions such as decline of 1.9 percent in Apr 2012, 1.3 percent in Jan 2013 and 1.0 percent in Mar 2013. The quarter ending in Jul 2013 is quite strong with growth of 1.9 percent in May, 0.2 percent in Jun and 1.1 percent in Jul, interrupted by decline of 1.0 percent in Aug 2013 followed by increase of 0.6 percent in Sep 2013. The volume of retail sales fell 0.7 percent in Oct 2013.

Table VH-1, UK, Volume of Retail Sales ∆%

	Month ∆%	12-Month ∆%
Oct 2013	-0.7	1.8
Sep	0.6	2.0
Aug	-1.0	1.8
Jul	1.1	2.6
Jun	0.2	1.6
May	1.9	1.7
Apr	-0.7	0.8
Mar	-0.5	-1.0
Feb	2.2	2.0
Jan	-0.9	-1.3
Dec 2012	-0.2	0.1
Nov	-0.1	0.3
Oct	-0.6	0.2
Sep	0.4	2.0
Aug	-0.2	2.0
Jul	0.1	1.7
Jun	0.2	1.8
May	1.0	1.5
Apr	-2.4	-1.9
Mar	2.4	2.8
Feb	-1.1	0.3
Jan	0.4	0.6
Dec 2011	0.0	2.4
Nov	-0.1	0.2
Oct	1.2	0.6
Sep	0.4	0.1
Aug	-0.5	-1.4
Jul	0.2	-1.0
Jun	0.0	-0.9
May	-2.4	-0.9
Apr	2.2	2.2
Mar	-0.1	-0.2
Feb	-0.8	-0.1
Jan	2.3	3.4
Dec 2010	-2.2	-2.3

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/rsi/retail-sales/october-2013/index.html

Retail sales in the UK struggle with oscillating and relatively high inflation. Table VH-2 provides 12-month percentage changes of the implied deflator of UK retail sales. The implied deflator of all retail sales increased 0.7 percent in the 12 months ending in Oct 2013 while that of sales excluding auto fuel decreased 3.5 percent. The 12-month increase of the implied deflator of auto fuel in Sep 2012 was minus 1.2 percent. The 12-month increase of the implied deflator of auto fuel sales rose to 17.0 percent in Sep 2011, which is the highest 12-month increase in 2011, but then declined to 0.3 percent in Dec 2012 and minus 0.2 percent in Jan 2013. The 12-month implied deflator of auto fuel sales decreased 2.2 percent in May 2013, increasing 1.3 percent in Jun 2013 and 2.6 percent in Jul 2013. The percentage change of the implied deflator of sales of food stores at 3.3 percent in Oct 2013 is higher than for total retail sales. Increases in fuel prices at the retail level have occurred throughout most years since 2005 with exception of the decline of 9.5 percent in 2008 when commodity carry trades were reversed in the panic of the financial crisis. UK inflation is particularly sensitive to changes in commodity prices.

Table VH-2, UK, Implied Deflator of Retail Sales, 12-Month Percentage Changes, ∆%

		All Retail	All Retail Ex Auto Fuel	Mostly Food Stores	Mostly Nonfood Stores	Mostly Automotive Fuel Stores
	Dec	-0.2	0.5	7.1	-3.9	-9.7
2009	Jan	-0.2	1.6	7.3	-2.9	-13.4
	Feb	1.0	2.6	8.4	-2.1	-11.0
	Mar	0.6	2.4	7.9	-2.0	-12.4
	Apr	0.2	1.7	6.2	-2.0	-11.1
	May	-	1.6	5.7	-1.9	-12.4
	Jun	-1.1	0.7	4.2	-2.4	-13.2
	Jul	-1.4	0.3	3.5	-2.4	-13.6
	Aug	-0.9	0.2	2.3	-1.8	-8.9
	Sep	-0.8	-	1.9	-1.5	-5.8
	Oct	0.3	0.5	2.5	-1.2	-0.8
	Nov	1.4	0.5	1.8	-0.8	10.0
	Dec	3.7	2.4	2.2	1.8	17.0
2010	Jan	4.1	2.0	2.7	1.2	23.3
	Feb	3.0	1.0	1.5	0.8	20.5
	Mar	3.6	1.4	2.2	0.9	22.7
	Apr	4.0	2.0	2.9	1.3	23.3
	May	3.4	1.5	2.0	1.1	20.9
	Jun	2.6	1.3	2.1	0.8	14.7
	Jul	2.7	1.6	3.0	0.5	13.5
	Aug	2.6	1.7	3.4	0.4	11.4
	Sep	3.1	2.6	4.3	1.2	8.3
	Oct	3.3	2.5	4.1	1.1	10.8
	Nov	3.6	3.0	4.9	1.4	9.8
	Dec	3.7	3.2	5.2	1.4	12.4
2011	Jan	4.4	3.3	5.4	1.4	14.5
	Feb	4.9	3.8	5.6	2.2	15.1
	Mar	4.3	3.0	4.3	1.9	14.9
	Apr	4.2	3.3	4.8	1.9	12.3
	May	4.6	3.5	5.6	1.8	13.2
	Jun	4.7	3.4	6.2	1.2	14.5
	Jul	5.1	3.9	6.0	2.2	14.5
	Aug	5.4	4.0	6.0	2.4	16.2
	Sep	5.1	3.7	6.2	1.7	17.0
	Oct	4.7	3.5	5.1	2.3	14.8
	Nov	4.0	3.0	4.7	1.7	12.6
	Dec	3.3	2.4	4.3	1.0	9.1
2012	Jan	2.6	2.2	3.6	1.1	5.3
	Feb	2.8	2.4	4.0	0.9	5.4
	Mar	3.0	2.7	4.5	1.1	4.9
	Apr	2.3	2.0	3.8	0.4	5.2
	May	1.4	1.5	3.1	0.2	1.2
	Jun	0.6	0.9	2.3	-0.2	-1.2
	Jul	0.4	0.7	2.0	-0.2	-1.4
	Aug	0.5	0.6	2.1	-0.8	0.4
	Sep	0.9	0.7	2.1	-0.4	2.9
	Oct	1.1	1.0	2.8	-0.4	2.6
	Nov	0.7	0.7	3.1	-1.0	1.3
	Dec	0.9	1.0	3.0	-0.3	0.3
2013	Jan	1.1	1.4	3.8	-0.7	-0.2
	Feb	0.9	1.0	3.2	-0.7	1.1
	Mar	0.9	1.2	3.1	-0.7	0.5
	Apr	0.6	1.1	3.4	-0.7	-3.0
	May	1.0	1.5	3.5	-0.1	-2.2
	Jun	1.7	1.8	3.4	0.5	1.3
	Jul	1.8	1.7	3.4	0.3	2.6
	Aug	1.6	1.6	3.4	0.3	1.5
	Sep	0.9	1.3	3.4	-0.2	-1.2
	Oct	0.7	1.3	3.3	-0.1	-3.5

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/rsi/retail-sales/october-2013/index.html

UK monthly retail volume of sales is quite volatile, as shown in Table VH-3. Total volume of sales decreased 0.7 percent in Apr 2013 and increased 1.9 percent in May 2013, 0.2 percent in Jun 2013, 1.1 percent in Jul 2013 but declined 1.0 percent in Aug 2013. Retail sales increased 0.6 percent in Sep 2013 and fell 0.7 percent in Oct 2013. There was decrease of 0.6 percent in retail sales excluding auto fuels in Oct 2013 and decrease of 0.1 percent in food stores, decrease of 1.3 percent in nonfood stores and decrease of 2.1 percent in auto fuel stores. Multiple positive and negative variations and changes in magnitudes confirm high volatility.

VH-3, UK, Growth of Retail Sales Volume by Component Groups Month SA ∆%

		All Retail	All Retail Ex Auto Fuel	Mostly Food Stores	Mostly Nonfood Stores	Mostly Automotive Fuel Stores
2011	Jan	2.3	1.4	0.6	2.1	10.4
	Feb	-0.8	-0.9	-0.4	-1.5	-0.3
	Mar	-0.1	0.0	0.5	-0.1	-0.8
	Apr	2.2	2.3	4.1	0.4	1.7
	May	-2.4	-2.6	-4.6	-1.0	-0.4
	Jun	0.0	-0.1	-0.2	-0.5	0.3
	Jul	0.2	0.3	0.8	0.2	-0.6
	Aug	-0.5	-0.5	0.0	-1.2	-0.5
	Sep	0.4	0.4	0.2	0.6	0.6
	Oct	1.2	1.1	0.8	1.5	1.4
	Nov	-0.1	-0.5	-0.6	-0.9	2.7
	Dec	0.0	0.2	0.1	0.8	-0.9
2012	Jan	0.4	0.5	0.4	0.5	0.0
	Feb	-1.1	-0.9	-0.2	-1.6	-2.4
	Mar	2.4	2.0	-0.5	4.5	5.8
	Apr	-2.4	-1.1	0.3	-3.1	-12.6
	May	1.0	0.6	0.0	1.1	5.2
	Jun	0.2	0.5	0.1	1.0	-2.6
	Jul	0.1	-0.1	0.0	-0.6	2.0
	Aug	-0.2	-0.3	0.3	0.4	0.5
	Sep	0.4	0.3	0.0	-0.4	1.2
	Oct	-0.6	-0.3	-0.9	-0.2	-2.7
	Nov	-0.1	0.2	-0.4	0.7	-2.3
	Dec	-0.2	-0.5	0.0	-1.4	2.7
2013	Jan	-0.9	-0.6	-1.0	-0.6	-3.4
	Feb	2.2	2.1	0.7	3.3	2.7
	Mar	-0.5	-0.6	1.9	-3.3	0.0
	Apr	-0.7	-0.7	-3.6	2.3	-0.2
	May	1.9	1.9	2.6	1.0	1.5
	Jun	0.2	0.2	0.1	0.3	0.1
	Jul	1.1	1.1	2.7	-0.5	0.8
	Aug	-1.0	-1.0	-2.6	0.0	-0.7
	Sep	0.6	0.8	-0.5	2.4	-1.3
	Oct	-0.7	-0.6	-0.1	-1.3	-2.1

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/rsi/retail-sales/october-2013/index.html

Percentage growth in 12 months of retail sales volume by component groups in the UK is provided in Table VH-4. Total retail sales increased 1.8 percent in the 12 months ending in Oct 2013 with increase of 2.3 percent in sales excluding auto fuel. Sales of food stores decreased 0.3 percent in the 12 months ending in Oct 2013 while sales of nonfood stores increased 2.7 percent and sales of auto fuel stores decreased 2.4 percent.

Table VH-4, UK, Growth of Retail Sales Volume by Component Groups 12-Month ∆%

		All Retail	All Retail Ex Fuel	Mostly Food Stores	Mostly Nonfood Stores	Mostly Automotive Food Stores
2010	Dec	-2.3	-1.8	-4.3	-0.5	-8.5
2011	Jan	3.4	2.9	-2.5	7.0	7.6
	Feb	-0.1	-0.6	-2.5	-0.4	4.7
	Mar	-0.2	-0.6	-1.5	-0.6	3.6
	Apr	2.2	1.9	2.2	0.4	3.9
	May	-0.9	-1.3	-3.4	-1.0	2.2
	Jun	-0.9	-1.4	-4.0	-1.1	3.2
	Jul	-1.0	-1.4	-1.2	-2.8	1.9
	Aug	-1.4	-1.7	-0.7	-4.0	1.8
	Sep	0.1	-0.3	-0.3	-1.8	3.3
	Oct	0.6	0.3	0.4	-1.1	2.7
	Nov	0.2	-0.5	-1.1	-1.9	5.2
	Dec	2.4	1.2	1.1	0.4	13.9
2012	Jan	0.6	0.3	0.8	-1.2	3.1
	Feb	0.3	0.2	0.9	-1.3	0.9
	Mar	2.8	2.2	-0.1	3.2	7.7
	Apr	-1.9	-1.2	-3.7	-0.4	-7.5
	May	1.5	2.0	1.0	1.7	-2.3
	Jun	1.8	2.6	1.3	3.3	-5.1
	Jul	1.7	2.3	0.5	2.5	-2.5
	Aug	2.0	2.5	0.8	4.1	-1.5
	Sep	2.0	2.3	0.6	3.0	-0.8
	Oct	0.2	0.9	-1.1	1.4	-4.9
	Nov	0.3	1.5	-0.9	3.0	-9.5
	Dec	0.1	0.8	-0.9	0.9	-6.2
2013	Jan	-1.3	-0.3	-2.2	-0.3	-9.3
	Feb	2.0	2.8	-1.4	4.6	-4.6
	Mar	-1.0	0.2	1.0	-3.2	-9.9
	Apr	0.8	0.6	-3.0	2.1	2.9
	May	1.7	1.9	-0.4	2.0	-0.7
	Jun	1.6	1.6	-0.5	1.2	2.0
	Jul	2.6	2.8	2.3	1.4	0.7
	Aug	1.8	2.0	-0.6	1.0	-0.5
	Sep	2.0	2.5	-1.1	3.9	-3.0
	Oct	1.8	2.3	-0.3	2.7	-2.4

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/rsi/retail-sales/october-2013/index.html

Table VH-5 provides the analysis of the UK Office for National Statistics of contributions to 12-month percentage changes of value and volume of retail sales in the UK. The volume of retail sales seasonally adjusted increased 1.8 percent in the 12 months ending in Sep 2013. Sales of predominantly food stores with weight of 41.5 percent decreased 0.3 percent in the 12 months ending in Oct 2013, deducting 0.1 percentage points. Mostly nonfood stores with weight of 41.3 percent increased 2.7 percent with contribution of 1.1 percentage points. Positive contribution to 12-month percentage changes of volume was made by non-store retailing with weight of 5.7 percent, growth of 16.3 percent and positive contribution of 1.0 percentage points. Automotive fuel with weight of 11.5 percent and growth of minus 2.4 percent deducted 0.2 percentage points. The value of retail sales increased 2.4 percent in the 12 months ending in Oct 2013. There were positive contributions: 1.2 percentage points for predominantly nonfood stores and 1.1 percentage points for non-store retailing. Automotive fuel stores deducted 0.7 percentage points while food stores added 1.2 percentage points.

Table VH-5, UK, Volume and Value of Retail Sales 12-month ∆% and Percentage Points Contributions by Sectors

Oct 2013	Weight % of All Retailing	Volume SA 12- Month ∆%	PP Cont. % points	Value SA 12- Month ∆%	PP Cont. % points
All Retailing	100.0	1.8		2.5
Mostly Food Stores	41.5	-0.3	-0.1	3.0	1.2
Mostly Nonfood Stores	41.3	2.7	1.1	2.6	1.1
Non-store Retailing	5.7	16.3	1.0	15.4	0.9
Automotive Fuel	11.5	-2.4	-0.2	-5.9	-0.7

Cont.: Contribution

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/rsi/retail-sales/october-2013/index.html

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