CMP Associates Regulation Blog: Capital Flows, Exchange Rates and Unconventional Monetary Policy, Interest Rate Risks, Recovery without Hiring, Cyclical Slow Growth not Secular Stagnation, Collapse of United States Dynamism of Income Growth and Employment Creation, World Financial Turbulence, World Economic Slowdown and Global Recession Risk: Part IV

Capital Flows, Exchange Rates and Unconventional Monetary Policy, Interest Rate Risks, Recovery without Hiring, Cyclical Slow Growth not Secular Stagnation, Collapse of United States Dynamism of Income Growth and Employment Creation, World Financial Turbulence, World Economic Slowdown and Global Recession Risk

Carlos M. Pelaez

Executive Summary

I Recovery without Hiring

IA1 Hiring Collapse

IA2 Labor Underutilization

ICA3 Ten Million Fewer Full-time Jobs

IA4 Theory and Reality of Cyclical Slow Growth Not Secular Stagnation: Youth and Middle-Age Unemployment

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

IIB United States Commercial Banks Assets and Liabilities

IIA1 Transmission of Monetary Policy

IIB1 Functions of Banks

IIC United States Commercial Banks Assets and Liabilities

IID Theory and Reality of Economic History, Cyclical Slow Growth Not Secular Stagnation and Monetary Policy Based on Fear of Deflation

III World Financial Turbulence

IIIA Financial Risks

IIIE Appendix Euro Zone Survival Risk

IIIF Appendix on Sovereign Bond Valuation

IV Global Inflation

V World Economic Slowdown

VA United States

VB Japan

VC China

VD Euro Area

VE Germany

VF France

VG Italy

VH United Kingdom

VI Valuation of Risk Financial Assets

VII Economic Indicators

VIII Interest Rates

IX Conclusion

References

Appendixes

Appendix I The Great Inflation

IIIB Appendix on Safe Haven Currencies

IIIC Appendix on Fiscal Compact

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

IIIG Appendix on Deficit Financing of Growth and the Debt Crisis

IIIGA Monetary Policy with Deficit Financing of Economic Growth

IIIGB Adjustment during the Debt Crisis of the 1980s

V World Economic Slowdown. Table V-1 is constructed with the database of the IMF (http://www.imf.org/external/pubs/ft/weo/2013/02/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 0.9 percent in IQ2012 and 3.5 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 0.5 percent in IIQ2012 at the seasonally adjusted annual rate (SAAR) of minus 2.0 percent, which is much lower than 3.5 percent in IQ2012. Growth of 3.2 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 0.8 percent in IIIQ2012 at the SAAR of minus 3.2 percent and decreased 0.2 percent relative to a year earlier. Japan’s GDP grew 0.1 percent in IVQ2012 at the SAAR of 0.6 percent and decreased 0.3 percent relative to a year earlier. Japan grew 1.1 percent in IQ2013 at the SAAR of 4.5 percent and 0.1 percent relative to a year earlier. Japan’s GDP increased 0.9 percent in IIQ2013 at the SAAR of 3.6 percent and increased 1.2 percent relative to a year earlier. Japan’s GDP grew 0.3 percent in IIIQ2013 at the SAAR of 1.1 percent and increased 2.4 pecent relative to a year earlier. China grew at 2.1 percent in IIQ2012, which annualizes to 8.7 percent and 7.6 percent relative to a year earlier. China grew at 2.0 percent in IIIQ2012, which annualizes at 8.2 percent and 7.4 percent relative to a year earlier. In IVQ2012, China grew at 1.9 percent, which annualizes at 7.8 percent, and 7.9 percent in IVQ2012 relative to IVQ2011. In IQ2013, China grew at 1.5 percent, which annualizes at 6.1 percent and 7.7 percent relative to a year earlier. In IIQ2013, China grew at 1.8 percent, which annualizes at 7.4 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. China grew at 1.8 percent in IVQ2013, which annualized to 7.4 percent and 7.7 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 0.2 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 IIIQ2013, euro area GDP increased 0.1 percent and fell 0.3 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, US GDP grew 0.7 percent, 2.8 percent at SAAR and 3.1 percent relative to IIIQ2011. In IVQ2012, US 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 4.1 percent in SAAR in IIIQ2013, 1.0 percent relative to the prior quarter and 2.0 percent relative to the same quarter a year earlier (http://cmpassocregulationblog.blogspot.com/2013/12/tapering-quantitative-easing-mediocre.html) with weak hiring (http://cmpassocregulationblog.blogspot.com/2013/12/theory-and-reality-of-secular.html). In IQ2012, UK GDP changed 0.0 percent, increasing 0.6 percent relative to a year earlier. UK GDP fell 0.4 percent in IIQ2012 and changed 0.0 percent relative to a year earlier. UK GDP increased 0.8 percent in IIIQ2012 and increased 0.2 percent relative to a year earlier. UK GDP fell 0.1 percent in IVQ2012 relative to IIIQ2012 and increased 0.2 percent relative to a year earlier. UK GDP increased 0.5 percent in IQ2013 and 0.7 percent relative to a year earlier. UK GDP increased 0.8 percent in IIQ2013 and 2.0 percent relative to a year earlier. In IIIQ2013, UK GDP increased 0.8 percent and 1.9 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 0.5 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 changed 0.0 percent in IIIQ2013 and declined 1.8 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 0.6 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: 0.9 SAAR: 3.5	3.1
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: -0.5 SAAR: -2.0	3.2
China	2.1	7.6
Euro Area	-0.3	-0.5
Germany	-0.1	0.6 1.1 CA
France	-0.3	0.1
Italy	-0.6	-2.6
United Kingdom	-0.4	0.0
	IIIQ2012/ IIQ2012	IIIQ2012/ IIIQ2011
United States	QOQ: 0.7 SAAR: 2.8	3.1
Japan	QOQ: –0.8 SAAR: –3.2	-0.2
China	2.0	7.4
Euro Area	-0.2	-0.7
Germany	0.2	0.4
France	0.2	0.0
Italy	-0.5	-2.8
United Kingdom	0.8	0.2
	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	-0.1	0.2
	IQ2013/IVQ2012	IQ2013/IQ2012
United States	QOQ: 0.3 SAAR: 1.1	1.3
Japan	QOQ: 1.1 SAAR: 4.5	0.1
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	0.5	0.7
	IIQ2013/IQ2013	IIQ2013/IIQ2012
United States	QOQ: 0.6 SAAR: 2.5	1.6
Japan	QOQ: 0.9 SAAR: 3.6	1.2
China	1.8	7.5
Euro Area	0.3	-0.6
Germany	0.7	0.9
France	0.6	0.5
Italy	-0.3	-2.2
UK	0.8	2.0
	IIIQ2013/IIQ2013	III/Q2013/ IIIQ2012
USA	QOQ: 1.0 SAAR: 4.1	2.0
Japan	QOQ: 0.3 SAAR: 1.1	2.4
China	2.2	7.8
Euro Area	0.1	-0.3
Germany	0.3	1.1
France	-0.1	0.2
Italy	0.0	-1.8
UK	0.8	1.9
	IVQ2013/IIIQ2013	IVQ2013/IVQ2012
China	1.8	7.7

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

Source: Country Statistical Agencies http://www.census.gov/aboutus/stat_int.html

Table V-4 provides two types of data: growth of exports and imports in the latest available months and in the past 12 months; and contributions of net trade (exports less imports) to growth of real GDP. Japan provides the most worrisome data (http://cmpassocregulationblog.blogspot.com/2013/12/tapering-quantitative-easing-mediocre.html and earlier http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-zero-interest-rates-world.html 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 Nov 2013, Japan’s exports grew 18.4 percent in 12 months while imports increased 21.1 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 0.4 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 1.9 percentage points from GDP growth in Japan. In Dec 2013, China exports increased 4.3 percent relative to a year earlier and imports increased 8.3 percent. Germany’s exports increased 0.2 percent in the month of Nov 2013 and increased 1.0 percent in the 12 months ending in Nov 2013. Germany’s imports decreased 1.1 percent in the month of Nov and decreased 0.4 percent in the 12 months ending in Nov. 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 0.8 percentage points in IIQ2012, added 0.7 percentage points in IIIQ2012 and subtracted 0.5 percentage points in IVQ2012. In IQ2013, net trade added 0.5 percentage points to UK’s growth of value added and contributed 0.2 percentage points in IIQ2013. In IIIQ2013, net trade deducted 1.2 percentage points from UK GDP growth. France’s exports decreased 2.1 percent in Nov 2013 while imports increased 0.2. Net traded added 0.1 percentage points to France’s GDP in IIIQ2012 and 0.1 percentage points in IVQ2012. Net trade deducted 0.1 percentage points from France’s GDP growth in IQ2013 and added 0.1 percentage points in IIQ2013, deducting 0.6 percentage points in IIIQ2013. US exports increased 1.8 percent in Oct 2013 and goods exports increased 2.0 percent in Jan-Oct 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 0.14 percentage points to US GDP growth in IIIQ2013. US imports increased 0.4 percent in Oct 2013 and goods imports decreased 0.3 percent in Jan-Oct 2013 relative to a year earlier. Industrial production increased 1.1 percent in Nov 2013 after increasing 0.1 percent in Oct 2013 and increasing 0.5 percent in Sep 2013, with all data seasonally adjusted. Industrial production increased 0.3 percent in Dec 2013 after increasing 1.0 percent in Nov 2013 and increasing 0.3 percent in Oct 2013, 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 rose 0.3 percent in December, its fifth consecutive monthly increase. For the fourth quarter as a whole, industrial production advanced at an annual rate of 6.8 percent, the largest quarterly increase since the second quarter of 2010; gains were widespread across industries. Following increases of 0.6 percent in each of the previous two months, factory output rose 0.4 percent in December and was 2.6 percent above its year-earlier level. The production of mines moved up 0.8 percent; the index has advanced 6.6 percent over the past 12 months. The output of utilities fell 1.4 percent after three consecutive monthly gains. At 101.8 percent of its 2007 average, total industrial production in December was 3.7 percent above its year-earlier level and 0.9 percent above its pre-recession peak in December 2007. Capacity utilization for total industry moved up 0.1 percentage point to 79.2 percent, a rate 1.0 percentage point below its long-run (1972–2012) average.”

In the six months ending in Dec 2013, United States national industrial production accumulated increase of 2.7 percent at the annual equivalent rate of 5.5 percent, which is higher than growth of 3.2 percent in the 12 months ending in Dec 2013. Excluding growth of 1.0 percent in Nov 2013, growth in the remaining five months from Jul 2012 to Dec 2013 accumulated to 1.1 percent or 2.2 percent annual equivalent. Industrial production fell in one of the past six months. Business equipment accumulated growth of 1.7 percent in the six months from Jun to Nov 2013 at the annual equivalent rate of 4.2 percent, which is higher than growth of 3.7 percent in the 12 months ending in Dec 2013. The Fed analyzes capacity utilization of total industry in its report (http://www.federalreserve.gov/releases/g17/Current/default.htm): “Capacity utilization for total industry moved up 0.1 percentage point to 79.2 percent, a rate 1.0 percentage point below its long-run (1972–2012) average.” United States industry apparently decelerated to a lower growth rate with possible acceleration in the past few months.

Manufacturing increased 0.4 percent in Dec 2013 after increasing 0.6 percent in Nov 2013 and increasing 0.6 percent in Oct 2013 seasonally adjusted, increasing 2.5 percent not seasonally adjusted in 12 months ending in Nov 2013, as shown in Table I-2. Manufacturing grew cumulatively 2.0 percent in the six months ending in Dec 2013 or at the annual equivalent rate of 4.1 percent. Excluding the increase of 0.7 percent in Aug 2013, manufacturing accumulated growth of 1.3 percent from Aug 2013 to Dec 2013 or at the annual equivalent rate of 3.2 percent. Excluding decline of 0.5 percent in Jul 2013, manufacturing grew 2.5 percent from Aug to Dec 2013 or at the annual equivalent rate of 6.2 percent. Table I-2 provides a longer perspective of manufacturing in the US. There has been evident deceleration of manufacturing growth in the US from 2010 and the first three months of 2011 into more recent months as shown by 12 months rates of growth. Growth rates appeared to be increasing again closer to 5 percent in Apr-Jun 2012 but deteriorated. The rates of decline of manufacturing in 2009 are quite high with a drop of 18.2 percent in the 12 months ending in Apr 2009. Manufacturing recovered from this decline and led the recovery from the recession. Rates of growth appeared to be returning to the levels at 3 percent or higher in the annual rates before the recession but the pace of manufacturing fell steadily in the past six months with some strength at the margin.

Manufacturing fell 21.9 percent from the peak in Jun 2007 to the trough in Apr 2009 and increased by 19.6 percent from the trough in Apr 2009 to Dec 2013. Manufacturing output in Dec 2013 is 6.6 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	0.9 Nov	2.4 Jan-Nov	-1.4 Nov	-0.6 Jan-Nov
Japan		Nov 2013 18.4 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		Nov 2013 21.1 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		2013 4.3 Dec 12.7 Nov 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 25.0 Jan		2013 8.3 Dec 5.3 Nov 7.6 Oct 7.4 Sep 7.0 Aug 10.9 Jul -0.7 Jun -0.3 May 16.8 Apr 14.1 Mar -15.2 Feb 28.8 Jan
Euro Area	-2.2 12-M Nov	0.5 Jan-Nov	-5.5 12-M Nov	-3.6 Jan-Nov
Germany	0.2 Nov CSA	1.0 Nov	-1.1 Nov CSA	-0.4 Nov
France Nov	-2.1	-2.6	0.2	-0.1
Italy Nov	-1.9	-3.4	-2.2	-6.9
UK	1.2 Nov	0.5 Sep-Nov 13 /Sep-Nov 12	0.6 Nov	2.1 Sep-Nov 13/Sep-Nov 12
Net Trade % Points GDP Growth	% Points
USA	IIIQ2013 0.14 IIQ2013 -0.07 IQ2013 -0.28 IVQ2012 +0.68 IIIQ2012 -0.03 IIQ2012 +0.10 IQ2012 +0.44
Japan	0.4 IQ2012 -1.3 IIQ2012 -2.1 IIIQ2012 -0.6 IVQ2012 1.6 IQ2013 0.6 IIQ2013 -1.9 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 0.1 IVQ2012 -0.1 IQ2013 0.1 IIQ2013 -0.6 IIIQ2013
UK	-0.8 IQ2012 -0.8 IIQ2012 +0.7 IIIQ2012 -0.5 IVQ2012 0.5 IQ2013 0.2 IIQ2013 -1.2 IIIQ2013

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 VB-7 for Nov 2013. The share of Asia in Japan’s trade is more than one-half for 55.0 percent of exports and 45.4 percent of imports. Within Asia, exports to China are 19.4 percent of total exports and imports from China 23.4 percent of total imports. While exports to China increased 33.1 percent in the 12 months ending in Nov 2013, imports from China increased 19.4 percent. The second largest export market for Japan in Nov 2013 is the US with share of 19.2 percent of total exports, which is almost equal to that of China, and share of imports from the US of 9.0 percent in total imports. Western Europe has share of 10.2 percent in Japan’s exports and of 10.1 percent in imports. Rates of growth of exports of Japan in Nov 2013 are relatively high for several countries and regions with growth of 21.2 percent for exports to the US, 30.4 percent for exports to Brazil and 6.3 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 Nov 2013 are positive for all trading partners with exception of France. Imports from Asia increased 19.8 percent in the 12 months ending in Nov 2013 while imports from China increased 19.4 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

Nov 2013	Exports Millions Yen	12 months ∆%	Imports Millions Yen	12 months ∆%
Total	5,900,458	18.4	7,193,325	21.1
Asia	3,243,626	18.9	3,268,586	19.8
China	1,142,599	33.1	1,679,702	19.4
USA	1,131,304	21.2	647,248	34.9
Canada	68,688	15.2	96,957	7.6
Brazil	43,821	30.4	96,632	5.4
Mexico	74,569	0.2	35,001	11.0
Western Europe	600,981	17.1	728,480	7.6
Germany	165,555	25.9	201,831	6.1
France	48,177	28.7	102,161	-4.9
UK	84,919	-5.1	55,180	-2.8
Middle East	228,322	24.7	1,379,683	33.4
Australia	128,145	6.3	387,037	14.3

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, decreased to 54.0 in Dec from 54.2 in Nov, indicating expansion at almost unchanged rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/ebfdf95d51b2401aae0936330ea3bd7e). This index has remained above the contraction territory of 50.0 during 53 consecutive months. The employment index increased from 51.3 in Nov to 52.4 in Dec with input prices rising at a slower rate, new orders increasing at faster rate and output increasing at slower rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/ebfdf95d51b2401aae0936330ea3bd7e). David Hensley, Director of Global Economics Coordination at JP Morgan finds expectations of continuing growth in 2014 (http://www.markiteconomics.com/Survey/PressRelease.mvc/ebfdf95d51b2401aae0936330ea3bd7e). The JP Morgan Global Manufacturing PMI^™, produced by JP Morgan and Markit in association with ISM and IFPSM, was higher at 53.3 in Dec from 53.1 in Nov, which is the highest reading since May 2011 (http://www.markiteconomics.com/Survey/PressRelease.mvc/7757ef12fcdf458ab9f3e1c2d7c0811a). New export orders expanded for the sixth consecutive months (http://www.markiteconomics.com/Survey/PressRelease.mvc/7757ef12fcdf458ab9f3e1c2d7c0811a). David Hensley, Director of Global Economic Coordination at JP Morgan finds acceleration of global manufacturing with output at the highest rate in about three years (http://www.markiteconomics.com/Survey/PressRelease.mvc/7757ef12fcdf458ab9f3e1c2d7c0811a). The HSBC Brazil Composite Output Index, compiled by Markit, decreased marginally from 51.8 in Nov to 51.7 in Dec, indicating moderate expansion of Brazil’s private sector (http://www.markiteconomics.com/Survey/PressRelease.mvc/8e4e1a9551684016a6014835860005eb). The HSBC Brazil Services Business Activity index, compiled by Markit, decreased marginally from 52.3 in Nov to 51.7 in Dec, indicating continuing improvement in business activity at slower rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/8e4e1a9551684016a6014835860005eb). André Loes, Chief Economist, Brazil, at HSBC, finds slower growth with decreasing confidence but slower rate of increase of prices (http://www.markiteconomics.com/Survey/PressRelease.mvc/8e4e1a9551684016a6014835860005eb). The HSBC Brazil Purchasing Managers’ Index^TM (PMI^™) increased from 49.7 in Nov to 50.5 in Dec, indicating marginal improvement in manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/22c84c0c32a1483db57c2ec93cfb5ebc). André Loes, Chief Economist, Brazil at HSBC, finds improvement with growth of production and new orders (http://www.markiteconomics.com/Survey/PressRelease.mvc/22c84c0c32a1483db57c2ec93cfb5ebc).

VA United States. The Markit Flash US Manufacturing Purchasing Managers’ Index^™ (PMI^™) seasonally adjusted decreased to 53.7 in Jan from 55.0 in Dec, which is slightly higher than the average at 53.5 in 2013, indicating moderate growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/bda141f5c50642788bf2733f4522f28c). New export orders registered 48.9 in Jan, falling from 51.4 in Dec, indicating marginal contraction. Chris Williamson, Chief Economist at Markit, finds that manufacturing output is growing at 2.0 percent per quarter with positive effects on employment (http://www.markiteconomics.com/Survey/PressRelease.mvc/bda141f5c50642788bf2733f4522f28c). The Markit Flash US Services PMI™ Business Activity Index increased from 55.9 in Nov to 56.0 in Dec with the average at 53.7l, which is the lowest quarterly average in 2013 (http://www.markiteconomics.com/Survey/PressRelease.mvc/a3f2275774ad43e3b0e1b72f6b0b7b8b). Chris Williamson, Chief Economist at Markit, finds that the surveys are consistent with growth at around 3 percent per year in IVQ2013 (http://www.markiteconomics.com/Survey/PressRelease.mvc/a3f2275774ad43e3b0e1b72f6b0b7b8b). The Markit US Composite PMI™ Output Index of Manufacturing and Services fell marginally to 56.1 in Dec from 56.2 in Nov (http://www.markiteconomics.com/Survey/PressRelease.mvc/546ebdb0665349ea89f47dc9955c4d91). The Markit US Services PMI™ Business Activity Index fell marginally from 55.9 in Nov to 55.7 in Dec (http://www.markiteconomics.com/Survey/PressRelease.mvc/546ebdb0665349ea89f47dc9955c4d91). Chris Williamson, Chief Economist at Markit, finds renewed optimism by business (http://www.markiteconomics.com/Survey/PressRelease.mvc/546ebdb0665349ea89f47dc9955c4d91). The Markit US Manufacturing Purchasing Managers’ Index^™ (PMI^™) increased to 55.0 in Dec from 54.7 in Nov, which indicates solid expansion (http://www.markiteconomics.com/Survey/PressRelease.mvc/3c6c524ef8474099a853c9cc449b5f1c). The index of new exports orders was unchanged from 51.4 in Nov to 51.4 in Dec while total new orders decreased from 56.2 in Dec to 56.1 in Dec. Chris Williamson, Chief Economist at Markit, finds that the index suggests growth of production at 3.0 percent annual rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/3c6c524ef8474099a853c9cc449b5f1c). The purchasing managers’ index (PMI) of the Institute for Supply Management (ISM) Report on Business^® increased 0.9 percentage points from 56.4 in Oct to 57.3 in Nov, which indicates growth at a higher rate (http://www.ism.ws/ISMReport/MfgROB.cfm?navItemNumber=12942). The index of new orders increased 3.0 percentage points from 60.6 in Oct to 63.6 in Nov. The index of exports increased 2.5 percentage point from 57.0 in Oct to 59.5 in Nov, growing at a faster rate. The Non-Manufacturing ISM Report on Business^® PMI decreased 0.9 percentage points from 53.9 in Nov to 53.0 in Dec, indicating growth of business activity/production during 53 consecutive months, while the index of new orders decreased 7.0 percentage points from 56.4 in Nov to 49.4 in Dec (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	Dec 12 months NSA ∆%: 1.5; ex food and energy ∆%: 1.7 Dec month SA ∆%: 0.3; ex food and energy ∆%: 0.1 Blog 1/19/14
Producer Price Index	Dec 12-month NSA ∆%: 1.2; ex food and energy ∆% 1.4 Dec month SA ∆% = 0.4; ex food and energy ∆%: 0.3 Blog 1/19/14
PCE Inflation	Nov 12-month NSA ∆%: headline 0.9; ex food and energy ∆% 1.1 Blog 12/29/13
Employment Situation	Household Survey: Dec Unemployment Rate SA 6.7% Blog calculation People in Job Stress Dec: 29.3 million NSA, 18.0% of Labor Force Establishment Survey: Dec Nonfarm Jobs +74,000; Private +87,000 jobs created Nov 12-month Average Hourly Earnings Inflation Adjusted ∆%: 0.8 Blog 1/12/14
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 Nov 2013 4.097 million lower by 0.804 million than 4.901 million in Nov 2007 Blog 1/26/14
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 2.0 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 4.1 Blog 12/22/13
Real Private Fixed Investment	SAAR IIIQ2013 5.9 ∆% IVQ2007 to IIIQ2013: minus 3.6% Blog 12/22/13
Personal Income and Consumption	Nov month ∆% SA Real Disposable Personal Income (RDPI) SA ∆% 0.1 Real Personal Consumption Expenditures (RPCE): 0.5 12-month Nov NSA ∆%: RDPI: 0.6; RPCE ∆%: 2.6 Blog 12/29/13
Quarterly Services Report	IIIQ13/IIQ12 NSA ∆%: Information 4.9 Financial & Insurance 0.6 Blog 12/15/13
Employment Cost Index	Compensation Private IIIQ2013 SA ∆%: 0.4 Sep 12 months ∆%: 1.9 Blog 11/24/13
Industrial Production	Dec month SA ∆%: 0.3 Dec 12 months SA ∆%: 3.7 Manufacturing Dec SA ∆% 0.4 Dec 12 months SA ∆% 2.6, NSA 2.5 Capacity Utilization: 79.0 Blog 1/19/14
Productivity and Costs	Nonfarm Business Productivity IIIQ2013∆% SAAE 3.0; IIIQ2013/IIIQ2012 ∆% 0.3; Unit Labor Costs SAAE IIIQ2013 ∆% -1.4; IIIQ2013/IIIQ2012 ∆%: 2.1 Blog 12/22/2013
New York Fed Manufacturing Index	General Business Conditions From Dec 2.22 to Jan 12.51 New Orders: From Dec minus 1.69 to Jan 10.98 Blog 1/19/14
Philadelphia Fed Business Outlook Index	General Index from Dec 6.4 to Jan 9.4 New Orders from Dec 12.9 to Jan 5.1 Blog 1/19/14
Manufacturing Shipments and Orders	New Orders SA Nov ∆% 1.8 Ex Transport 0.6 Jan-Nov NSA New Orders 2.4 Ex transport 1.4 Blog 1/12/14
Durable Goods	Nov New Orders SA ∆%: 3.5; ex transport ∆%: 1.2 Jan-Nov 13/Jan-Nov 12 New Orders NSA ∆%: 5.3; ex transport ∆% 3.6 Blog 12/29/13
Sales of New Motor Vehicles	Jan-Dec 2013 15,600,199; Jan-Dec 2012 14,491,873. Dec 13 SAAR 16.40 million, Nov 13 SAAR 16.41 million, Dec 2012 SAAR 15.24 million Blog 1/5/14
Sales of Merchant Wholesalers	Jan-Nov 2013/Jan-Nov 2012 NSA ∆%: Total 3.7; Durable Goods: 3.9; Nondurable Goods: 3.6 Blog 1/12/14
Sales and Inventories of Manufacturers, Retailers and Merchant Wholesalers	Nov 13/Nov 12-M NSA ∆%: Sales Total Business 2.5; Manufacturers 1.7 Retailers 3.4; Merchant Wholesalers 2.4 Blog 1/19/14
Sales for Retail and Food Services	Jan-Dec 2013/Jan-Dec 2012 ∆%: Retail and Food Services 4.2; Retail ∆% 4.2 Blog 1/19/14
Value of Construction Put in Place	Nov SAAR month SA ∆%: 1.0 Nov 12-month NSA: 1.1 Jan-Nov 2013 ∆% 5.0 Blog 1/5/14
Case-Shiller Home Prices	Oct 2013/Oct 2012 ∆% NSA: 10 Cities 13.6; 20 Cities: 13.6 ∆% Oct SA: 10 Cities 1.0 ; 20 Cities: 1.0 Blog 1/5/14
FHFA House Price Index Purchases Only	Oct SA ∆% 0.5; 12 month NSA ∆%: 8.2 Blog 12/29/13
New House Sales	Nov 2013 month SAAR ∆%: minus 2.1 Jan-Nov 2013/Jan-Nov 2012 NSA ∆%: 18.1 Blog 12/29/13
Housing Starts and Permits	Dec Starts month SA ∆% -9.8; Permits ∆%: -3.0 Jan-Dec 2013/Jan-Dec 2012 NSA ∆% Starts 18.3; Permits ∆% 17.5 Blog 1/19/14
Trade Balance	Balance Nov SA -$24,252 million versus Oct -$39,328 million Exports Nov SA ∆%: 0.9 Imports Nov SA ∆%: -1.4 Goods Exports Jan-Nov 2013/2012 NSA ∆%: 2.4 Goods Imports Jan-Nov 2013/2012 NSA ∆%: -0.6 Blog 1/12/14
Export and Import Prices	Dec 12-month NSA ∆%: Imports -1.3; Exports -1.0 Blog 1/19/14
Consumer Credit	Nov ∆% annual rate: Total 4.8; Revolving 0.6; Nonrevolving 6.4 Blog 1/12/14
Net Foreign Purchases of Long-term Treasury Securities	Nov Net Foreign Purchases of Long-term US Securities: -$29.3 billion Major Holders of Treasury Securities: China $1317 billion; Japan $1186 billion; Total Foreign US Treasury Holdings Nov $5717 billion Blog 1/19/14
Treasury Budget	Fiscal Year 2014/2013 ∆% Dec: Receipts 8.0; Outlays minus 7.8; Individual Income Taxes -1.9 Deficit Fiscal Year 2011 $1,296 billion Deficit Fiscal Year 2012 $1,089 billion Blog 1/19/2014
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	Dec 2013 SAAR ∆%: Securities 11.7 Loans 3.7 Cash Assets -9.0 Deposits 9.4 Blog 1/26/14
Flow of Funds	IIIQ2013 ∆ since 2007 Assets +$8554.2 MM Nonfinancial -$1228.7 MM Real estate -$1838.9 MM Financial +9782.9 MM Net Worth +$9269.0 MM Blog 12/29/13
Current Account Balance of Payments	IIIQ2013 -110,055 MM %GDP 2.2 Blog 12/22/13

Links to blog comments in Table USA:

1/19/14 http://cmpassocregulationblog.blogspot.com/2014/01/world-inflation-waves-interest-rate.html

1/12/14 http://cmpassocregulationblog.blogspot.com/2014/01/twenty-nine-million-unemployed-or.html

1/5/14 http://cmpassocregulationblog.blogspot.com/2014/01/theory-and-reality-of-secular.html

12/29/13 http://cmpassocregulationblog.blogspot.com/2013/12/collapse-of-united-states-dynamism-of.html

12/22/13 http://cmpassocregulationblog.blogspot.com/2013/12/tapering-quantitative-easing-mediocre.html

12/15/13 http://cmpassocregulationblog.blogspot.com/2013/12/theory-and-reality-of-secular.html

11/24/13 http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-zero-interest-rates-world.html

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

VB Japan. Table VB-BOJF provides the forecasts of economic activity and inflation in Japan by the majority of members of the Policy Board of the Bank of Japan, which is part of their Outlook for Economic Activity and Prices (http://www.boj.or.jp/en/announcements/release_2013/k130711a.pdf). For fiscal 2013, the forecast is of growth of GDP between 2.5 and 2.9 percent, with the all items CPI less fresh food of 0.7 to 0.9 percent (http://www.boj.or.jp/en/announcements/release_2014/k140122a.pdf). The critical difference is forecast of the CPI excluding fresh food of 2.9 to 3.6 percent in 2014 and 1.7 to 2.9 percent in 2015. Consumer price inflation in Japan excluding fresh food was 0.0 percent in Nov 2013 and 1.2 percent in 12 months (http://www.stat.go.jp/english/data/cpi/1581.htm). The new monetary policy of the Bank of Japan aims to increase inflation to 2 percent. These forecasts are biannual in Apr and Oct. The Cabinet Office, Ministry of Finance and Bank of Japan released on Jan 22, 2013, a “Joint Statement of the Government and the Bank of Japan on Overcoming Deflation and Achieving Sustainable Economic Growth” (http://www.boj.or.jp/en/announcements/release_2013/k130122c.pdf) with the important change of increasing the inflation target of monetary policy from 1 percent to 2 percent:

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

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

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

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

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

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

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

Fiscal Year Date of Forecast	Real GDP	CPI All Items Less Fresh Food	Excluding Effects of Consumption Tax Hikes
2013
Jan 2014	+2.5 to +2.9 [+2.7]	+0.7 to +0.9 [+0.7]
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
Jan 2014	+0.9 to 1.5 [+1.4]	+2.9 to +3.6 [+3.3]	+0.9 to +1.6 [+1.3]
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
Jan 2014	+1.2 to +1.8 [+1.5]	+1.7 to +2.9 [+2.6]	+1.0 to +2.2 [+1.9]
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

http://www.boj.or.jp/en/announcements/release_2014/k140122a.pdf

Private-sector activity in Japan expanded with the Markit Composite Output PMI^™ Index unchanged from 54.0 in Nov to 54.0 in Dec, indicating strong growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/0a46c780971f46dfa4572eb754475113). Claudia Tillbrooke, Economist at Markit and author of the report, finds that the survey data suggest continuing strong growth of the economy of Japan with strength in manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/0a46c780971f46dfa4572eb754475113). The Markit Business Activity Index of Services increased from the record of 51.8 in Nov to 52.1 in Dec (http://www.markiteconomics.com/Survey/PressRelease.mvc/0a46c780971f46dfa4572eb754475113). Claudia Tillbrooke, Economist at Markit and author of the report, finds growth in services converging to manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/0a46c780971f46dfa4572eb754475113). The Markit/JMMA Purchasing Managers’ Index^™ (PMI™), seasonally adjusted, increased from 55.1 in Nov to 55.2 in Dec, which is the highest level since Jul 2006 (http://www.markiteconomics.com/Survey/PressRelease.mvc/a42e8a52c4114460ad2b9f8cea030c3f). New orders grew at a high rate for the tenth consecutive month. New export orders increased for the fourth consecutive month. Claudia Tillbrooke, Economist at Markit and author of the report, finds improving manufacturing conditions at the highest levels since 2006 with some concerns about the sales tax increase in Apr and employment (http://www.markiteconomics.com/Survey/PressRelease.mvc/a42e8a52c4114460ad2b9f8cea030c3f).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	Dec ∆% 0.3 12 months ∆% 2.5 Blog 1/19/14
Consumer Price Index	Nov NSA ∆% 0.0; Nov 12 months NSA ∆% 1.5 Blog 12/29/13
Real GDP Growth	IIIQ2013 ∆%: 0.3 on IIQ2013; IIIQ2013 SAAR 1.1; ∆% from quarter a year earlier: 2.4 % Blog 6/16/13 8/18/13 9/15/13 11/17/13 12/15/13
Employment Report	Nov Unemployed 2.49 million Change in unemployed since last year: minus 110 thousand Unemployment rate: 4.0 % Blog 12/29/13
All Industry Indices	Nov month SA ∆% 0.3 12-month NSA ∆% 1.7 Blog 1/26/14
Industrial Production	Nov SA month ∆%: 0.1 12-month NSA ∆% 5.0 Blog 12/29/13
Machine Orders	Total Nov ∆% 5.8 Private ∆%: -1.3 Nov ∆% Excluding Volatile Orders 9.3 Blog 1/19/14
Tertiary Index	Nov month SA ∆% 0.6 Nov 12 months NSA ∆% 0.4 Blog 1/19/14
Wholesale and Retail Sales	Nov 12 months: Total ∆%: 3.-0 Wholesale ∆%: 2.5 Retail ∆%: 4.0 Blog 12/29/13
Family Income and Expenditure Survey	Nov 12-month ∆% total nominal consumption 2.1, real 0.2 Blog 12/29/13
Trade Balance	Exports Nov 12 months ∆%: 18.4 Imports Nov 12 months ∆% 21.1 Blog 12/22/13

Links to blog comments in Table JPY:

1/19/14 http://cmpassocregulationblog.blogspot.com/2014/01/world-inflation-waves-interest-rate.html

12/29/13 http://cmpassocregulationblog.blogspot.com/2013/12/collapse-of-united-states-dynamism-of.html

12/22/13 http://cmpassocregulationblog.blogspot.com/2013/12/tapering-quantitative-easing-mediocre.html

12/15/13 http://cmpassocregulationblog.blogspot.com/2013/12/theory-and-reality-of-secular.html

11/17/13 http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-unwinding-monetary-policy.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 0.3 percent in IIIQ2013 (Table VB-1 http://cmpassocregulationblog.blogspot.com/2013/12/theory-and-reality-of-secular.html), industry increased 1.8 percent, the tertiary sector decreased 0.1 percent, government decreased 0.4 percent and construction increased 5.4 percent. The report shows that the all industry index increased 0.6 percent in IIIQ2013. Industry added 0.31 percentage points to growth of the all industry index and the tertiary index deducted 0.07 percentage points. Japan had already experienced a very weak quarter in IVQ2010, with decline of GDP of 0.5 percent (Table VB-1 http://cmpassocregulationblog.blogspot.com/2013/12/theory-and-reality-of-secular.html), when it was unexpectedly hit by the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. GDP fell 1.8 percent in IQ2011 and 0.7 percent in IIQ2011. GDP increased 0.1 percent 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/2013/12/theory-and-reality-of-secular.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	-0.1	-0.4	0.6	0.3
Cont to IIIQ % Change	0.27	0.31	-0.07	-0.05
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	-0.8
IIQ	1.3	-2.1	0.0	0.0	-0.2	-0.5
IQ	2.0	1.6	0.0	0.2	0.1	0.9

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/2013/12/theory-and-reality-of-secular_3421.html

There are more details in Table VB-2. In Nov 2013, the all industry activity index increased 0.3 percent with industry decreasing 0.1 percent and services increasing 0.6 percent while construction increased 1.8 percent and government decreased 0.9 percent. Industry deducted 0.02 percentage points and services added 0.39 percentage points while construction added 0.09 percentage points and government deducted 0.11 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 0.5 percent in Sep 2013. The index fell 0.4 percent in Oct 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 and 1.0 percent in Oct 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
Nov 2013	1.8	-0.1	0.6	-0.9	0.3
Cont to Nov % Change	0.09	-0.02	0.39	-0.11
Oct 2013	1.1	1.0	-0.9	0.5	-0.4
Sep	1.3	1.3	0.1	-0.3	0.5
Aug	0.0	-0.9	0.6	-0.2	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

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 2.4 percent relative to a year earlier (Table VB-4 http://cmpassocregulationblog.blogspot.com/2013/12/theory-and-reality-of-secular.html). Industry increased 2.2 percent relative to a year earlier while the tertiary sector increased 1.1 percent, adding combined 1.11 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 1.4 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	1.4
Cont to 2012 % Change	0.14	0.02	0.93	0.04
2011	-2.0	-2.3	0.1	-0.2	-0.5	-0.5
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	13.0	2.2	1.1	-0.8	1.6	2.4
Cont to IIIQ % Change	0.59	0.38	0.73	-0.10
IIQ	8.8	-3.1	1.2	-0.3	0.5	1.2
IQ2013	5.4	-7.8	-0.2	0.7	-1.2	0.1
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	-0.2
IIQ	4.9	5.5	2.1	0.6	2.6	3.2
IQ	-1.1	6.2	2.4	0.3	2.6	3.1

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

http://www.meti.go.jp/english/statistics/index.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 1.7 percent in Nov 2013 relative to Nov 2012. Industry increased 4.8 percent in Nov 2013 relative to a year earlier, adding 0.83 percentage points to growth of the all industry activity index. The tertiary sector increased 0.4 percent, adding 0.27 percentage points. Construction added 0.71 percentage points to the index and government deducted 0.13 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
Nov 2013	13.3	4.8	0.4	-1.1	1.7
Cont to Nov % Change	0.71	0.83	0.27	-0.13
Oct	14.4	5.3	0.2	-0.5	1.7
Sep	12.8	5.1	1.4	-1.2	2.3
Aug	13.0	-0.5	0.7	-0.1	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

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

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

VC China. China estimates an index of nonmanufacturing purchasing managers based on 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 total index increased from 55.7 in Mar 2012 to 58.0 in Mar 2012, decreasing to 53.9 in Aug 2013. The index decreased from 56.0 in Nov 2013 to 54.6 in Dec 2013. The index of new orders increased from 52.2 in Jan 2012 to 54.3 in Dec 2012 but fell to 50.1 in May 2013, barely above the neutral frontier of 50.0. The index of new orders stabilized at 51.0 in Nov-Dec 2013.

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

	Total Index	New Orders	Interm. Input Prices	Subs Prices	Exp
Dec 2013	54.6	51.0	56.9	52.0	58.7
Nov	56.0	51.0	54.8	49.5	61.3
Oct	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. The index fell from 56.1 in Dec 2012 to 53.9 in Jun 2013. The index recovered to 56.3 in Oct 2013, decreasing marginally to 54.6 in Dec 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 2012, falling to 49.2 in Aug 2012, rebounding to 50.6 in Dec 2012. The index fell to 50.1 in Jun 2013, barely above the neutral frontier at 50.0, recovering to 51.4 in Nov 2013 but falling to 51.0 in Dec 2013. The index of new orders fell from 57.2 in Apr 2012 to 52.0 in Dec 2012. The index of new orders fell from 54.5 in Nov 2013 to 53.9 in Dec 2013.

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

	IPM	PI	NOI	INV	EMP	SDEL
Dec 2013	51.0	53.9	52.0	47.6	48.7	50.5
Nov	51.4	54.5	52.3	47.8	49.6	50.6
Oct	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. The index fell to 50.1 in Feb 2013 and in Jun 2013. The index decreased from 51.4 in Nov 2013 to 51.0 in Dec 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 IVQ2013 relative to the same period in 2012 was 7.7 percent, as shown in Table VC-GDP. Secondary industry accounts for 43.9 percent of GDP in IVQ2013. In IVQ2013, industry alone accounts for 37.0 percent in IVQ2013 and construction with the remaining 6.9 percent in the four quarters of 2013. Tertiary industry accounts for 46.1 percent of cumulative GDP in IVQ2013 and primary industry for 10.0 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 10.4 percent in IIQ2011 to 7.4 percent in IVQ2011 and 5.7 percent in IQ2012, rebounding to 8.7 percent in IIQ2012, 8.2 percent in IIIQ2012 and 7.8 percent in IVQ2012. Annual equivalent growth in IQ2013 fell to 6.1 percent and to 7.4 percent in IIQ2013, rebounding to 9.1 percent in IIIQ2013. Annual equivalent growth was 7.4 percent in IVQ2013.

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	56,884.5	7.7
Primary Industry	5,695.7	4.0
Farming	5,695.7	4.0
Secondary Industry	24,968.4	7.8
Industry	21,068.9	7.6
Construction	3899.5	9.5
Tertiary Industry	26,220.4	8.3
Transport, Storage, Post	2728.3	7.2
Wholesale, Retail Trades	5,567.2	10.3
Hotel & Catering Services	1149.4	5.3
Financial Intermediation	3353.5	10.1
Real Estate	3329.5	6.6
Other	10,092.5	7.7
Growth in Quarter Relative to Prior Quarter	∆% on Prior Quarter	∆% Annual Equivalent
2013
IVQ2013	1.8	7.4
IIIQ2013	2.2	9.1
IIQ2013	1.8	7.4
IQ2013	1.5	6.1
2012
IVQ2012	1.9	7.8
IIIQ2012	2.0	8.2
IIQ2012	2.1	8.7
IQ2012	1.4	5.7
2011
IVQ2011	1.8	7.4
IIIQ2011	2.2	9.1
IIQ2011	2.5	10.4
IQ2011	2.3	9.5

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

Growth of China’s GDP in IVQ2013 relative to the same period in 2012 was 7.7 percent, as shown in Table VC-GDPA. Secondary industry accounts for 43.9 percent of GDP of which industry alone for 37.0 percent in cumulative IVQ2013 and construction with the remaining 6.9 percent in the four quarters of 2013. Tertiary industry accounts for 45.1 percent of GDP in the cumulative to IVQ2013 and primary industry for 10.0 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. GDP grew 7.7 percent in IVQ2013 relative to a year earlier and 1.8 percent relative to IIIQ2013, which is equivalent to 7.4 percent per year.

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

	IQ 2013	IIQ 2013	IIIQ 2013	IVQ 2013
GDP	7.7	7.5	7.8	7.7
Primary Industry	3.4	3.0	3.4	4.0
Secondary Industry	7.8	7.6	7.8	7.8
Tertiary Industry	8.3	8.3	8.4	8.3
GDP ∆% Relative to a Prior Quarter	1.5	1.8	2.2	1.8
	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	2.5	2.2	1.8	1.4	2.1	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/a5d1371973e1486d93f290b9dfe5fe22) is slowing. The overall Flash HSBC China Manufacturing PMI^™ decreased from 50.5 in Dec to 49.6 in Jan, which is moderately below the contraction frontier of 50.0, while the Flash HSBC China Manufacturing Output Index decreased from 51.4 in Dec to 51.3 in Jan, remaining in moderate expansion territory. Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds that the index is consistent with softening domestic demand (http://www.markiteconomics.com/Survey/PressRelease.mvc/a5d1371973e1486d93f290b9dfe5fe22). 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, decreasing from 52.3 in Nov to 51.2 in Dec, indicating moderate growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/d4eff443fc7a4ad8ba13150b37fa7ff3). Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds support of manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/d4eff443fc7a4ad8ba13150b37fa7ff3). The HSBC Business Activity index decreased from 52.5 in Nov to 50.9 in Dec (http://www.markiteconomics.com/Survey/PressRelease.mvc/d4eff443fc7a4ad8ba13150b37fa7ff3). Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC, finds manufacturing supporting growth of services (http://www.markiteconomics.com/Survey/PressRelease.mvc/d4eff443fc7a4ad8ba13150b37fa7ff3). The HSBC Purchasing Managers’ Index^™ (PMI^™), compiled by Markit, decreased marginally to 50.5 in Dec from 50.8 in Nov, indicating marginally expanding manufacturing at slower rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/c3747b7d95134930925b6676bf0db89c). New export orders increased marginally with growth of total new orders originating in domestic demand. 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 into 2014 (http://www.markiteconomics.com/Survey/PressRelease.mvc/c3747b7d95134930925b6676bf0db89c). Table CNY provides the country data table for China.

Table CNY, China, Economic Indicators

Price Indexes for Industry	Dec 12-month ∆%: minus 1.4 Dec month ∆%: 0.0 Blog 1/12/14
Consumer Price Index	Dec month ∆%: 0.3 Dec 12 months ∆%: 2.5 Blog 1/12/14
Value Added of Industry	Dec month ∆%: 0.71 Jan-Dec 2013/Jan-Dec 2012 ∆%: 9.7 Dec 12-Month ∆%: 9.7 Blog 1/26/14
GDP Growth Rate	Year IVQ2013 ∆%: 7.7 Quarter IVQ2013 AE ∆%: 7.4 Blog 1/26/14
Investment in Fixed Assets	Total Jan-Dec 2013 ∆%: 19.6 Real estate development: 19.8 Blog 1/26/14
Retail Sales	Dec month ∆%: 1.24 Dec 12 month ∆%: 13.6 Jan-Dec ∆%: 13.1 Blog 1/26/14
Trade Balance	Dec balance $25.60 billion Exports 12M ∆% 4.3 Imports 12M ∆% 8.3 Cumulative Dec: $259.75 billion Blog 1/12/14

Links to blog comments in Table CNY:

1/12/14 http://cmpassocregulationblog.blogspot.com/2014/01/twenty-nine-million-unemployed-or.html

Cumulative growth of China’s GDP in IVQ2013 relative to the same period in 2012 was 7.7 percent, as shown in Table VC-1. Secondary industry accounts for 43.9 percent of GDP in IVQ2013. In IVQ2013, industry alone accounts for 37.0 percent in IVQ2013 and construction with the remaining 6.9 percent in the four quarters of 2013. Tertiary industry accounts for 46.1 percent of cumulative GDP in IVQ2013 and primary industry for 10.0 percent. China’s growth strategy consisted of rapid increases in productivity in industry to absorb population from agriculture where incomes are lower (Pelaez and Pelaez, The Global Recession Risk (2007), 56-80). The bottom block of Table VC-1 provides quarter-on-quarter growth rates of GDP and their annual equivalent. China’s GDP growth decelerated significantly from annual equivalent 10.4 percent in IIQ2011 to 7.4 percent in IVQ2011 and 5.7 percent in IQ2012, rebounding to 8.7 percent in IIQ2012, 8.2 percent in IIIQ2012 and 7.8 percent in IVQ2012. Annual equivalent growth in IQ2013 fell to 6.1 percent and to 7.4 percent in IIQ2013, rebounding to 9.1 percent in IIIQ2013. Annual equivalent growth was 7.4 percent in IVQ2013.

Table VC-1, 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	56,884.5	7.7
Primary Industry	5,695.7	4.0
Farming	5,695.7	4.0
Secondary Industry	24,968.4	7.8
Industry	21,068.9	7.6
Construction	3899.5	9.5
Tertiary Industry	26,220.4	8.3
Transport, Storage, Post	2728.3	7.2
Wholesale, Retail Trades	5,567.2	10.3
Hotel & Catering Services	1149.4	5.3
Financial Intermediation	3353.5	10.1
Real Estate	3329.5	6.6
Other	10,092.5	7.7
Growth in Quarter Relative to Prior Quarter	∆% on Prior Quarter	∆% Annual Equivalent
2013
IVQ2013	1.8	7.4
IIIQ2013	2.2	9.1
IIQ2013	1.8	7.4
IQ2013	1.5	6.1
2012
IVQ2012	1.9	7.8
IIIQ2012	2.0	8.2
IIQ2012	2.1	8.7
IQ2012	1.4	5.7
2011
IVQ2011	1.8	7.4
IIIQ2011	2.2	9.1
IIQ2011	2.5	10.4
IQ2011	2.3	9.5

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

Growth of China’s GDP in IVQ2013 relative to the same period in 2012 was 7.7 percent, as shown in Table VC-2. Secondary industry accounts for 43.9 percent of GDP of which industry alone for 37.0 percent in cumulative IVQ2013 and construction with the remaining 6.9 percent in the four quarters of 2013. Tertiary industry accounts for 45.1 percent of GDP in the cumulative to IVQ2013 and primary industry for 10.0 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. GDP grew 7.7 percent in IVQ2013 relative to a year earlier and 1.8 percent relative to IIIQ2013, which is equivalent to 7.4 percent per year.

Table VC-2, China, Growth Rate of GDP, ∆% Relative to a Year Earlier and ∆% Relative to Prior Quarter

	IQ 2013	IIQ 2013	IIIQ 2013	IVQ 2013
GDP	7.7	7.5	7.8	7.7
Primary Industry	3.4	3.0	3.4	4.0
Secondary Industry	7.8	7.6	7.8	7.8
Tertiary Industry	8.3	8.3	8.4	8.3
GDP ∆% Relative to a Prior Quarter	1.5	1.8	2.2	1.8
	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	2.5	2.2	1.8	1.4	2.1	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/

Cumulative and 12-months rates of value added of industry in China are provided in Table VC-3. Value added of industry increased 9.7 percent in Jan-Dec 2013 relative to a year earlier and 9.7 percent in the 12 months ending in Dec 2013. Industry’s value added increased 9.7 percent in Jan-Nov 2013 and 10.0 percent in the 12 months ending in Nov 2013. Industry’s value added increased 9.7 percent in Jan-Oct 2013 relative to the same period a year earlier and 10.3 percent in the 12 months ending in Oct 2013. Value added in total industry increased 9.6 in Jan-Sep 2013 relative to a year earlier and 10.2 percent in 12 months. Value added in total industry in Jan-Aug 2013 increased 9.5 percent relative to a year earlier. Heavy industry (manufacturing) had been the driver of growth with a cumulative rate of 10.0 percent relative to a year earlier in Jan-Mar 2012 that declined to 10.5 percent in Jan-Apr 2012 relative to the same period a year earlier and further down to 10.1 percent in Jan-Jun 2012. Growth of heavy industry was 9.9 percent in Jan-Jul 2012, 9.8 percent in Jan-Aug 2012, 9.7 percent in Jan-Sep 2012, 9.7 percent in Jan-Oct 2012, 9.8 percent in Jan-Nov 2012, 9.9 percent in Jan-Dec 2012, 10.2 percent in Jan-Feb 2013. Growth of heavy industry was 9.8 percent in Jan-Mar 2013, 9.7 percent in Jan-Apr 2013, 9.7 percent in Jan-May 2013, 10.0 percent in Jan-Jun 2013, 10.1 percent in Jan-Jul 2013 and 10.2 percent in Jan-Aug 2013. The rate for heavy industry increased marginally to 10.3 percent in Jan-Sep 2013. Heavy industry grew 10.5 percent in Jan-Dec 2013 and 10.7 percent in the 12 months ending in Dec 2013. Light industry (mining and quarrying) grew 6.4 percent in Jan-Dec 2013 relative to a year earlier. Growth of total industry decelerated from cumulative 14.4 percent in Jan-Mar 2011 to 9.7 percent in Jan-Dec 2013.

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

	Industry	Light Industry	Heavy Industry	State Owned	Joint-Stock
2013
Jan-Dec	9.7	6.4	10.5	6.9	11.0
12M Dec	9.7	5.4	10.7	8.3	10.8
Jan-Nov	9.7	6.4	10.5	6.8	4.4
12M Nov	10.0	5.6	11.0	9.1	2.4
Jan-Oct	9.7	6.5	10.4	6.5	11.0
12M Oct	10.3	4.3	11.4	8.4	11.1
Jan-Sep	9.6	6.7	10.3	6.3	11.0
12M Sep	10.2	4.9	11.1	7.8	11.1
Jan-Aug	9.5	6.9	10.2	6.1	11.0
12M Aug	10.4	5.8	10.9	9.5	11.7
Jan-Jul	9.4	7.1	10.1	5.6	10.9
12M Jun	9.7	5.5	10.5	8.1	11.1
Jan-Jun	9.3	7.3	10.0	5.2	10.9
12M Jun	8.9	5.8	9.6	6.3	10.5
Jan-May	9.4	8.5	9.7	4.9	11.0
12M May	9.2	8.0	9.8	4.4	10.7
Jan-Apr	9.4	8.6	9.7	4.9	11.1
12 M Apr	9.3	8.5	9.6	4.3	10.9
Jan-Mar	9.5	8.7	9.8	5.2	11.3
12 M Mar	8.9	8.2	9.1	4.3	11.0
Jan-Feb	9.9	9.1	10.2	5.8	11.4
2012
Jan-Dec 2012	10.0	10.1	9.9	6.4	11.8
12 M Dec	10.3	9.6	10.6	8.0	12.1
Jan-Nov	10.0	10.2	9.8	6.3	11.8
12 M Nov	10.1	9.2	10.5	7.2	11.8
Jan-Oct	10.0	10.3	9.7	6.4	11.8
12 M Oct	9.6	9.1	9.7	7.0	11.7
Jan-Sep	10.0	10.4	9.7	6.3	11.8
12 M Sep	9.2	9.0	9.3	6.3	11.0
Jan-Aug	10.1	10.5	9.8	6.3	15.4
12 M Aug	8.9	8.6	9.0	5.3	14.3
Jan-Jul	10.3	10.8	9.9	6.6	12.1
12 M Jul	9.2	10.1	8.8	4.8	10.9
Jan-Jun	10.5	11.1	10.1	7.0	12.4
12 M Jun	9.5	9.0	9.6	6.5	11.5
Jan-May	10.7	11.5	10.3	6.7	12.4
12 M May	9.6	9.1	9.8	6.6	11.0
Jan-Apr	11.0	12.3	10.5	6.6	12.9
12 M Apr	9.3	10.3	8.9	4.3	10.7
Jan-Mar	11.6	13.2	11.0	7.2	13.8
12 M Mar	11.9	13.9	11.2	8.0	13.7
Jan-Feb	11.4	12.7	10.9	7.3	13.9
2011
Jan-Dec	13.9	13.0	14.3	9.9	15.8
12 M Dec	12.8	12.6	13.0	9.2	14.7
Jan-Nov	14.0	13.0	14.4	9.9	16.0
12 M Nov	12.4	12.4	12.4	7.8	14.4
Jan-Oct	14.1	13.0	14.5	10.1	9.1
12 M Oct	13.2	12.1	13.7	8.9	15.1
Jan-Sep	14.2	13.1	14.6	10.4	16.1
12 M Sep	13.8	12.8	14.3	9.9	16.0
Jan-Aug	14.2	13.1	14.6	10.4	16.1
12 M Aug	13.5	13.4	13.5	9.4	15.5
Jan-Jul	14.3
12 M Jul	14.0	12.8	14.5	9.5
Jan-Jun	14.3	13.1	14.7	10.7	19.7
12 M Jun	15.1	13.9	15.6	10.7	20.8
Jan-May	14.0	12.9	14.4	10.7	19.3
12 M May	13.3	12.9	13.5	8.9	18.7
Jan-Apr	14.2	12.9	14.7	11.2	19.5
12 M Apr	13.4	11.9	14.0	10.4	18.0
Jan-Mar	14.4	13.1	14.9	11.4	19.8
12 M Mar	14.8	12.8	15.6	12.9	19.2
12 M Feb	14.9	13.1	15.6	10.5	21.7
Jan-Feb	14.1	13.3	14.4	10.6	20.3

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

Source: National Bureau of Statistics of China

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

Chart VC-1 provides 12-month percentage changes of value added of industry in 2012 and from Jan to Dec 2013. Growth rates of value added of industry in the first five months of 2010 were higher than in 2011 as would be expected in an earlier phase of recovery from the global recession. Growth rates converged in the second half of 2011 to lower percentages with further decline into 2013 to single digit percentage changes, 10.3 percent in Dec 2012, 8.9 percent in Mar 2013 and 9.3 percent in Apr 2013. The growth rate eased to 9.2 percent in May 2013 and 8.9 percent in Jun 2013, rebounding to 9.7 percent in Jul 2013. The rate of growth increased to 10.4 percent in Aug 2013 and fell marginally to 10.2 percent in Sep 2013. There is recovery to 10.3 percent in Oct 2013, easing to 10.0 percent in Nov 2013 and 9.7 percent in Dec 2013.

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

Source: National Bureau of Statistics of China

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

Yearly rates of growth for the past 12 months and cumulative relative to the earlier year of various segments of industrial production in China are provided in Table VC-4. Rates from Jan to Dec 2011 relative to the same period a year earlier fluctuated but remained mostly above 10 percent with the exception of motor vehicles and crude oil. There is deceleration in Jan-Dec 2012 of percentage change with no segment showing growth exceeding 10 percent with exception of 12-month growth of 13.5 percent for pig iron and 16.7 percent for nonferrous metals. In Jan-Sep 2013, many segments grew at rates exceeding or around 10 percent with exception of electricity at 6.8 percent, crude oil at 4.2 percent and pig iron at 6.9 percent. Electricity fell from growth of 16.2 percent in the 12 months ending in Jun 2011 to 0.0 percent in the 12 months ending in Jun 2012, rebounding to 4.8 percent in Aug 2012 but declining to 1.5 percent in Sep 2012, increasing to 3.9 percent in Oct 2012, 7.9 percent in Nov 2012 and 7.6 percent in Dec 2012. Electricity grew 6.8 percent in Jan-Jul 2013 relative to a year earlier and increased 8.2 percent in the 12 months ending in Sep 2013. Electricity output increased 7.6 percent in Jan-Dec 2013 relative to a year earlier and 8.3 percent in 12 months ending in Dec 2013. Auto production jumped to 18.4 percent in Jan-Dec 2013 relative to a year earlier and 22.8 percent in 12 months ending in Dec 2013.

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

	Elec- tricity	Pig Iron	Cement	Crude Oil	Non- ferrous Metals	Autos
2013
Jan-Dec	7.6	6.2	9.6	3.3	9.9	18.4
12M Dec	8.3	5.9	10.8	0.2	2.3	22.8
Jan-Nov	7.0	5.9	9.2	3.6	10.5	18.1
12M Nov	6.8	0.6	10.0	-0.6	13.7	25.6
Jan-Oct	7.0	6.5	9.0	4.1	10.3	17.2
12M Oct	8.4	7.7	8.9	3.1	12.9	25.5
Jan-Sep	6.8	6.9	8.9	4.2	9.8	15.3
12M Sep	8.2	11.2	6.4	-1.2	10.1	17.5
Jan-Aug	6.4	6.6	9.2	4.7	9.7	15.1
12M Aug	13.4	11.1	8.2	5.5	5.7	14.8
Jan-Jul	5.2	6.0	9.6	4.5	10.3	15.1
12 M Jul	8.1	5.0	9.1	7.1	9.8	15.4
Jan-Jun	4.4	5.7	9.7	4.1	10.0	15.2
12 M Jun	6.0	2.9	8.8	10.8	6.7	13.5
Jan-May	4.0	10.8	8.9	2.9	10.9	15.4
12 M May	4.1	11.3	8.5	2.4	7.5	15.7
Jan-Apr	3.8	10.5	8.4	3.2	11.4	15.4
12 M Apr	6.2	8.1	8.7	2.5	10.3	18.3
Jan-Mar	2.9	12.3	8.2	4.3	10.6	13.5
12 M Mar	2.1	9.2	6.9	5.5	9.9	12.4
Jan-Feb	3.4	14.2	10.8	3.0	13.5	12.4
2012
Jan-Dec	4.7	7.7	7.4	3.7	9.3	6.3
12 M Dec	7.6	13.5	5.4	8.4	16.7	5.3
Jan-Nov	4.4	7.2	7.5	3.2	8.4	6.5
12 M Nov	7.9	16.5	9.4	9.1	15.2	3.9
Jan-Oct	3.9	6.3	6.7	2.6	7.7	6.9
12 M Oct	6.4	11.7	11.5	6.7	14.0	3.8
Jan-Sep	3.6	5.7	6.7	2.2	7.1	7.3
12 M Sep	1.5	4.9	12.0	7.0	7.1	6.3
Jan-Aug	3.8	-0.5	8.7	2.5	13.8	10.4
12 M Aug	4.8	2.6	5.9	-0.4	13.8	9.7
Jan-Jul	3.8	6.1	5.3	1.6	6.7	7.4
12M Jul	2.1	6.5	6.1	1.1	4.1	12.3
Jan-Jun	3.7	6.1	5.5	1.7	6.7	6.7
12 M Jun	0.0	6.7	6.5	-0.6	5.8	13.8
Jan-May	4.7	6.3	5.0	2.2	5.1	6.2
12 M May	2.7	6.3	4.3	0.7	6.6	18.5
Jan-Apr	5.0	6.2	5.5	2.9	4.6	3.1
12 M Apr	0.7	7.9	4.9	-0.3	2.3	10.7
Jan-Mar	7.1	6.5	7.3	3.1	5.8	0.0
12 M Mar	7.2	10.2	7.9	2.0	3.3	5.1
Jan-Feb	7.1	4.6	4.8	4.0	8.4	-1.8
2011
Jan-Dec	12.0	8.4	16.1	4.9	10.6	3.0
12 M Dec	9.7	3.7	7.0	4.0	13.2	-6.5
Jan-Nov	12.0	13.1	17.2	5.3	10.2	3.9
12 M Nov	8.5	7.8	11.2	3.2	8.2	-1.3
Jan-Oct	12.3	13.7	18.0	5.4	10.4	5.2
12 M Oct	9.3	13.4	16.5	-0.9	3.7	1.3
Jan-Sep	12.7	13.9	18.1	6.0	11.2	5.5
12 M Sep	11.5	18.8	15.7	1.5	13.9	2.5
Jan-Aug	13.0	13.1	18.4	6.6		4.7
12 M Aug	10.0	12.9	12.8	4.5	15.6	9.5
Jan-Jul	13.3	13.0	19.2	6.9	9.9	4.0
12 M Jul	13.2	14.9	16.8	5.9	9.8	-1.3
12 M Jun	16.2	14.8	19.9	-0.7	9.8	3.6
12 M May	12.1	10.6	19.2	6.0	14.2	-1.9
12 M Apr	11.7	8.3	22.4	6.8	6.1	-1.6
12 M Mar	14.8	13.7	29.8	8.0	11.6	9.9
12 M Feb	11.7	14.5	9.1	10.9	14.4	10.3
12 M Jan	5.1	3.5	16.4	12.2	1.4	23.9
12 M Dec 2010	5.6	4.6	17.3	10.3	-1.9	27.6

M: month

Source: National Bureau of Statistics of China

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

Monthly growth rates of industrial production in China are provided in Table VC-5. Monthly rates have fluctuated around 1 percent. Jan and Feb 2012 are somewhat weaker but there was improvement to 1.25 percent in Mar 2012. The rate of 0.33 percent in Apr 2012 is the lowest in the monthly series from Feb 2011 to Dec 2013. Monthly sales growth remained below 1 percent in all months from Jan 2012 to Dec 2013 with the exception of Mar 2012. Value added in industry increased 0.69 percent in Sep 2013, 0.82 percent in Oct 2013 and 0.74 percent in Nov 2013. Value added of industry increased 0.71 percent in Dec 2013.

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

2011	Month ∆%
Feb	0.93
Mar	0.99
Apr	1.32
May	0.79
Jun	1.30
Jul	0.82
Aug	0.85
Sep	0.95
Oct	0.71
Nov	0.68
Dec	0.94
Jan 2012	0.50
Feb	0.61
Mar	1.25
Apr	0.33
May	0.89
Jun	0.83
Jul	0.59
Aug	0.61
Sep	0.89
Oct	0.76
Nov	0.86
Dec	0.90
Jan 2013	0.61
Feb	0.82
Mar	0.70
Apr	0.91
May	0.68
Jun	0.72
Jul	0.86
Aug	0.90
Sep	0.69
Oct	0.82
Nov	0.74
Dec	0.71

Source: National Bureau of Statistics of China

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

Table VC-6 provides cumulative growth of investment in fixed assets in China in 2011 relative to 2010, Jan-Dec 2012 and Jan-Dec 2013 relative to a year earlier. Total fixed investment had grown at a high rate fluctuating around 25 percent and fixed investment in real estate development has grown at rates in excess of 30 percent but rates have declined significantly to still quite high percentages. In Jan-Dec 2013, investment in fixed assets in China grew 19.6 percent relative to a year earlier and 19.8 percent in real estate development. There was slight deceleration in the final two months of 2011 that continued into Jan-Dec 2013.

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

	Total	State	Real Estate Development
Jan-Dec 2013	19.6	16.3	19.8
Jan-Nov	19.9	16.8	19.5
Jan-Oct	20.1	17.1	19.2
Jan-Sep	20.2	17.6	19.7
Jan-Aug	20.3	NA	19.3
Jan-Jul	20.1	17.5	20.5
Jan-Jun	20.1	17.5	20.3
Jan-May	20.4	17.7	20.6
Jan-Apr	20.6	18.1	21.1
Jan-Mar	20.9	18.7	20.2
Jan-Feb	21.2	16.9	22.8
Jan-Dec 2012	20.6	14.7	16.2
Jan-Nov	20.7	14.5	16.7
Jan-Oct	20.7	14.2	15.4
Jan-Sep	20.5	13.6	15.4
Jan-Aug	20.2	12.9	15.6
Jan-Jul	20.4	12.6	15.4
Jan-Jun	20.4	13.8	16.6
Jan-May	20.1	10.0	18.5
Jan-Apr	20.2	9.5	18.7
Jan-Mar	20.9	9.0	23.5
Jan-Feb	21.5	8.8	27.8
Jan-Dec 2011	23.8	11.1	27.9
Jan-Nov	24.5	11.7	29.9
Jan-Oct	24.9	12.4	31.1
Jan-Sep	24.9	12.7	32.0
Jan-Aug	25.0	12.1	33.2
Jan-Jul	25.4	13.6	33.6
Jan-Jun	25.6	14.6	32.9
Jan-May	25.8	14.9	34.6
Jan-Apr	25.4	16.6	34.3
Jan-Mar	25.0	17.0	34.1
Jan-Feb	24.9	15.6	35.2

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

Chart VC-2 provides cumulative fixed asset investment in China relative to a year earlier in all months from 2012 to 2013. Growth rose to 25.8 percent in Jan-May 2011 and then fell back to 24.9 percent in Sep and Oct 2011, declining further to 24.5 percent in Nov and 23.8 percent in Dec 2011. There was deeper drop in Jan-Feb 2012 to 21.5 percent, 20.9 percent in Jan-Mar, 20.2 percent in Jan-Apr 2012, 20.1 percent in Jan-Apr 2012, 20.4 percent in both Jan-Jun 2012 and Jan-Jul 2012, 20.2 percent in Jan-Aug 2012. Investment grew 20.5 percent in Jan-Sep 2012, 20.7 percent in Jan-Oct 2012, 20.7 percent in Jan-Nov 2012, 20.6 percent in Jan-Dec 2012, 21.2 percent in Jan-Feb 2013, 20.9 percent in Jan-Mar 2013, 20.6 in Jan-Apr 2013 and 20.4 percent in Jan-May 2013. The rate eased to 20.1 percent in Jan-Jun 2013 and Jan-Jul 2013, increasing to 20.3 percent in Jan-Aug 2013. The rate increased to 20.2 percent in Jan-Sep 2013 and 20.1 percent in Jan-Oct 2013. The rate eased to 19.9 percent in Jan-Nov 2013 and 19.6 percent in Jan-Dec 2013. Rates in 2013 and 2012 have fallen from higher gains in 2011.

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

Source: National Bureau of Statistics of China

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

Monetary policy has been used in China in the form of increases in interest rates and required reserves of banks to moderate real estate investment. These policies have been reversed because of lower inflation and weakening economic growth. Chart VC-3 shows decline of fluctuating cumulative growth rates of investment in real estate development relative to a year earlier from 35.2 percent in Jan-Feb 2011 to 31.1 percent in Jan-Oct 2011, 29.9 percent in Jan-Nov 2011, 27.9 percent in Jan-Dec 2011 and 27.8 percent in Jan-Feb 2012. There was sharper decline to 23.5 percent in Jan-Mar 2012, 18.7 percent in Jan-Apr 2012 and 18.5 percent in Jan-May 2012. The trend of decline continued with 16.6 percent in Jan-Jun 2012, 15.4 percent in Jan-Jul 2012, 15.6 percent in Jan-Aug 2012, 15.4 percent in Jan-Sep 2012, 16.7 percent in Jan-Oct 2012, 16.7 percent in Jan-Nov 2012 and 16.2 percent in Jan-Dec 2012. Real estate development grew 22.8 percent in Jan-Feb 2013, 20.2 percent in Jan-Mar 2013, 21.1 percent in Jan-Apr 2013 and 20.6 percent in Jan-May 2013. The rate eased to 20.3 percent in Jan-Jun 2013, increasing to 22.8 percent in Jan-Jul 2013. The rate fell to 19.3 percent in Jan-Aug 2013 and increased marginally to 19.7 percent in Jan-Sep 2013. The rate stabilized at 19.2 percent in Jan-Oct 2013 and 19.5 percent in Jan-Nov 2013. Real estate development grew at 19.8 percent in Jan-Dec 2013.

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

Source: National Bureau of Statistics of China

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

Growth rates of retail sales in 12 months and cumulative relative to a year earlier are in Table VC-7. There is decline of growth rates to cumulative 14.7 percent in Feb 2012, 14.8 percent in Mar, 14.7 percent in Apr, 14.5 percent in May, 14.4 percent in Jun, 14.2 percent in Jul, 14.1 percent in Aug to Oct 2012, 14.2 percent in Nov 2012 and 14.3 percent in Dec 2012. Percentage growth rates have declined in Jan-Dec 2012 relative to earlier months in 2011. The rate of retail sales growth was even lower at 12.3 percent in Feb 2013, with influence from the celebration of the New Year, followed by 12.4 percent in Mar 2013 and 12.5 percent in Apr 2013. The rate of retail growth was 12.9 percent in the 12 months ending in May 2013 and 12.6 percent in Jan-May relative to a year earlier. Growth strengthened with 13.3 percent in the 12 months ending in Jun 2013 and 12.7 percent in the cumulative to Jun 2013 relative to a year earlier. Growth continued with 13.2 in 12 months in Jul 2013 and 12.8 percent in the cumulative Jan-Jul 2013 relative to a year earlier. The rate stabilized in Aug 2013 at 13.4 percent in 12 months and 12.8 percent cumulative relative to a year earlier. Stabilization continued with 13.3 percent in the 12 months ending in Sep 2013 and 12.9 percent in the cumulative relative to a year earlier. Growth stabilized at 13.3 percent in the 12 months ending in Oct 2013 and 13.0 percent in the cumulative Jan-Oct 2013 relative to a year earlier. The cumulative Jan-Nov 2013 stabilized at 13.0 percent while the 12-month rate rose slightly to 13.7 percent in Nov 2013. There is stability in the rate of growth of retail sales at 13.6 percent in the 12 months ending in Dec 2013 and 13.1 percent cumulative relative to a year earlier.

Table VC-7, China, Retail Sales 12-Month ∆% and Cumulative ∆% Relative to Year Earlier

	12-Month ∆%	Cumulative ∆%/ Cumulative Year Earlier
2013
Dec	13.6	13.1
Nov	13.7	13.0
Oct	13.3	13.0
Sep	13.3	12.9
Aug	13.4	12.8
Jul	13.2	12.8
Jun	13.3	12.7
May	12.9	12.6
Apr	12.8	12.5
Mar	12.6	12.4
Feb	12.3	12.3
2012
Dec	15.2	14.3
Nov	14.9	14.2
Oct	14.5	14.1
Sep	14.2	14.1
Aug	13.2	14.1
Jul	13.1	14.2
Jun	13.7	14.4
May	13.8	14.5
Apr	14.1	14.7
Mar	15.2	14.8
Feb	14.7	14.7
2011
Dec	18.1	17.1
Nov	17.3	17.0
Oct	17.2	17.0
Sep	17.7	17.0
Aug	17.0	16.9
Jul	17.2	16.8
Jun	17.7	16.8
May	16.9	16.6
Apr	17.1	16.5
Mar	17.4	17.4
Feb	11.6	15.8
Jan	19.9	19.9

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

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

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

Source: National Bureau of Statistics of China

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

Table VC-8 provides monthly percentage changes of retail sales in China. Although the rate of 0.19 percent in Jan 2012 is the lowest in Table VC-7, the rate of 1.32 percent in Sep 2012 is relatively high and 1.23 percent in Dec 2012 is closer to rates in 2011. Sales are lower in Jan-Feb 2013 because of the New Year celebrations, rebounding in Mar-Dec 2013.

Table VC-8, China, Retail Sales, Month ∆%

2011	Month ∆%
Feb	1.35
Mar	1.26
Apr	1.30
May	1.39
Jun	1.49
Jul	1.57
Aug	1.50
Sep	1.33
Oct	1.36
Nov	1.26
Dec	1.41
2012
Jan	0.19
Feb	0.99
Mar	1.21
Apr	0.93
May	1.11
Jun	1.12
Jul	1.03
Aug	1.11
Sep	1.32
Oct	1.18
Nov	1.21
Dec	1.23
Jan 2013	0.14
Feb	0.96
Mar	1.30
Apr	1.28
May	1.19
Jun	1.26
Jul	1.23
Aug	1.12
Sep	1.21
Oct	1.18
Nov	1.31
Dec	1.24

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

VD Euro Area. Table VD-EUR provides yearly growth rates of the combined GDP of the members of the European Monetary Union (EMU) or euro area since 1996. Growth was very strong at 3.3 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	9.6	2.9
2000	2.2	8.7	3.8
2001	2.4	8.1	2.0
2002	2.3	8.5	0.9
2003	2.1	9.0	0.7
2004	2.2	9.3	2.2
2005	2.2	9.2	1.7
2006	2.2	8.5	3.3
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	10.1	1.6
2012	2.5	11.4	-0.7
2013*	1.4		-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, increased from 52.1 in Dec to 53.2 in Jan, which is a high in 31 months (http://www.markiteconomics.com/Survey/PressRelease.mvc/9265238f7fd24e47ae4c056350e1944c). Chris Williamson, Chief Economist at Markit, finds that the Markit Flash Eurozone PMI index suggests that the index is consistent with growth of GDP of 0.4 to 0.5 percent in IQ2014 (http://www.markiteconomics.com/Survey/PressRelease.mvc/9265238f7fd24e47ae4c056350e1944c). The Markit Eurozone PMI^® Composite Output Index, combining services and manufacturing activity with close association with GDP, increased from 51.7 in Nov to 52.1 in Dec, which is the second highest in two-and-a-half years (http://www.markiteconomics.com/Survey/PressRelease.mvc/162d00afdcc44cbb8228f2a76264c624). Chris Williamson, Chief Economist at Markit, finds growth in IVQ2013 at the rate of about 0.2 percent in IVQ2013 (http://www.markiteconomics.com/Survey/PressRelease.mvc/162d00afdcc44cbb8228f2a76264c624). The Markit Eurozone Services Business Activity Index decreased from 51.2 in Nov to 51.0 in Dec (http://www.markiteconomics.com/Survey/PressRelease.mvc/162d00afdcc44cbb8228f2a76264c624). The Markit Eurozone Manufacturing PMI^® increased to 52.7 in Dec from 51.6 in Nov with the reading for IVQ2013 at the highest level in two-and-a-half years (http://www.markiteconomics.com/Survey/PressRelease.mvc/b2dfe04a4c1e4e71802d7338b698602f). New orders increased for the sixth consecutive month with foreign orders at the highest in more than two-and-a-half years. Chris Williamson, Chief Economist at Markit, finds industrial growth in the euro area at a quarterly rate of 1.0 percent. (http://www.markiteconomics.com/Survey/PressRelease.mvc/b2dfe04a4c1e4e71802d7338b698602f). Table EUR provides the data table for the euro area.

Table EUR, Euro Area Economic Indicators

GDP	IIIQ2013 ∆% 0.1; IIIQ2013/IIIQ2012 ∆% -0.3 Blog 1/12/14
Unemployment	Nov 2013: 12.1 % unemployment rate Nov 2013: 19.241 million unemployed Blog 1/12/14
HICP	Dec month ∆%: 0.3 12 months Dec ∆%: 0.8 Blog 1/19/14
Producer Prices	Euro Zone industrial producer prices Nov ∆%: -0.1 Nov 12-month ∆%: -1.2 Blog 1/12/14
Industrial Production	Nov month ∆%: 1.8; Nov 12 months ∆%: 3.0 Blog 1/19/14
Retail Sales	Nov month ∆%: minus 1.4 Nov 12 months ∆%: minus 1.6 Blog 1/12/14
Confidence and Economic Sentiment Indicator	Sentiment 98.5 Nov 2013 Consumer minus 15.4 Nov 2013 Blog 12/1/13
Trade	Jan-Nov 2013/Jan-Nov 2012 Exports ∆%: 0.5 Imports ∆%: -3.6 Nov 2013 12-month Exports ∆% -2.2 Imports ∆% -5.5 Blog 1/19/14

Links to blog comments in Table EUR:

1/19/14 http://cmpassocregulationblog.blogspot.com/2014/01/world-inflation-waves-interest-rate.html

1/12/14 http://cmpassocregulationblog.blogspot.com/2014/01/twenty-nine-million-unemployed-or.html

12/1/13 http://cmpassocregulationblog.blogspot.com/2013/12/exit-risks-of-zero-interest-rates-world.html

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. Growth decelerated to 0.4 percent in 2013.

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
2013	0.4	0.5
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

https://www.destatis.de/EN/PressServices/Press/pr/2014/01/PE14_016_811.html

https://www.destatis.de/DE/PresseService/Presse/Pressekonferenzen/2014/BIP2013/Pressebroschuere_BIP2013.html

The Flash Germany Composite Output Index of the Markit Flash Germany PMI^®, combining manufacturing and services, increased from 55.0 in Dec to 55.9 in Jan. The index of manufacturing output reached 60.4 in Jan, for a 33-month high, from 57.9 in Dec, while the index of services increased to 53.6 in Jan from 53.5 in Dec. The overall Flash Germany Manufacturing PMI^® increased from 54.3 in Dec to 56.3 in Jan, which is a 32-month high (http://www.markiteconomics.com/Survey/PressRelease.mvc/cf093f72c48b48159b0c25f222a80354). New export work volumes increased at the fastest pace since Apr 2011 for the sixth consecutive month. Tim Moore, Senior Economist at Markit, finds expansion of Germany’s private sector at the fastest rate since Jun 2011 (http://www.markiteconomics.com/Survey/PressRelease.mvc/cf093f72c48b48159b0c25f222a80354). The Markit Germany Composite Output Index of the Markit Germany Services PMI^®, combining manufacturing and services with close association with Germany’s GDP, decreased from 55.4 in Nov to 55.0 in Dec (http://www.markiteconomics.com/Survey/PressRelease.mvc/8990b59b325c4908ab9750fb9e59b018). Tim Moore, Senior Economist at Markit and author of the report, finds improving expectations by German private sector companies (http://www.markiteconomics.com/Survey/PressRelease.mvc/8990b59b325c4908ab9750fb9e59b018). The Germany Services Business Activity Index decreased from 55.7 in Nov to 53.5 in Dec (http://www.markiteconomics.com/Survey/PressRelease.mvc/8990b59b325c4908ab9750fb9e59b018). The Markit/BME Germany Purchasing Managers’ Index^® (PMI^®), showing close association with Germany’s manufacturing conditions, increased from 52.7 in Nov to 54.3 in Dec, in the best reading in two-and-a-half years (http://www.markiteconomics.com/Survey/PressRelease.mvc/13f1cfefa2034863a31e87812f389789). New export orders increased for the sixth consecutive month at the highest rate in two-and-a-half years. Tim Moore, Senior Economist at Markit and author of the report, finds the highest growth of manufacturing in two-and-a-half years (http://www.markiteconomics.com/Survey/PressRelease.mvc/13f1cfefa2034863a31e87812f389789.

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 1/26/14
Consumer Price Index	Dec month NSA ∆%: 0.4 Dec 12-month NSA ∆%: 1.4 Blog 1/19/14
Producer Price Index	Dec month ∆%: 0.1 CSA, 0.2 12-month NSA ∆%: -0.5 Blog 1/26/14
Industrial Production	MFG Nov month CSA ∆%: minus 3.1 12-month NSA: 1.1 Blog 1/12/14
Machine Orders	MFG Nov month ∆%: 2.1 Nov 12-month ∆%: 3.7 Blog 1/12/14
Retail Sales	Oct Month ∆% -0.8 12-Month ∆% -0.2 Blog 12/1/13
Employment Report	Unemployment Rate SA Nov 5.2% Blog 1/12/14
Trade Balance	Exports Nov 12-month NSA ∆%: 1.0 Imports Nov 12 months NSA ∆%: -0.4 Exports Nov month CSA ∆%: 0.3; Imports Nov month SA minus 1.1 Blog 1/12/14

Links to blog comments in Table DE:

1/19/14 http://cmpassocregulationblog.blogspot.com/2014/01/world-inflation-waves-interest-rate.html

1/12/14 http://cmpassocregulationblog.blogspot.com/2014/01/twenty-nine-million-unemployed-or.html

12/1/13 http://cmpassocregulationblog.blogspot.com/2013/12/exit-risks-of-zero-interest-rates-world.html

11/24/13 http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-zero-interest-rates-world.html

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

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

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

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

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

VF France. Table VF-FR provides growth rates of GDP of France with the estimates of Institut National de la Statistique et des Études Économiques (INSEE). The long-term rate of GDP growth of France from IVQ1949 to IVQ2012 is quite high at 3.2 percent. France’s growth rates were quite high in the four decades of the 1950s, 1960, 1970s and 1980s with an average growth rate of 4.0 percent compounding the average rates in the decades and discounting to one decade. The growth impulse diminished with 1.9 percent in the 1990s and 1.7 percent from 2000 to 2007. The average growth rate from 2000 to 2012, using fourth quarter data, is 1.0 percent because of the sharp impact of the global recession from IVQ2007 to IIQ2009. The growth rate from 2000 to 2012 is 1.0 percent. Cobet and Wilson (2002) provide estimates of output per hour and unit labor costs in national currency and US dollars for the US, Japan and Germany from 1950 to 2000 (see Pelaez and Pelaez, The Global Recession Risk (2007), 137-44). The average yearly rate of productivity change from 1950 to 2000 was 2.9 percent in the US, 6.3 percent for Japan and 4.7 percent for Germany while unit labor costs in USD increased at 2.6 percent in the US, 4.7 percent in Japan and 4.3 percent in Germany. From 1995 to 2000, output per hour increased at the average yearly rate of 4.6 percent in the US, 3.9 percent in Japan and 2.6 percent in Germany while unit labor costs in US fell at minus 0.7 percent in the US, 4.3 percent in Japan and 7.5 percent in Germany. There was increase in productivity growth in the G7 in Japan and France in the second half of the 1990s but significantly lower than the acceleration of 1.3 percentage points per year in the US. Lucas (2011May) compares growth of the G7 economies (US, UK, Japan, Germany, France, Italy and Canada) and Spain, finding that catch-up growth with earlier rates for the US and UK stalled in the 1970s.

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

Period	Average ∆%
1949-2012	3.2
2000-2012	1.0
2000-2011	1.1
2000-2007	1.7
1990-1999	1.9
1980-1989	2.5
1970-1979	3.8
1960-1969	5.7
1950-1959	4.2

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=28&date=20131224

The Markit Flash France Composite Output Index increased from 47.3 in Dec to 48.5 in Jan for a three-month low (http://www.markiteconomics.com/Survey/PressRelease.mvc/228631c479cf456f8a42312cc0864fd1). Jack Kennedy, Senior Economist at Markit and author of the report, finds continuing economic weakness in the French private sector (http://www.markiteconomics.com/Survey/PressRelease.mvc/228631c479cf456f8a42312cc0864fd1). The Markit France Composite Output Index, combining services and manufacturing with close association with French GDP, fell from 48.0 in Nov to 47.3 in Nov, indicating sharper contraction (http://www.markiteconomics.com/Survey/PressRelease.mvc/dae24bc1c4b74ffda157de48b9511a5b). Jack Kennedy, Senior Economist at Markit and author of the France Services PMI^®, finds continuing weak demand (http://www.markiteconomics.com/Survey/PressRelease.mvc/dae24bc1c4b74ffda157de48b9511a5b). The Markit France Services Activity index decreased from 48.0 in Nov to 47.9 in Dec (http://www.markiteconomics.com/Survey/PressRelease.mvc/dae24bc1c4b74ffda157de48b9511a5b). The Markit France Manufacturing Purchasing Managers’ Index^® decreased to 47.0 in Dec from 48.4 in Nov for the lowest reading in seven months (http://www.markiteconomics.com/Survey/PressRelease.mvc/45fadf38ca6745b1b423f91ecb61df83). Jack Kennedy, Senior Economist at Markit and author of the France Manufacturing PMI^®, finds sharper decline of output and new orders with weak internal demand (http://www.markiteconomics.com/Survey/PressRelease.mvc/45fadf38ca6745b1b423f91ecb61df83). Table FR provides the country data table for France.

Table FR, France, Economic Indicators

CPI	Dec month ∆% 0.3 12 months ∆%: 0.7 1/19/14
PPI	Nov month ∆%: 0.5 Nov 12 months ∆%: -0.6 Blog 12/29/13
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 12/29/13
Industrial Production	Nov ∆%: Manufacturing 0.2 12-Month ∆%: Manufacturing 1.6 Blog 1/12/14
Consumer Spending	Manufactured Goods Nov ∆%: 0.1 Nov 12-Month Manufactured Goods ∆%: 1.3 Blog 12/29/13
Employment	Unemployment Rate: IIIQ2013 10.5% Blog 12/8/13
Trade Balance	Nov Exports ∆%: month -2.1, 12 months -2.6 Nov Imports ∆%: month 0.2, 12 months -0.1 Blog 1/12/14
Confidence Indicators	Historical averages 100 Jan Mfg Business Climate 100 Blog 1/26/14

Links to blog comments in Table FR:

1/19/14 http://cmpassocregulationblog.blogspot.com/2014/01/world-inflation-waves-interest-rate.html

1/12/14 http://cmpassocregulationblog.blogspot.com/2014/01/twenty-nine-million-unemployed-or.html

12/29/13 http://cmpassocregulationblog.blogspot.com/2013/12/collapse-of-united-states-dynamism-of.html

12/8/13 http://cmpassocregulationblog.blogspot.com/2013/12/exit-risks-of-zero-interest-rates-world.html

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

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

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

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

Table VF-1 shows the INSEE business climate indicator for manufacturing. The headline composite indicator decreased from 92 in Jan 2013 to 88 in Apr 2013 but rebounded to 92 in May 2013, 93 in Jun 2013, 95 in Jul 2013 and 98 in Aug 2013. The index fell marginally to 97 in Sep 2013 and increased to 98 in Oct 13 and 98 in Nov 2013, approaching the long-term average of 100 since 1976. The index reached 100 in Dec 2013 and 100 in Jan 2014. The final row shows general production expectations deteriorating from minus 34 in Feb 2013 to minus 49 in Apr 2013 and improving to minus 46 in May 2013, minus 41 in Jun 2013 and minus 30 in Jul 2013. There is further improvement of general production expectations to minus 18 in Aug 2013, to minus 10 in Sep 2013 and to minus 6 in Oct 2013, which is close to the long-term average of minus 10. General production expectations deteriorated to minus 17 in Nov 2013, improving to minus 11 in Dec 2013. There is further improvement to -5 in Jan 2014. The indicator of demand and export order levels improved from minus 30 in Feb 2013 to minus 29 in May 2013 and minus 28 in Jun 2013, continuing improvement to minus 22 in Aug. There is further improvement to minus 21 in Sep 2013, minus 21 in Oct 2013 and minus 21 in Nov 2013. The index improved to minus 20 in Dec 2013 and minus 18 in Jan 2014.

Table VF-1, France, Manufacturing Business Climate Indicators of INSEE

Mfg 2013	Average since 1976	Oct 13	Nov 13	Dec 13	Jan 14
Composite Indicator	100	98	98	100	100
Past Activity	4	-1	9	11	-1
Finished- Goods Inventory Level	13	10	13	9	6
Global Order Books	-18	-24	-23	-21	-19
Export Order Books	-14	-21	-21	-20	-18
Personal Production Expectations	5	8	1	4	9
General Production Expectations	-9	-6	-17	-11	-5

Source: Institut National de la Statistique et des Études Économique

http://www.insee.fr/en/themes/info-rapide.asp?id=11&date=20140123

Chart VF-1 of the Institut National de la Statistique et des Études Économiques (INSEE) provides the history of the manufacturing business climate indicator of INSEE since 1992. The index fell during the contractions of 1991, 2001 and 2008. After rapid recovery beginning in 2009 the synthetic index shows declining trend in 2011 with upward reversal in 2012 interrupted in Apr through Jul 2012 and a marginal upward move in Aug-Sep 2012 but new decline in Oct 2012. The manufacturing composite indicator marginally reversed in Nov 2012 with stability in Dec 2012 and decline in Jan 2013 but improvement in Feb 2013 and stability in Mar 2013, deteriorating in Apr 2013 and recovering in May-Aug 2013. The composite indicator of manufacturing eased slightly in Sep 2013 and improved marginally in Oct-Nov 2013, close to the long-term average of 100. The index reached 100 in Dec 2013 and 100 in Jan 2014.

Chart VF-1, France, INSEE Industrial Business Climate Composite Indicator

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=11&date=20140123

Chart VF-2 of the Institut National de la Statistique et des Études Économiques (INSEE) shows strong drops of the turning point indicator in the recessions of 1991, 2001 and 2008. There have been other drops of this index. The turning point indicator has fallen to levels in the direction of past contractions and after rebounding in Oct and Nov 2011 is showing declining trend in Jan 2012 with slight reversal in Feb followed by significant improvement in Mar and deterioration in Apr through Jul 2012. There is new improvement in Aug 2012 followed by decline in Sep-Oct 2012 followed by rebound in Nov 2012 and stability in Dec 2012 to Jan-Mar 2013, deteriorating in Apr-May 2013. The index improved in Jun-Sep 2013 and stabilized in Oct 2013, declining in Nov 2013. The index increased in Dec 2013 and in Jan 2014.

Chart VF-2, INSEE Business Climate Manufacturing Turning Point Indicator

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=11&date=20140123

Chart VF-3 of the Institut National de la Statistique et des Études Économiques (INSEE) of France provides the composite climate indicator for French business. There is recovery in Jul-Sep 2013 and stability in Oct-Nov 2013. The index fell marginally in Dec 2013 and in Jan 2014.

Chart VF-3, France, Composite Indicator of Business Climate of INSEE

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=105&date=20140123

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 1.8 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 IIIQ2013, 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
IIIQ	-1.8	-1.2	-1.5	-5.1	0.0
IIQ	-2.2	-4.7	-2.5	-5.8	0.2
IQ	-2.5	-4.8	-2.6	-7.3	-0.6
2012
IVQ	-3.0	-6.9	-4.0	-8.1	0.8
IIIQ	-2.8	-7.5	-4.1	-8.7	1.8
IIQ	-2.6	-7.3	-3.6	-8.8	2.1
IQ	-1.8	-8.2	-3.4	-8.1	2.8
2011
IVQ	-0.6	-6.8	-2.0	-3.8	3.5
IIIQ	0.5	0.5	-1.0	-2.4	6.0
IIQ	1.1	3.7	0.4	-0.7	7.5
IQ	1.4	9.1	0.7	0.6	11.0
2010
IVQ	2.3	15.6	1.1	1.3	13.4
IIIQ	1.8	13.2	1.3	2.4	12.1
IIQ	1.8	13.4	0.8	0.9	12.0
IQ	0.9	7.0	1.0	-2.4	7.1
2009
IVQ	-3.5	-6.3	0.2	-8.2	-9.3
IIIQ	-5.0	-12.2	-0.8	-12.6	-16.4
IIQ	-6.6	-17.9	-1.4	-13.6	-21.4
IQ	-6.9	-17.2	-1.8	-12.4	-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/106657

The Markit/ADACI Business Activity Index increased from 47.2 in Nov to 47.9 in Dec (http://www.markiteconomics.com/Survey/PressRelease.mvc/81f6dcfaf618459cadc3bd4bcc1449bd). Phil Smith, Economist at Markit and author of the Italy Services PMI^®, finds the index suggesting nil growth with manufacturing strength compensating for services weakness (http://www.markiteconomics.com/Survey/PressRelease.mvc/81f6dcfaf618459cadc3bd4bcc1449bd). The Markit/ADACI Purchasing Managers’ Index^® (PMI^®), increased from 51.4 in Nov to 53.3 in Dec for the highest reading since Apr 2011 (http://www.markiteconomics.com/Survey/PressRelease.mvc/337850bc94a34a3a892567600df53850). New export orders grew at the fastest rate in 32 months in Nov and Dec. Phil Smith, Economist at Markit and author of the Italian Manufacturing PMI^®, finds the best conditions in more than two-and-a-half years with concern on the margins of sales prices relative to input costs (http://www.markiteconomics.com/Survey/PressRelease.mvc/337850bc94a34a3a892567600df53850). Table IT provides the country data table for Italy.

Table IT, Italy, Economic Indicators

Consumer Price Index	Dec month ∆%: 0.2 Dec 12-month ∆%: 0.7 Blog 1/19/14
Producer Price Index	Nov month ∆%: -0.1 Nov 12-month ∆%: -2.3 Blog 1/5/14
GDP Growth	IIIQ2013/IIQ2013 SA ∆%: 0.0 IIIQ2013/IIIQ2012 NSA ∆%: minus 1.8 Blog 3/17/13 6/16/13 8/11/13 9/15/13 11/17/13 12/15/13
Labor Report	Nov 2013 Participation rate 63.6% Employment ratio 55.4% Unemployment rate 12.7% Youth Unemployment 41.6% Blog 1/12/14
Industrial Production	Nov month ∆%: 0.3 12 months CA ∆%: 1.4 Blog 1/19/14
Retail Sales	Dec month ∆%: 0.0 Dec 12-month ∆%: 0.1 Blog 1/26/13
Business Confidence	Mfg Dec 92.3, Aug 93.5 Construction Dec 77.1, Aug 76.8 Blog 1/5/14
Trade Balance	Balance Nov SA €2993 million versus Oct €2957 Exports Nov month SA ∆%: -1.9; Imports Nov month ∆%: -2.2 Exports 12 months Nov NSA ∆%: -3.4 Imports 12 months NSA ∆%: -6.9 Blog 1/19/14

Links to blog comments in Table IT:

1/19/14 http://cmpassocregulationblog.blogspot.com/2014/01/world-inflation-waves-interest-rate.html

1/12/14 http://cmpassocregulationblog.blogspot.com/2014/01/twenty-nine-million-unemployed-or.html

1/5/14 http://cmpassocregulationblog.blogspot.com/2014/01/theory-and-reality-of-secular.html

12/15/13 http://cmpassocregulationblog.blogspot.com/2013/12/theory-and-reality-of-secular.html

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

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-1 provides growth of retail sales for Italy. Retail sales changed 0.0 percent in Nov 2013 relative to Oct 2013, decreased 0.5 percent in Sep-Nov 2013 relative to Jun-Aug 2013, increased 0.1 percent in Nov 2013 relative to Nov 2012 and decreased 2.1 percent cumulatively in Jan-Nov 2013 relative to Jan-Nov 2012. Food retail sales outperform non-food retail sales.

Table VG-1, Italy, Retail Sales ∆%

	Nov 2013/ Oct 2013 SA	Sep-Nov 13/ Jun-Aug 13 SA	Nov 2013/ Nov 2012 NSA	Jan-Nov 2013/ Jan-Nov 2012
Food	0.2	-0.2	1.5	-1.0
Non-food	-0.1	-0.6	-0.6	-2.7
Total	0.0	-0.5	0.1	-2.1

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/110442

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, increasing in Oct-Nov 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-Nov 2013 and annual rates for 2011 and 2012 in Table VG-2. 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 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 increased 0.1 percent in Nov 2013 and the decline in 12 months improved to increase of 0.1 percent.

Table VG-2, Italy, Retail Sales Month and 12-Month ∆%

	Month ∆% SA	12-Month ∆% NSA
Nov 2013	0.0	0.1
Oct	-0.1	-1.6
Sep	-0.3	-2.8
Aug	0.0	0.2
Jul	-0.2	-0.8
Jun	-0.1	-3.0
May	0.1	-1.2
Apr	0.0	-2.9
Mar	-0.2	-3.2
Feb	-0.1	-4.8
Jan	-0.4	-2.8
Dec 2012	0.1	-3.4
Nov	-0.2	-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	-0.5	-1.5
Oct	0.7	-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/110442

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/naa2/quarterly-national-accounts/q3-2013/index.html

The Business Activity Index of the Markit/CIPS UK Services PMI^® decreased from 60.0 in Nov to 58.8 in Dec, which is still close to high historical levels (http://www.markiteconomics.com/Survey/PressRelease.mvc/1132e9ba11934548a369f9a4872acb02). Chris Williamson, Chief Economist at Markit, finds the UK economist growing at 1.9 percent in 2013, which would be the highest rate since 2007 (http://www.markiteconomics.com/Survey/PressRelease.mvc/1132e9ba11934548a369f9a4872acb02). The Markit/CIPS UK Manufacturing Purchasing Managers’ Index^® (PMI^®) decreased to 57.3 in Dec from 58.1 in Nov with continuing strength close to the highest reading since Feb 2011 (http://www.markiteconomics.com/Survey/PressRelease.mvc/f1cb2cbaa8794e7eb8ca538a5d252a2a). New export orders increased for the ninth consecutive month but with the lowest rate since Sep. New orders increased from Brazil, China, Ireland, Russia and the US. Rob Dobson, Senior Economist at Markit that compiles the Markit/CIPS Manufacturing PMI^®, finds that manufacturing conditions continue around the levels in Nov with output and new orders close to the fastest pace in 22 years and growth in IVQ2013 probably above 1.0 percent (http://www.markiteconomics.com/Survey/PressRelease.mvc/f1cb2cbaa8794e7eb8ca538a5d252a2a). Table UK provides the economic indicators for the United Kingdom.

Table UK, UK Economic Indicators

CPI	Dec month ∆%: 0.4 Dec 12-month ∆%: 2.0 Blog 1/19/14
Output/Input Prices	Output Prices: Dec 12-month NSA ∆%: 1.0; excluding food, petroleum ∆%: 1.0 Input Prices: Dec 12-month NSA ∆%: -1.2 Excluding ∆%: -1.6 Blog 1/19/14
GDP Growth	IIIQ2013 prior quarter ∆% 0.8; year earlier same quarter ∆%: 1.9 Blog 3/31/13 4/28/13 5/26/13 7/28/13 8/25/13 9/29/13 10/27/13 12/1/13 12/22/13
Industrial Production	Nov 2013/Nov 2012 ∆%: Production Industries 2.5; Manufacturing 2.8 Blog 1/12/14
Retail Sales	Dec month ∆%: 2.6 Dec 12-month ∆%: 5.3 Blog 1/19/14
Labor Market	Sep-Nov Unemployment Rate: 7.1%; Claimant Count 3.7%; Earnings Growth 0.9% Blog 1/26/14 LMGDP 12/22/13
GDP and the Labor Market	IIIQ2013 Weekly Hours 101.4, GDP 98.0, Employment 101.5 IQ2008 =100 Blog 12/22/13
Trade Balance	Balance SA Nov minus ₤3238 million Exports Nov ∆%: 1.2; Sep-Nov ∆%: 0.5 Imports Nov ∆%: 0.6 Sep-Nov ∆%: 2.2 Blog 1/12/14

Links to blog comments in Table UK:

1/19/14 http://cmpassocregulationblog.blogspot.com/2014/01/world-inflation-waves-interest-rate.html

1/12/14 http://cmpassocregulationblog.blogspot.com/2014/01/twenty-nine-million-unemployed-or.html

12/22/13 http://cmpassocregulationblog.blogspot.com/2013/12/tapering-quantitative-easing-mediocre.html

12/1/13 http://cmpassocregulationblog.blogspot.com/2013/12/exit-risks-of-zero-interest-rates-world.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

Labor market statistics of the UK for the quarter Sep-Nov 2013 are provided in Table VH-L2. The unemployment rate decreased to 7.1 percent and the number unemployed decreased 172,000 in the year, reaching 2.320 million. The employment rate is 72.1 percent. Earnings growth including bonuses increased 0.9 percent over the earlier year. The claimant count or those receiving unemployment benefits stands at 3.7 percent, down 0.1 percentage points on the month and down 0.9 percentage points on the year.

Table VH-L2, UK, Labor Market Statistics

	Quarter Sep-Nov 2013
Unemployment Rate	7.1% down 0.5 on quarter and down 0.6 from year earlier
Number Unemployed	(1) Down 167,000 on quarter and down 172,000 from year earlier to reach 2.320 million (2) Unemployment rate 16 to 24 years of age 21.0% of that age group (3) Unemployed 16 to 24 years excluding those in full-time education 633,000 (287,000 in full-time education) down 27,000 on quarter; unemployment rate 18.1% down 0.9 % Points
Number Unemployed > one and two years	(1) Number unemployed over one year: 839,000, down 61,000 on quarter, down 53,000 on year (2) Number unemployed over two years: 449,000, down 18,000 on quarter, up 14,000 on year
Inactivity Rate 16-64 Years of Age (Definition: Not in employment but have not been seeking employment in the past four weeks or are unable to start work in two weeks)	(1) 22.2%, down 0.1 % points on quarter, down 0.2 on year (2) Economically inactive 16-64 years down 22,000 on quarter and down 75,000 on year to 8.92 million
Employment Rate	72.1%, up 0.5 on quarter, up 0.7 % points on year
Number Employed	(1) Up 280,000 on quarter, +450,000 on year to 30.150 million (2) Number of employees up 160,000 on quarter to 25.54 million (3) Self-employed rose 147,000 on quarter to 4.36 million (4) Full-time 21.868 million, up 157,000 on quarter, up 412,000 on year (5) 1.46 million working part-time and self-employed who could not find full-time jobs
Earnings Growth Rates Year on Year	(1) Total +0.9% (including bonuses) over year earlier; regular 0.9%; private sector 1.2% on year earlier, public sector 0.2% on year earlier (2) Regular private 1.1 % (excluding bonuses); regular public 0.3% on year earlier
Full-time and Part-time	(1) Number full-time 21.824 million, up 148,000 on quarter (2) Number part-time 8.045 million, up 38,000 on quarter
Claimant Count (Jobseeker’s Allowance, JSA)	(1) Latest estimate: 1.247 million; down 24,000 in month, down 307,000 on year earlier (2) Claimant count 3.7%, down 0.1 on month and down 0.9 % points on year
Labor Productivity	(1) Output per worker fell 0.3% from IIQ2013 to IIIQ2013 (2) Unit labor costs fell 0.8% from IIQ2013 to IIIQ2013

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/lms/labour-market-statistics/january-2014/index.html

Table VH-L3 provides indicators of the labor force survey of the UK for Sep-Nov 2013 and earlier quarters. There has been improvement in UK labor markets with the rate of unemployment decreasing from 7.7 percent in Sep-Nov 2012 to 7.1 percent in Sep-Nov 2013.

Table VH-L3, UK, Labor Force Survey Indicators

	LFHP	EMP	PART	UNE	RATE
Sep-Nov 2011	40,172	29,128	70.3	2,675	8.4
Sep-Nov 2012	40,209	29,700	71.5	2,493	7.7
Dec-Feb 2013	40,226	29,698	71.4	2,563	7.9
Mar-May 2013	40,242	29,714	71.4	2,505	7.8
Jun-Aug 2013	40,269	29,869	71.7	2,487	7.7
Sep-Nov 2013	40,313	30,150	72.1	2,320	7.1

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

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/lms/labour-market-statistics/january-2014/index.html

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Monday, January 27, 2014

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