Global Financial Instability, Recovery without Hiring, Collapse of United States Dynamism of Income Growth and Employment Creation, World Cyclical Slow Growth and Global Recession Risk: Part V

 

Global Financial Instability, Recovery without Hiring, Collapse of United States Dynamism of Income Growth and Employment Creation, World Cyclical Slow Growth and Global Recession Risk

Carlos M. Pelaez

© Carlos M. Pelaez, 2009, 2010, 2011, 2012, 2013, 2014

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

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

III World Financial Turbulence

IIIA Financial Risks

IIIE Appendix Euro Zone Survival Risk

IIIF Appendix on Sovereign Bond Valuation

IV Global Inflation

V World Economic Slowdown

VA United States

VB Japan

VC China

VD Euro Area

VE Germany

VF France

VG Italy

VH United Kingdom

VI Valuation of Risk Financial Assets

VII Economic Indicators

VIII Interest Rates

IX Conclusion

References

Appendixes

Appendix I The Great Inflation

IIIB Appendix on Safe Haven Currencies

IIIC Appendix on Fiscal Compact

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

IIIG Appendix on Deficit Financing of Growth and the Debt Crisis

IIIGA Monetary Policy with Deficit Financing of Economic Growth

IIIGB Adjustment during the Debt Crisis of the 1980s

V World Economic Slowdown. Table V-1 is constructed with the database of the IMF (http://www.imf.org/external/pubs/ft/weo/2013/02/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 IVQ2013. Growth is weak throughout most of the world.

• Japan. The GDP of Japan increased 0.9 percent in IQ2012 and 3.2 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 0.4 percent in IIQ2012 at the seasonally adjusted annual rate (SAAR) of minus 1.7 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 changed 0.0 percent in IVQ2012 at the SAAR of minus 0.1 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 changed 0.0 percent relative to a year earlier. Japan’s GDP increased 1.1 percent in IIQ2013 at the SAAR of 4.1 percent and increased 1.2 percent relative to a year earlier. Japan’s GDP grew 0.2 percent in IIIQ2013 at the SAAR of 0.9 percent and increased 2.3 percent relative to a year earlier. In IVQ2013, Japan’s GDP increased 0.2 percent at the SAAR of 0.7 percent, increasing 2.6 percent relative to a year earlier.
• China. The GDP of 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.
• Euro Area. 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. The GDP of the euro area increased 0.2 percent in IVQ2013 and increased 0.5 percent relative to a year earlier.
• Germany. The GDP of Germany 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. In IVQ2013, Germany’s GDP increased 0.4 percent and 1.3 percent relative to a year earlier.
• United States. 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/2014/03/financial-uncertainty-mediocre-cyclical.html and earlier http://cmpassocregulationblog.blogspot.com/2014/03/financial-risks-slow-cyclical-united.html) with weak hiring (http://cmpassocregulationblog.blogspot.com/2014/03/global-financial-risks-recovery-without.htmland earlier http://cmpassocregulationblog.blogspot.com/2014/02/theory-and-reality-of-cyclical-slow.html). In IVQ2013, US GDP grew 0.7 percent at 2.6 percent SAAR and 2.6 percent relative to a year earlier.
• United Kingdom. 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 increased 0.1 percent relative to a year earlier. UK GDP increased 0.8 percent in IIIQ2012 and increased 0.3 percent relative to a year earlier. UK GDP fell 0.2 percent in IVQ2012 relative to IIIQ2012 and increased 0.2 percent relative to a year earlier. UK GDP increased 0.4 percent in IQ2013 and 0.5 percent relative to a year earlier. UK GDP increased 0.8 percent in IIQ2013 and 1.7 percent relative to a year earlier. In IIIQ2013, UK GDP increased 0.8 percent and 1.8 percent relative to a year earlier. UK GDP increased 0.7 percent in IVQ2013 and 2.7 percent relative to a year earlier.
• Italy. 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 1.7 percent relative to IQ2011. Italy’s GDP fell 0.5 percent in IIQ2012 and declined 2.4 percent relative to a year earlier. In IIIQ2012, Italy’s GDP fell 0.4 percent and declined 2.6 percent relative to a year earlier. The GDP of Italy contracted 0.9 percent in IVQ2012 and fell 2.8 percent relative to a year earlier. In IQ2013, Italy’s GDP contracted 0.6 percent and fell 2.4 percent relative to a year earlier. Italy’s GDP fell 0.3 percent in IIQ2013 and 2.1 percent relative to a year earlier. The GDP of Italy decreased 0.1 percent in IIIQ2013 and declined 1.9 percent relative to a year earlier. Italy’s GDP increased 0.1 percent in IVQ2013 and decreased 0.9 percent relative to a year earlier.
• France. France’s GDP increased 0.1 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 changed 0.0 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 decreased 0.1 percent in IIIQ2013 and increased 0.3 percent relative to a year earlier. The GDP of France increased 0.3 percent in IVQ2013 and 0.8 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	3.2
China	1.4	8.1
Euro Area	-0.1	-0.2
Germany	0.7	1.8
France	0.1	0.4
Italy	-1.1	-1.7
United Kingdom	0.0	0.6
	IIQ2012/IQ2012	IIQ2012/IIQ2011
United States	QOQ: 0.3         SAAR: 1.2	2.8
Japan	QOQ: -0.4 SAAR: -1.7	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	-0.5	-2.4
United Kingdom	-0.4	0.1
	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	-0.4	-2.6
United Kingdom	0.8	0.3
	IVQ2012/IIIQ2012	IVQ2012/IVQ2011
United States	QOQ: 0.0 SAAR: 0.1	2.0
Japan	QOQ: 0.0 SAAR: 0.1	-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	-2.8
United Kingdom	-0.2	0.2
	IQ2013/IVQ2012	IQ2013/IQ2012
United States	QOQ: 0.3 SAAR: 1.1	1.3
Japan	QOQ: 1.1 SAAR: 4.5	0.0
China	1.5	7.7
Euro Area	-0.2	-1.2
Germany	0.0	-1.6
France	0.0	-0.4
Italy	-0.6	-2.4
UK	0.4	0.5
	IIQ2013/IQ2013	IIQ2013/IIQ2012
United States	QOQ: 0.6 SAAR: 2.5	1.6
Japan	QOQ: 1.1 SAAR: 4.1	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	-2.1
UK	0.8	1.7
	IIIQ2013/IIQ2013	III/Q2013/  IIIQ2012
USA	QOQ: 1.0 SAAR: 4.1	2.0
Japan	QOQ: 0.2 SAAR: 0.9	2.3
China	2.2	7.8
Euro Area	0.1	-0.3
Germany	0.3	1.1
France	-0.1	0.3
Italy	-0.1	-1.9
UK	0.8	1.8
	IVQ2013/IIIQ2013	IVQ2013/IVQ2012
USA	QOQ: 0.7 SAAR: 2.6	2.6
Japan	QOQ: 0.2 SAAR: 0.7	2.6
China	1.8	7.7
Euro Area	0.2	0.5
Germany	0.4	1.3
France	0.3	0.8
Italy	0.1	-0.9
UK	0.7	2.7

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. Japan provides the most worrisome data (http://cmpassocregulationblog.blogspot.com/2014/03/interest-rate-risks-world-inflation.html and earlier http://cmpassocregulationblog.blogspot.com/2014/03/financial-risks-slow-cyclical-united.html and earlier http://cmpassocregulationblog.blogspot.com/2014/02/mediocre-cyclical-united-states.html and earlier 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 Feb 2014, Japan’s exports grew 9.0 percent in 12 months while imports increased 9.0 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 2.2 percentage points from GDP growth in IIIQ2012 and deducted 0.5 percentage points from GDP growth in IVQ2012. Net trade added 0.4 percentage points to GDP growth in IQ2012, 1.7 percentage points in IQ2013 and 0.5 percentage points in IIQ2013. In IIIQ2013, net trade deducted 2.0 percentage points from GDP growth in Japan. Net trade ducted 2.2 percentage points from GDP growth in Japan in IVQ2013.
• China. In Mar 2014, China exports decreased 6.6 percent relative to a year earlier and imports decreased 11.3 percent.
• Germany. Germany’s exports decreased 1.3 percent in the month of Feb 2014 and increased 4.6 percent in the 12 months ending in Feb 2014. Germany’s imports increased 0.4 percent in the month of Feb and increased 6.5 percent in the 12 months ending in Dec. 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 0.3 percentage points in IQ2013 and added 0.3 percentage points in IIQ2013. Net traded deducted 0.3 percentage points from Germany’s GDP growth in IIIQ2013 and added 1.1 percentage points to GDP growth in IVQ2013.
• United Kingdom. Net trade deducted 0.7 percentage points from UK value added in IQ2012, deducted 0.8 percentage points in IIQ2012, added 0.9 percentage points in IIIQ2012 and subtracted 0.4 percentage points in IVQ2012. In IQ2013, net trade added 0.5 percentage points to UK’s growth of value added and contributed 0.0 percentage points in IIQ2013. In IIIQ2013, net trade deducted 1.1 percentage points from UK growth. Net trade contributed 1.0 percentage points to UK value added in IVQ2013.
• France. France’s exports decreased 0.2 percent in Feb 2013 while imports decreased 5.5 percent. 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 0.2 percentage points in IIQ2013, deducting 0.6 percentage points in IIIQ2013. Net trade added 0.2 percentage points to France’s GDP in IVQ2013.
• United States. US exports decreased 1.1 percent in Feb 2014 and goods exports increased 1.8 percent in Jan-Feb 2014 relative to a year earlier. 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. Net trade added 0.99 percentage points to US GDP growth in IVQ2013. Industrial production increased 0.6 percent in Feb 2014 after decreasing 0.2 percent in Jan 2013 and changing 0.0 percent in Dec 2013, as shown in Table I-1, with all data seasonally adjusted. The report of the Board of Governors of the Federal Reserve System states (http://www.federalreserve.gov/releases/g17/Current/default.htm):

“Industrial production increased 0.6 percent in February after having declined 0.2 percent in January. In February, manufacturing output rose 0.8 percent and nearly reversed its decline of 0.9 percent in January, which resulted, in part, from extreme weather. The gain in factory production in February was the largest since last August. The output of utilities edged down 0.2 percent following a jump of 3.8 percent in January, and the production at mines moved up 0.3 percent. At 101.6 percent of its 2007 average, total industrial production in February was 2.8 percent above its level of a year earlier. The capacity utilization rate for total industry increased in February to 78.8 percent, a rate that is 1.3 percentage points below its long-run (1972–2013) average.”

In the six months ending in Feb 2014, United States national industrial production accumulated increase of 2.0 percent at the annual equivalent rate of 4.1 percent, which is higher than growth of 2.9 percent in the 12 months ending in Jan 2014. Excluding growth of -0.2 percent in Jan 2014, growth in the remaining five months from Sep to Feb 2013 accumulated to 2.2 percent or 5.4 percent annual equivalent. Industrial production fell in one of the past six months. Business equipment accumulated growth of 2.3 percent in the six months from Sep 2013 to Feb 2014 at the annual equivalent rate of 4.7 percent, which is lower than growth of 2.8 percent in the 12 months ending in Feb 2014. The Fed analyzes capacity utilization of total industry in its report (http://www.federalreserve.gov/releases/g17/Current/default.htm): “The capacity utilization rate for total industry increased in February to 78.8 percent, a rate that is 1.3 percentage points below its long-run (1972–2013) average.” United States industry apparently decelerated to a lower growth rate with possible acceleration in the past few months. Manufacturing increased 0.8 percent in Feb 2014 after decreasing 0.9 percent in Jan 2014 and increasing 0.2 percent in Dec 2013 seasonally adjusted, increasing 1.9 percent not seasonally adjusted in 12 months ending in Feb 2014, as shown in Table I-2. Manufacturing grew cumulatively 1.2 percent in the six months ending in Jan 2014 or at the annual equivalent rate of 2.4 percent. Excluding the decrease of 0.9 percent in Jan 2014, manufacturing accumulated growth of 2.1 percent from Sep 2013 to Feb 2013 or at the annual equivalent rate of 5.2 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. The Manufacturing fell 21.9 from the peak in Jun 2007 to the trough in Apr 2009 and increased by 19.1 percent from the trough in Apr 2009 to Dec 2013. Manufacturing grew 19.1 percent from the trough in Apr 2009 to Feb 2014. Manufacturing output in Feb 2014 is 6.9 percent below the peak in Jun 2007.

The geographical breakdown of exports and imports of Japan with selected regions and countries is provided in Table V-5 for Feb 2014. The share of Asia in Japan’s trade is more than one-half for 53.5 percent of exports and 41.7 percent of imports. Within Asia, exports to China are 18.5 percent of total exports and imports from China 18.0 percent of total imports. While exports to China increased 27.7 percent in the 12 months ending in Feb 2014, imports from China increased 5.7 percent. The largest export market for Japan in Feb 2014 is the US with share of 18.3 percent of total exports, which is close to that of China, and share of imports from the US of 8.8 percent in total imports. Japan’s exports to the US grew 5.6 percent in the 12 months ending in Feb 2014 and imports from the US grew 20.8 percent. Western Europe has share of 10.8 percent in Japan’s exports and of 10.7 percent in imports. Rates of growth of exports of Japan in Jan 2014 are 5.6 percent for exports to the US, minus 0.6 percent for exports to Brazil and 21.1 percent for exports to Germany. 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 Feb 2014 are positive for all trading partners except for declines from France and the Middle East. Imports from Asia increased 7.7 percent in the 12 months ending in Feb 2014 while imports from China increased 5.7 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-3, Growth of Trade and Contributions of Net Trade to GDP Growth, ∆% and % Points

	Exports M ∆%	Exports 12 M ∆%	Imports M ∆%	Imports 12 M ∆%
USA	-1.1 Feb	1.8 Jan-Feb	0.4 Feb	-0.1 Jan-Feb
Japan		Feb 2014 9.5 Jan 2014 9.5 Dec 2013 15.3 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		Feb 2014 9.0 Jan 2014 25.0 Dec 2013 24.7 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		2014 -6.6 Mar -18.1 Feb 10.6 Jan 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		2014 -11.3 Mar 10.1 Feb 10.0 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	1.0 12-M Jan	0.8 Jan-Dec	-3.2 12-M Dec	-3.3 Jan-Dec
Germany	-1.3 Feb CSA	4.6 Feb	0.4 Jan CSA	6.5 Feb
France Feb	-0.2	1.3	-5.5	-4.4
Italy Jan	-1.5	0.2	-1.6	-6.6
UK	-2.2 Feb	0.1 Dec-Feb 14 /Dec-Feb 13	2.3 Dec	-0.4 Dec-Feb 14 13/Dec-Feb 13
Net Trade % Points GDP Growth	% Points
USA	IVQ2013 0.99 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 -2.2 IIIQ2012 -0.5 IVQ2012 1.7 IQ2013 0.6 IIQ2013 -2.0 IIIQ2013 -2.1 IVQ2013
Germany	IQ2012 0.8 IIQ2012 0.4 IIIQ2012 0.3 IVQ2012 -0.5 IQ2013 -0.3 IIQ2013 0.3 IIIQ2013 -0.3 IVQ2013 1.1
France	0.1 IIIQ2012 0.1 IVQ2012 -0.1 IQ2013 0.2 IIQ2013 -0.6 IIIQ2013 0.2 IVQ2013
UK	-0.7 IQ2012 -0.8 IIQ2012 +0.9 IIIQ2012 -0.4 IVQ2012 0.5 IQ2013 0.0 IIQ2013 -1.1 IIIQ2013 1.0 IVQ2013

Sources: Country Statistical Agencies http://www.census.gov/foreign-trade/ http://www.bea.gov/iTable/index_nipa.cfm

Table V-5, Japan, Value and 12-Month Percentage Changes of Exports and Imports by Regions and Countries, ∆% and Millions of Yen

Feb 2014	Exports Millions Yen	12 months ∆%	Imports Millions Yen	12 months ∆%
Total	5,799,966	9.8	6,600,275	9.0
Asia	3,102,072	12.5	2,749,544	7.7
China	1,074,853	27.7	1,185,620	5.7
USA	1,063,575	5.6	579,923	20.8
Canada	68,826	-5.8	85,997	11.8
Brazil	38,879	-0.6	96,705	1.2
Mexico	83,036	16.4	36,199	24.5
Western Europe	623,929	11.7	707,309	17.6
Germany	165,864	21.1	214,308	33.0
France	50,842	13.8	80,196	-1.0
UK	87,878	-0.6	52,547	5.1
Middle East	230,990	18.7	1,328,897	-2.2
Australia	126,279	-7.3	373,453	6.3

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, increased to 53.5 in Mar from 53.1 in Feb, indicating expansion at faster rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/cb2b07fd46e141f88cfaa803e20492ce). This index has remained above the contraction territory of 50.0 during 56 consecutive months. The employment index decreased from 51.5 in Feb to 51.3 in Mar with input prices rising at slower rate, new orders increasing at slower rate and output increasing at faster rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/cb2b07fd46e141f88cfaa803e20492ce). David Hensley, Director of Global Economics Coordination at JP Morgan finds temporary effects of services and weather with expectation of resumption of growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/cb2b07fd46e141f88cfaa803e20492ce). The JP Morgan Global Manufacturing PMI^™, produced by JP Morgan and Markit in association with ISM and IFPSM, decreased at 52.4 in Mar from 53.3 in Feb (http://www.markiteconomics.com/Survey/PressRelease.mvc/23053796366e42919999b6fe424ea05e). New export orders expanded for the ninth consecutive month (http://www.markiteconomics.com/Survey/PressRelease.mvc/23053796366e42919999b6fe424ea05e). David Hensley, Director of Global Economic Coordination at JP Morgan finds slowing of the index but continuing growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/23053796366e42919999b6fe424ea05e). The HSBC Brazil Composite Output Index, compiled by Markit, increased from 50.8 in Feb to 51.0 in Mar, indicating expanding activity of Brazil’s private sector (http://www.markiteconomics.com/Survey/PressRelease.mvc/1ad634697ca34b4ab336cd46af6f78c2). The HSBC Brazil Services Business Activity index, compiled by Markit, increased from 50.8 in Feb to 51.0 in Mar, indicating expanding services activity (http://www.markiteconomics.com/Survey/PressRelease.mvc/1ad634697ca34b4ab336cd46af6f78c2). André Loes, Chief Economist, Brazil, at HSBC, finds weak private sectory activity (http://www.markiteconomics.com/Survey/PressRelease.mvc/1ad634697ca34b4ab336cd46af6f78c2). The HSBC Brazil Purchasing Managers’ Index^TM (PMI^™) increased marginally from 50.4 in Feb to 50.6 in Mar, indicating moderate improvement in manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/36a63834a3864df9b3c283352df1ba2a). André Loes, Chief Economist, Brazil at HSBC, finds growth of output with slowing new orders (http://www.markiteconomics.com/Survey/PressRelease.mvc/36a63834a3864df9b3c283352df1ba2a).

VA United States. The Markit Flash US Manufacturing Purchasing Managers’ Index^™ (PMI^™) seasonally adjusted decreased to 55.5 in Mar from 57.1 in Feb, which is the second highest rate of improvement since Jan 2013 (http://www.markiteconomics.com/Survey/PressRelease.mvc/6cbe45feb6f34d4e86b94f05944db01c). New export orders registered 51.0 in Mar, decreasing from 51.6 in Feb, indicating marginal expansion. Chris Williamson, Chief Economist at Markit, finds that manufacturing hiring is growing with creation of about 10,000 to 15,000 jobs per month and growth at annual rate of 4 percent (http://www.markiteconomics.com/Survey/PressRelease.mvc/6cbe45feb6f34d4e86b94f05944db01c). The Markit Flash US Services PMI™ Business Activity Index increased from 53.3 in Feb to 55.5 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/a655b90f6ba1492d8fbea2d7ada81977). Chris Williamson, Chief Economist at Markit, finds that the surveys are consistent with growth of jobs at monthly rate of 130,000 and GDP growth around 2.5 percent annual rate in IQ2014 (http://www.markiteconomics.com/Survey/PressRelease.mvc/a655b90f6ba1492d8fbea2d7ada81977). The Markit US Composite PMI™ Output Index of Manufacturing and Services increased to 55.7 in Mar from 54.1 in Feb (http://www.markiteconomics.com/Survey/PressRelease.mvc/536f1ccda0d24d58b6e6bbbec19f30e8). The Markit US Services PMI™ Business Activity Index increased from 53.3 in Feb to 55.3 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/536f1ccda0d24d58b6e6bbbec19f30e8). Chris Williamson, Chief Economist at Markit, finds the indexes consistent with growth of 2.5 percent in the US in IQ2014(http://www.markiteconomics.com/Survey/PressRelease.mvc/536f1ccda0d24d58b6e6bbbec19f30e8). The Markit US Manufacturing Purchasing Managers’ Index^™ (PMI^™) decreased to 55.5 in Mar from 57.1 in Feb, which indicates expansion at slower rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/8b3f4e4546394602ba5fa63dc2b80f2d). The index of new exports orders decreased from 51.6 in Feb to 51.1 in Mar while total new orders decreased from 59.6 in Feb to 58.1 in Mar. Chris Williamson, Chief Economist at Markit, finds that the index suggests strength in US manufacturing with hiring at around 15 to 20,000 per month (http://www.markiteconomics.com/Survey/PressRelease.mvc/8b3f4e4546394602ba5fa63dc2b80f2d). The purchasing managers’ index (PMI) of the Institute for Supply Management (ISM) Report on Business^® increased 0.5 percentage points from 53.2 in Feb to 53.7 in Mar, which indicates growth at a faster rate (http://www.ism.ws/ISMReport/MfgROB.cfm?navItemNumber=12942). The index of new orders increased 0.6 percentage points from 54.5 in Feb to 55.1 in Mar. The index of exports decreased 0.2 percentage point from 53.5 in Feb to 55.5 in Mar, growing at a faster rate. The Non-Manufacturing ISM Report on Business^® PMI increased 1.5 percentage points from 51.6 in Feb to 53.1 in Mar, indicating growth of business activity/production during 56 consecutive months, while the index of new orders increased 2.1 percentage points from 51.3 in Feb to 53.4 in Mar (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	Feb 12 months NSA ∆%: 1.1; ex food and energy ∆%: 1.6 Feb month SA ∆%: 0.1; ex food and energy ∆%: 0.1 Blog 3/23/14
Producer Price Index	Finished Goods Feb 12-month NSA ∆%: 1.3; ex food and energy ∆% 1.7 Feb month SA ∆% = 0.4; ex food and energy ∆%: 0.1 Final Demand Feb 12-month NSA ∆%: 0.9; ex food and energy ∆% 1.1 Feb month SA ∆% = -0.1; ex food and energy ∆%: -0.2 Blog 3/23/14
PCE Inflation	Feb 12-month NSA ∆%: headline 0.9; ex food and energy ∆% 1.1 Blog 3/30/14
Employment Situation	Household Survey: Mar Unemployment Rate SA 6.7% Blog calculation People in Job Stress Mar: 28.2 million NSA, 17.2% of Labor Force Establishment Survey: Mar Nonfarm Jobs +192,000; Private +192,000 jobs created  Feb 12-month Average Hourly Earnings Inflation Adjusted ∆%: 2.3 Blog 4/6/14
Nonfarm Hiring	Nonfarm Hiring fell from 63.3 million in 2006 to 54.2 million in 2013 or by 9.1 million Private-Sector Hiring Feb 2014 3.750 million lower by 0.643 million than 4.393 million in Feb 2006 Blog 4/13/14
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 IVQ2013/IVQ2012 2.6 IQ2012 SAAR 3.7 IIQ2012 SAAR 1.2 IIIQ2012 SAAR 2.8 IVQ2012 SAAR 0.1 IQ2013 SAAR 1.1 IIQ2013 SAAR 2.5 IIIQ2013 SAAR 4.1 IVQ2013 SAAR 2.6 Blog 3/30/14
Real Private Fixed Investment	SAAR IVQ2013 2.8 ∆% IVQ2007 to IVQ2013: minus 2.9% Blog 3/30/14
Corporate Profits	IVQ2013 SAAR: Corporate Profits 2.2; Undistributed Profits -6.7 Blog 3/30/14
Personal Income and Consumption	Feb month ∆% SA Real Disposable Personal Income (RDPI) SA ∆% 0.3 Real Personal Consumption Expenditures (RPCE): 0.2 12-month Feb NSA ∆%: RDPI: 2.1; RPCE ∆%: 2.1 Blog 3/30/14
Quarterly Services Report	IVQ13/IVQ12 NSA ∆%: Information 5.5 Financial & Insurance 5.6 Blog 3/16/14
Employment Cost Index	Compensation Private IVQ2013 SA ∆%: 0.5 Dec 12 months ∆%: 1.9 Blog 2/9/14
Industrial Production	Feb month SA ∆%: 0.6 Feb 12 months SA ∆%: 2.8 Manufacturing Feb SA ∆% 0.8 Feb 12 months SA ∆% 1.5, NSA 1.9 Capacity Utilization: 78.8 Blog 3/23/14
Productivity and Costs	Nonfarm Business Productivity IVQ2013∆% SAAE 1.8; IVQ2013/IVQ2012 ∆% 1.3; Unit Labor Costs SAAE IVQ2013 ∆% -0.1; IVQ2013/IVQ2012 ∆%: -0.9 Blog 3/9/2014
New York Fed Manufacturing Index	General Business Conditions From Feb 4.48 to Mar 5.61 New Orders: From Feb -0.21 to Mar 3.13 Blog 3/23/14
Philadelphia Fed Business Outlook Index	General Index from Feb -6.3 to Mar 9.0 New Orders from Feb -5.2 to Mar 5.7 Blog 3/23/14
Manufacturing Shipments and Orders	New Orders SA Feb ∆% 1.6 Ex Transport 0.7 Jan-Feb NSA New Orders ∆% 0.1 Ex transport 0.0 Blog 4/6/14
Durable Goods	Feb New Orders SA ∆%: 2.2; ex transport ∆%: 0.2 Jan-Feb 14/Jan-Feb 13 New Orders NSA ∆%: 0.8; ex transport ∆% 1.0 Blog 3/30/14
Sales of New Motor Vehicles	Jan-Mar 2014 2,206,454; Jan-Mar 2013 2,238,820. Mar 14 SAAR 16.40 million, Feb 14 SAAR 15.34 million, Mar 2013 SAAR 15.30 million Blog 4/6/14
Sales of Merchant Wholesalers	Jan-Feb 2014/Jan-Feb 2013 NSA ∆%: Total 3.3; Durable Goods: 2.8; Nondurable Goods: 3.8 Blog 4/13/14
Sales and Inventories of Manufacturers, Retailers and Merchant Wholesalers	Jan 14 12-M NSA ∆%: Sales Total Business 2.6; Manufacturers 1.8 Retailers 2.3; Merchant Wholesalers 3.6 Blog 3/16/14
Sales for Retail and Food Services	Jan-Feb 2014/Jan-Feb 2013 ∆%: Retail and Food Services 1.9; Retail ∆% 1.8 Blog 3/16/14
Value of Construction Put in Place	Feb SAAR month SA ∆%: 0.1 Feb 12-month NSA: 8.5 Blog 4/6/14
Case-Shiller Home Prices	Jan 2014/Jan 2013 ∆% NSA: 10 Cities 13.5; 20 Cities: 13.2 ∆% Jan SA: 10 Cities 0.8 ; 20 Cities: 0.8 Blog 3/30/14
FHFA House Price Index Purchases Only	Jan SA ∆% 0.5; 12 month NSA ∆%: 7.4 Blog 3/30/14
New House Sales	Feb 2014 month SAAR ∆%: -3.3 Jan-Feb 2013/Jan-Feb 2012 NSA ∆%: -0.1 Blog 3/30/14
Housing Starts and Permits	Feb Starts month SA ∆% minus 0.2; Permits ∆%: 7.7 Jan-Feb 2014/Jan-Feb 2013 NSA ∆% Starts -1.0; Permits  ∆% 4.4 Blog 3/23/14
Trade Balance	Balance Feb SA -$42,300 million versus jan -$39,280 million Exports Feb SA ∆%: -1.1 Imports Feb SA ∆%: 0.4 Goods Exports Jan-Feb 2014/Jan-Feb 2013 NSA ∆%: 1.8 Goods Imports Jan-Feb 2014/Jan-Feb 2012 NSA ∆%: -0.1 Blog 4/6/14
Export and Import Prices	Mar 12-month NSA ∆%: Imports -0.6; Exports 0.2 Blog 4/13/14
Consumer Credit	Feb ∆% annual rate: Total 6.4; Revolving -3.4; Nonrevolving 10.1 Blog 4/13/14
Net Foreign Purchases of Long-term Treasury Securities	Jan Net Foreign Purchases of Long-term US Securities: $7.3 billion Major Holders of Treasury Securities: China $1274 billion; Japan $1201 billion; Total Foreign US Treasury Holdings Nov $5833 billion Blog 3/23/14
Treasury Budget	Fiscal Year 2014/2013 ∆% Mar: Receipts 10.4; Outlays minus 3.5; Individual Income Taxes 5.3 Deficit Fiscal Year 2011 $1,300 billion Deficit Fiscal Year 2012 $1,087 billion Deficit Fiscal Year 2013 $680 billion Blog 3/16/2014
CBO Budget and Economic Outlook	2012 Deficit $1087 B 6.8% GDP Debt 11,281 B 70.1% GDP 2013 Deficit $680 B, 4.1% GDP Debt 11,982 B 72.1% GDP Blog 8/26/12 11/18/12 2/10/13 9/22/13 2/16/14
Commercial Banks Assets and Liabilities	Feb 2014 SAAR ∆%: Securities 0.5 Loans 2.5 Cash Assets 46.6 Deposits 7.0 Blog 3/30/14
Flow of Funds	IVQ2013 ∆ since 2007 Assets +$12,272.6 BN Nonfinancial -$729.2 BN Real estate -$1380.6 BN Financial +13,001.7 BN Net Worth +$12,910.9 BN Blog 3/16/14
Current Account Balance of Payments	IVQ2013 -83,739 MM %GDP 2.2 Blog 3/23/14

Links to blog comments in Table USA:

4/6/14 http://cmpassocregulationblog.blogspot.com/2014/04/interest-rate-risks-twenty-eight.html

3/30/14 http://cmpassocregulationblog.blogspot.com/2014/03/financial-uncertainty-mediocre-cyclical.html

3/23/14 http://cmpassocregulationblog.blogspot.com/2014/03/interest-rate-risks-world-inflation.html

3/16/2014 http://cmpassocregulationblog.blogspot.com/2014/03/global-financial-risks-recovery-without.html

3/9/14 http://cmpassocregulationblog.blogspot.com/2014/03/rules-discretionary-authorities-and.html

2/16/14 http://cmpassocregulationblog.blogspot.com/2014/02/theory-and-reality-of-cyclical-slow.html

2/9/14 http://cmpassocregulationblog.blogspot.com/2014/02/financial-instability-rules.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

Sales and inventories of merchant wholesalers except manufacturers’ sales branches and offices are shown in Table VA-1 for Jan-Feb 2014 NSA and percentage changes from the prior month SA and for Jan-Feb 2014 relative to Jan-Feb 2013. These data are volatile, aggregating diverse categories of durable and nondurable goods without adjustment for price changes. Total sales for the US rose 3.3 percent in Jan-Feb 2014 relative to Jan-Feb 2013 and increased 1.7 percent in Feb 2014 relative to Jan 2014. The value of total sales is quite high at $813.0 billion, approaching five trillion dollars in a year. Value in the breakdown is useful in identifying relative importance of individual categories. Sales of durable goods in Jan-Feb 2014 reached $365.9 billion, over two trillion dollars for a year, increasing 0.1 percent in Feb 2014 relative to Jan 2014 and increasing 2.8 percent in Jan-Feb 2014 relative to Jan-Feb 2013. Sales of automotive products reached $61.0 billion in Jan-Feb 2014, increasing 0.3 percent in the month and increasing 2.5 percent relative to a year earlier. There is strong performance of 11.0 percent in machinery but lower of 2.0 percent in electrical products. Sales of nondurable goods rose 3.8 percent over a year earlier. The influence of commodity prices returned as suggested by decrease of 4.6 percent in Feb 2014 and decrease of 6.5 percent in Jan-Feb 2014 relative to a year earlier in farm products with increase of 4.0 percent in petroleum products in Feb 2014 and increase of 10.1 percent relative to a year earlier. The final three columns in Table VA-1 provide the value of inventories and percentage changes from the prior month and relative to the same month a year earlier. US total inventories of wholesalers increased 0.5 percent in Feb 2014 and increased 4.7 percent relative to a year earlier. Inventories of durable goods of $319.6 billion are 60.9 percent of total inventories of $524.6 billion and rose 6.0 percent relative to a year earlier. Automotive inventories increased 7.9 percent relative to a year earlier. Machinery inventories of $94.6 billion rose 12.3 percent relative to a year earlier. Inventories of nondurable goods of $205.1 billion are 39.1 percent of the total and increased 2.7 percent relative to a year earlier. Inventories of farm products increased 2.7 percent in Feb relative to Jan and decreased 4.5 percent relative to a year earlier. Inventories of petroleum products decreased 2.6 percent in Feb and decreased 12.4 percent relative to a year earlier.

Table VA-1, US, Sales and Inventories of Merchant Wholesalers except Manufacturers’ Sales Branches and Offices, Month ∆%

2013	Sales $ Billions Jan-Feb 2014 NSA	Sales Feb ∆% SA	Sales∆% Jan-Feb 2014 from Jan-Feb 2013  NSA	INV $ Billions Feb 2014 NSA	INV Feb ∆% SA	INV  ∆% Feb 2014 from Feb 2013 NSA
US Total	813.0	0.7	3.3	524.6	0.5	4.7
Durable	365.9	0.1	2.8	319.6	0.7	6.0
Automotive	61.0	0.3	2.5	53.6	0.5	7.9
Prof. Equip.	67.7	0.2	0.9	40.1	1.4	5.3
Computer Equipment	37.4	-2.7	0.9	17.1	2.2	5.9
Electrical	63.7	-1.6	2.0	34.6	0.5	1.2
Machinery	68.9	1.8	11.0	94.6	1.4	12.3
Not Durable	447.1	1.2	3.8	205.1	0.1	2.7
Drugs	73.5	1.6	6.7	39.9	2.0	19.3
Apparel	23.0	1.8	0.8	23.8	0.0	5.5
Groceries	93.6	-0.1	3.3	31.9	-1.3	0.2
Farm Products	40.6	-4.6	-6.5	26.9	2.7	-4.5
Petroleum	127.3	4.0	10.1	20.2	-2.6	-12.4

Note: INV: inventories

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

Chart VA-1 of the US Census Bureau provides sales of wholesale trade NSA from Jan 1992 to Feb 2014. The jagged curve of wholesale trade sales without adjustment shows strong seasonal variations. There is a strong long-term trend interrupted by sharp drop during the global recession. Growth resumed along a stronger upward trend and the level surpasses the peak before the global recession with stability in the final segment.

Chart VA-1, US, Wholesale Trade Sales, Monthly, NSA, Jan 1992-
Feb 2014, Millions of Dollars

Source: US Census Bureau

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

Chart VA-2 of the US Census Bureau provides US wholesale trade sales with seasonal adjustment from Jan 1992 to Feb 2014. The elimination of seasonality permits enhanced comparison of adjacent sales. The final segment identifies another drop followed by increase to a higher level with stability.

Chart VA-2, US, Wholesale Trade Sales, Monthly, SA, Jan 1992-Feb 2014, Millions of Dollars

Source: US Census Bureau

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

Inventory/sales ratios of merchant wholesalers except manufacturers’ sales branches and offices are shown in Table VA-2. The total for the US has remained almost without change at 1.19 in Feb 2014, 1.19 in Jan 2014 and 1.17 in Feb 2013. Inventory/sales ratios are higher in durable goods industries but remain relatively stable with 1.60 in Feb 2014, 1.59 in Jan 2014 and 1.55 in Feb 2013. Computer equipment operates with low inventory/sales ratios of 0.83 in Feb 2014, 0.79 in Jan 2014 and 0.78 in Feb 2013 because of the capacity to fill orders on demand. As expected because of perishable nature, nondurable inventory/sales ratios are quite low with 0.84 in Feb 2014 and 0.85 in Jan 2014, which are close to 0.85 in Feb 2013. There are exceptions such as 1.96 in Feb 2014 in apparel that is close to 2.00 in Jan 2014 and close to 1.88 in Feb 2013.

Table VA-2, Inventory/Sales Ratios of Merchant Wholesalers except Manufacturers’ Sales Branches and Offices, % SA

	Feb 2014	Jan 2014	Feb 2013
US Total	1.19	1.19	1.17
Durable	1.60	1.59	1.55
Automotive	1.58	1.58	1.51
Prof. Equip.	1.07	1.05	1.02
Comp. Equip.	0.83	0.79	0.78
Electrical	1.02	1.00	1.03
Machinery	2.50	2.51	2.49
Not Durable	0.84	0.85	0.85
Drugs	1.09	1.09	1.01
Apparel	1.96	2.00	1.88
Groceries	0.66	0.67	0.68
Farm Products	1.15	1.07	1.10
Petroleum	0.29	0.31	0.35

Source: US Census Bureau

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

Inventories of merchant wholesalers except manufacturers’ sales branches in millions of dollars SA are provided in Chart VA-3 of the US Census Bureau. There is evident acceleration in inventory building in the final segment at a sharper slope than before the global recession with recent downward turn followed by stability.

Chart VA-3, US, Inventories of Merchant Wholesalers, Millions of Dollars, NSA, Jan 1992-Feb 2014

Source: US Census Bureau

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

Inventories of merchant wholesalers except manufacturers’ sales branches in millions of dollars SA are provided in Chart VA-4 of the US Census Bureau. There is evident acceleration in inventory building in the final segment at a sharper slope than before the global recession with recent downward turn followed by increase.

Chart VA-4, US, Inventories of Merchant Wholesalers, Millions of Dollars, SA, Jan 1992-Feb 2014

Source: US Census Bureau

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

Chart VA-5 provides the chart of the US Census Bureau with inventories/sales ratios of merchant wholesalers from 2004 to 2014 seasonally adjusted. Inventory/sales ratios rise during contractions as merchants are caught with increasing inventories because of weak sales and fall during expansions as merchants attempt to fill sales with existing stocks. There is an increase in the inventory/sales ratio in 2012 but not yet significantly higher with declining trend in the final segment followed by an increase and new decline/stability.

Chart VA-5, US, Monthly Inventories/Sales Ratios of Merchant Wholesalers, SA, 2005-2014

Source: US Census Bureau

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

Chart IIA2-1 provides prices of total US imports 2001-2014. Prices fell during the contraction of 2001. Import price inflation accelerated after unconventional monetary policy of near zero interest rates in 2003-2004 and quantitative easing by withdrawing supply with the suspension of 30-year Treasury bond auctions. Slow pace of adjusting fed funds rates from 1 percent by increments of 25 basis points in 17 consecutive meetings of the Federal Open Market Committee (FOMC) between Jun 2004 and Jun 2006 continued to give impetus to carry trades. The reduction of fed funds rates toward zero in 2008 fueled a spectacular global hunt for yields that caused commodity price inflation in the middle of a global recession. After risk aversion in 2009 because of the announcement of TARP (Troubled Asset Relief Program) creating anxiety on “toxic assets” in bank balance sheets (see Cochrane and Zingales 2009), prices collapsed because of unwinding carry trades. Renewed price increases returned with zero interest rates and quantitative easing. Monetary policy impulses in massive doses have driven inflation and valuation of risk financial assets in wide fluctuations over a decade.

Chart IIA2-1, US, Prices of Total US Imports 2001=100, 2001-2014

Source: Bureau of Labor Statistics

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

Chart IIA2-2 provides 12-month percentage changes of prices of total US imports from 2001 to 2014. The only plausible explanation for the wide oscillations is by the carry trade originating in unconventional monetary policy. Import prices jumped in 2008 during deep and protracted global recession driven by carry trades from zero interest rates to long, leveraged positions in commodity futures. Carry trades were unwound during the financial panic in the final quarter of 2008 that resulted in flight to government obligations. Import prices jumped again in 2009 with subdued risk aversion because US banks did not have unsustainable toxic assets. Import prices then fluctuated as carry trades were resumed during periods of risk appetite and unwound during risk aversion resulting from the European debt crisis.

Chart IIA2-2, US, Prices of Total US Imports, 12-Month Percentage Changes, 2001-2014

Source: Bureau of Labor Statistics http://www.bls.gov/mxp/data.htm

Chart IIA2-3 provides prices of US imports from 1982 to 2014. There is no similar episode to that of the increase of commodity prices in 2008 during a protracted and deep global recession with subsequent collapse during a flight into government obligations. Trade prices have been driven by carry trades created by unconventional monetary policy in the past decade.

Chart IIA2-3, US, Prices of Total US Imports, 2001=100, 1982-2014

Source: Bureau of Labor Statistics

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

Chart IIA2-4 provides 12-month percentage changes of US total imports from 1982 to 2014. There have not been wide consecutive oscillations as the ones during the global recession of IVQ2007 to IIQ2009.

Chart IIA2-4, US, Prices of Total US Imports, 12-Month Percentage Changes, 1982-2014

Source: Bureau of Labor Statistics http://www.bls.gov/mxp/data.htm

Chart IIA2-5 provides the index of US export prices from 2001 to 2014. Import and export prices have been driven by impulses of unconventional monetary policy in massive doses. The most recent segment in Chart IIA2-5 shows declining trend resulting from a combination of the world economic slowdown and the decline of commodity prices as carry trade exposures are unwound because of risk aversion to the sovereign debt crisis in Europe and slowdown in the world economy.

Chart IIA2-5, US, Prices of Total US Exports, 2001=100, 2001-2014

Source: Bureau of Labor Statistics http://www.bls.gov/mxp/data.htm

Chart IIA2-6 provides prices of US total exports from 1982 to 2014. The rise before the global recession from 2003 to 2008, driven by carry trades, is also unique in the series and is followed by another steep increase after risk aversion moderated in IQ2009.

Chart IIA2-6, US, Prices of Total US Exports, 2001=100, 1982-2014

Source: Bureau of Labor Statistics http://www.bls.gov/mxp/data.htm

Chart IIA2-7 provides 12-month percentage changes of total US exports from 1982 to 2014. The uniqueness of the oscillations around the global recession of IVQ2007 to IIQ2009 is clearly revealed.

Chart IIA2-7, US, Prices of Total US Exports, 12-Month Percentage Changes, 1982-2014

Source: Bureau of Labor Statistics http://www.bls.gov/mxp/data.htm

Twelve-month percentage changes of US prices of exports and imports are provided in Table IIA2-1. Import prices have been driven since 2003 by unconventional monetary policy of near zero interest rates influencing commodity prices according to moods of risk aversion and portfolio reallocations. In a global recession without risk aversion until the panic of Sep 2008 with flight to government obligations, import prices increased 21.4 percent in the 12 months ending in Jul 2008, 18.1 percent in the 12 months ending in Aug 2008, 13.1 percent in the 12 months ending in Sep 2008, 4.9 percent in the twelve months ending in Oct 2008. Import prices fell 10.1 percent in the 12 months ending in Dec 2008 when risk aversion developed in 2008 until mid 2009 (http://www.bls.gov/mxp/data.htm). Import prices rose again sharply in Dec 2009 by 8.6 percent and in Dec 2010 by 5.3 percent in the presence of zero interest rates with relaxed mood of risk aversion. Carry trades were unwound in May 2011 and following months as shown by decrease of import prices by 2.0 percent in the 12 months ending in Dec 2012 and 1.3 percent in Dec 2013. Import prices increased 15.2 percent in the 12 months ending in Mar 2008, fell 14.9 percent in the 12 months ending in Mar 2009 and increased 11.2 percent in the 12 months ending in Mar 2010. Fluctuations are much sharper in imports because of the high content of oil that as all commodities futures contracts increases sharply with zero interest rates and risk appetite, contracting under risk aversion. There is similar behavior of prices of imports ex fuels, exports and exports ex agricultural goods but less pronounced than for commodity-rich prices dominated by carry trades from zero interest rates. A critical event resulting from unconventional monetary policy driving higher commodity prices by carry trades is the deterioration of the terms of trade, or export prices relative to import prices, that has adversely affected US real income growth relative to what it would have been in the absence of unconventional monetary policy. Europe, Japan and other advanced economies have experienced similar deterioration of their terms of trade. Because of unwinding carry trades of commodity futures because of risk aversion and portfolio reallocations, import prices decreased 0.6 percent in the 12 months ending in Mar 2014, export prices increased 0.2 percent and prices of nonagricultural exports increased 0.4 percent. Imports excluding fuel fell 0.8 percent in the 12 months ending in Mar 2014. At the margin, price changes over the year in world exports and imports are decreasing or increasing moderately because of unwinding carry trades in a temporary mood of risk aversion and relative allocation of asset classes toward equities that reverses exposures in commodity futures.

Table IIA2-1, US, Twelve-Month Percentage Rates of Change of Prices of Exports and Imports

	Imports	Imports Ex Fuels	Exports	Exports Non-Ag
Mar 2014	-0.6	-0.8	0.2	0.4
Mar 2013	-2.1	-0.4	0.2	-0.8
Mar 2012	3.5	2.0	1.1	1.9
Mar 2011	10.3	4.4	9.5	7.1
Mar 2010	11.2	2.7	4.9	4.6
Mar 2009	-14.9	-2.8	-6.7	-5.0
Mar 2008	15.2	5.1	7.9	5.5
Mar 2007	2.8	2.6	5.4	4.3
Mar 2006	4.5	0.7	2.3	2.5
Mar 2005	7.6	2.5	3.3	4.5
Mar 2004	1.1	2.1	3.3	1.8
Mar 2003	6.8	0.6	2.2	1.6
Mar 2002	-5.6	NA	-2.4	-2.4
Mar 2001	-1.6	NA	0.0	-0.1

Source: Bureau of Labor Statistics http://www.bls.gov/mxp/data.htm

Table IIA2-2 provides 12-month percentage changes of the import price index all commodities from 2001 to 2014. Interest rates moving toward zero during unconventional monetary policy in 2008 induced carry trades into highly leveraged commodity derivatives positions that caused increases in 12-month percentage changes of import prices of around 20 percent. The flight into dollars and Treasury securities by fears of toxic assets in banks in the proposal of TARP (Cochrane and Zingales 2009) caused reversion of carry trades and collapse of commodity futures explaining sharp declines in trade prices in 2009. Twelve-month percentage changes of import prices at the end of 2012 and into 2013 occurred during another bout of risk aversion and portfolio reallocation. There is a new shock of risk aversion in late 2013 with marginally increasing exposures in commodities followed by reversals of exposures into 2014.

Table IIA2-2, US, Twelve-Month Percentage Changes of Import Price Index All Commodities, 2001-2014

Year	Jan	Feb	Mar	Jul	Aug	Sep	Oct	Nov	Dec
2001	2.8	0.2	-1.6	-4.1	-4.4	-5.6	-7.4	-8.8	-9.1
2002	-8.9	-8.3	-5.6	-1.7	-1.3	-0.4	1.9	2.5	4.2
2003	5.8	7.5	6.8	2.3	2.0	0.7	0.8	2.3	2.4
2004	2.2	0.9	1.1	5.6	7.1	8.2	9.9	9.0	6.7
2005	5.7	6.1	7.6	8.2	8.2	9.9	8.2	6.4	8.0
2006	8.7	6.9	4.5	7.0	6.0	1.6	-1.0	1.3	2.5
2007	0.0	1.2	2.8	2.8	1.9	4.8	9.1	12.0	10.6
2008	13.6	13.5	15.2	21.4	18.1	13.1	4.9	-5.9	-10.1
2009	-12.5	-12.7	-14.9	-19.1	-15.3	-12.0	-5.6	3.4	8.6
2010	11.4	11.3	11.2	4.9	3.8	3.6	3.9	4.1	5.3
2011	5.6	7.6	10.3	13.7	12.9	12.7	11.1	10.1	8.5
2012	6.9	5.1	3.5	-3.3	-1.8	-0.6	0.0	-1.4	-2.0
2013	-1.5	-0.6	-2.1	0.9	0.0	-0.7	-1.6	-1.8	-1.1
2014	-1.3	-1.2	-0.6

Source: Bureau of Labor Statistics http://www.bls.gov/mxp/data.htm

There is finer detail in one-month percentage changes of imports of the US in Table IIA2-3. Carry trades into commodity futures induced by interest rates moving to zero in unconventional monetary policy caused sharp monthly increases in import prices for cumulative increase of 13.8 percent from Mar to Jul 2008 at average rate of 2.6 percent per month or annual equivalent in five months of 36.4 percent (3.1 percent in Mar 2008, 2.8 percent in Apr 2008, 2.8 percent in May 2008, 3.0 percent in Jun 2008 and 1.4 percent in Jul 2008, data from http://www.bls.gov/mxp/data.htm). There is no other explanation for increases in import prices during sharp global recession and contracting world trade. Import prices then fell 23.4 percent from Aug 2008 to Jan 2009 or at the annual equivalent rate of minus 41.4 percent in the flight to US government securities in fear of the need to buy toxic assets from banks in the TARP program (Cochrane and Zingales 2009). Risk aversion during the first sovereign debt crisis of the euro area in May-Jun 2010 caused decline of US import prices at the annual equivalent rate of 11.4 percent. US import prices have been driven by combinations of carry trades induced by unconventional monetary policy and bouts of risk aversion and portfolio reallocation (http://cmpassocregulationblog.blogspot.com/2014/03/interest-rate-risks-world-inflation.html and earlier http://cmpassocregulationblog.blogspot.com/2014/02/squeeze-of-economic-activity-by-carry.html). US import prices increased 0.5 percent in Jan 2013 and 0.9 percent in Feb 2013 for annual equivalent rate of 8.7 percent, similar to those in national price indexes worldwide, originating in carry trades from zero interest rates to commodity futures. Import prices fell 0.1 percent in Mar 2013, 0.7 percent in Apr 2013, 0.6 percent in May 2013 and 0.4 percent in Jun 2013. Import prices changed 0.1 percent in Jul 2013, increased 0.4 percent in Aug 2013 and increased 0.3 percent in Sep 2013. Portfolio reallocations into asset classes other than commodities explains declines of import prices by 0.6 percent in Oct 2013 and 0.9 percent in Nov 2013. Import prices increased 0.1 percent in Dec 2013, 0.4 percent in Jan 2014, 0.9 percent in Feb 2014 and 0.6 percent in Mar 2014.

Table IIA2-3, US, One-Month Percentage Changes of Import Price Index All Commodities, 2001-2014

Year	Jan	Feb	Mar	Jul	Aug	Sep	Oct	Nov	Dec
2001	0.0	-0.6	-1.6	-1.5	-0.1	-0.1	-2.3	-1.5	-1.0
2002	0.2	0.0	1.3	0.4	0.3	0.7	0.0	-0.9	0.6
2003	1.8	1.7	0.6	0.5	0.0	-0.5	0.1	0.5	0.7
2004	1.5	0.4	0.8	0.4	1.5	0.5	1.6	-0.3	-1.4
2005	0.6	0.9	2.2	1.2	1.4	2.1	0.1	-1.9	0.0
2006	1.2	-0.8	-0.1	0.8	0.5	-2.2	-2.5	0.4	1.1
2007	-1.2	0.4	1.6	1.3	-0.3	0.6	1.5	3.2	-0.2
2008	1.5	0.2	3.1	1.4	-3.1	-3.6	-6.0	-7.4	-4.6
2009	-1.3	0.0	0.5	-0.6	1.5	0.2	0.8	1.5	0.2
2010	1.2	-0.1	0.4	0.0	0.4	0.0	1.1	1.7	1.4
2011	1.5	1.7	3.0	0.1	-0.4	-0.1	-0.4	0.7	0.0
2012	0.0	0.0	1.4	-0.7	1.2	1.0	0.3	-0.7	-0.6
2013	0.5	0.9	-0.1	0.1	0.4	0.3	-0.6	-0.9	0.1
2014	0.4	0.9	0.6

Source: Bureau of Labor Statistics http://www.bls.gov/mxp/data.htm

Chart IIA2-8 shows the US monthly import price index of all commodities excluding fuels from 2001 to 2014. All curves of nominal values follow the same behavior under the influence of unconventional monetary policy. Zero interest rates without risk aversion result in jumps of nominal values while under strong risk aversion even with zero interest rates there are declines of nominal values.

Chart IIA2-8, US, Import Price Index All Commodities Excluding Fuels, 2001=100, 2001-2014

Source: US Bureau of Labor Statistics

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

Chart IIA2-9 provides 12-month percentage changes of the US import price index excluding fuels between 2001 and 2014. There is the same behavior of carry trades driving up without risk aversion and down with risk aversion prices of raw materials, commodities and food in international trade during the global recession of IVQ2007 to IIQ2009 and in previous and subsequent periods.

Chart IIA2-9, US, Import Price Index All Commodities Excluding Fuels, 12-Month Percentage Changes, 2002-2014

Source: US Bureau of Labor Statistics

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

Chart IIA2-10 provides the monthly US import price index ex petroleum from 2001 to 2014. Prices including or excluding commodities follow the same fluctuations and trends originating in impulses of unconventional monetary policy of zero interest rates.

Chart IIA2-10, US, Import Price Index ex Petroleum, 2001=100, 2000-2014

Source: US Bureau of Labor Statistics

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

Chart IIA2-11 provides the US import price index ex petroleum from 1985 to 2014. There is the same unique hump in 2008 caused by carry trades from zero interest rates to prices of commodities and raw materials.

Chart IIA2-11, US, Import Price Index ex Petroleum, 2001=100, 1985-2014

Source: US Bureau of Labor Statistics

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

Chart IIA2-12 provides 12-month percentage changes of the import price index ex petroleum from 1986 to 2014. The oscillations caused by the carry trade in increasing prices of commodities and raw materials without risk aversion and subsequently decreasing them during risk aversion are unique.

Chart IIA2-12, US, Import Price Index ex Petroleum, 12-Month Percentage Changes, 1986-2014

Source: US Bureau of Labor Statistics

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

Chart IIA2-13 of the US Energy Information Administration shows the price of WTI crude oil since the 1980s. Chart IA2-13 captures commodity price shocks during the past decade. The costly mirage of deflation was caused by the decline in oil prices during the recession of 2001. The upward trend after 2003 was promoted by the carry trade from near zero interest rates. The jump above $140/barrel during the global recession in 2008 at $145.29/barrel on Jul 3, 2008, can only be explained by the carry trade promoted by monetary policy of zero fed funds rate. After moderation of risk aversion, the carry trade returned with resulting sharp upward trend of crude prices. Risk aversion resulted in another drop in recent weeks followed by some recovery and renewed deterioration/increase.

Chart IIA2-13, US, Crude Oil Futures Contract

Source: US Energy Information Administration

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=RCLC1&f=D

The price index of US imports of petroleum and petroleum products in shown in Chart IIA2-14. There is similar behavior of the curves all driven by the same impulses of monetary policy.

Chart IIA2-14, US, Import Price Index of Petroleum and Petroleum Products, 2001=100, 2001-2014

Source: US Bureau of Labor Statistics

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

Chart IIA2-15 provides the price index of petroleum and petroleum products from 1982 to 2014. The rise in prices during the global recession in 2008 and the decline after the flight to government obligations is unique in the history of the series. Increases in prices of trade in petroleum and petroleum products were induced by carry trades and declines by unwinding carry trades in flight to government obligations.

Chart IIA2-15, US, Import Price Index of Petroleum and Petroleum Products, 2001=100, 1982-2014

Source: US Bureau of Labor Statistics

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

Chart IIA2-16 provides 12-month percentage changes of the price index of US imports of petroleum and petroleum products from 1982 to 2014. There were wider oscillations in this index from 1999 to 2001 (see Barsky and Killian 2004 for an explanation).

Chart IIA2-16, US, Import Price Index of Petroleum and Petroleum Products, 12-Month Percentage Changes, 1982-2014

Source: US Bureau of Labor Statistics

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

The price index of US exports of agricultural commodities is in Chart IIA2-17 from 2001 to 2014. There are similar fluctuations and trends as in all other price index originating in unconventional monetary policy repeated over a decade. The most recent segment in 2011 has declining trend in a new flight from risk resulting from the sovereign debt crisis in Europe followed by declines in Jun 2012 and Nov 2012 with stability/decline in Dec 2012 into 2013.

Chart IIA2-17, US, Exports Price Index of Agricultural Commodities, 2001=100, 2001-2014

Source: US Bureau of Labor Statistics

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

Chart IIA2-18 provides the price index of US exports of agricultural commodities from 1982 to 2014. The increase in 2008 in the middle of deep, protracted contraction was induced by unconventional monetary policy. The decline from 2008 into 2009 was caused by unwinding carry trades in a flight to government obligations. The increase into 2011 and current pause were also induced by unconventional monetary policy in waves of increases during relaxed risk aversion and declines during unwinding of positions because of aversion to financial risk.

Chart IIA2-18, US, Exports Price Index of Agricultural Commodities, 2001=100, 1982-2014

Source: US Bureau of Labor Statistics

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

Chart IIA2-19 provides 12-month percentage changes of the index of US exports of agricultural commodities from 1986 to 2014. The wide swings in 2008, 2009 and 2011 are only explained by unconventional monetary policy inducing carry trades from zero interest rates to commodity futures and reversals during risk aversion.

Chart IIA2-19, US, Exports Price Index of Agricultural Commodities, 12-Month Percentage Changes, 1986-2014

Source: US Bureau of Labor Statistics

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

Chart IIA2-20 shows the export price index of nonagricultural commodities from 2001 to 2014. Unconventional monetary policy of zero interest rates drove price behavior during the past decade. Policy has been based on the myth of stimulating the economy by climbing the negative slope of an imaginary short-term Phillips curve.

Chart IIA2-20, US, Exports Price Index of Nonagricultural Commodities, 2001=100, 2001-2014

Source: US Bureau of Labor Statistics

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

Chart IIA2-21 provides a longer perspective of the price index of US nonagricultural commodities from 1982 to 2014. Increases and decreases around the global contraction after 2007 were caused by carry trade induced by unconventional monetary policy.

Chart IIA2-21, US, Exports Price Index of Nonagricultural Commodities, 2001=100, 1982-2014

Source: US Bureau of Labor Statistics

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

Finally, Chart IIA2-22 provides 12-month percentage changes of the price index of US exports of nonagricultural commodities from 1986 to 2014. The wide swings before, during and after the global recession beginning in 2007 were caused by carry trades induced by unconventional monetary policy.

Chart IIA2-22, US, Exports Price Index of Nonagricultural Commodities, 12-Month Percentage Changes, 1986-2014

Source: US Bureau of Labor Statistics

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

The report of consumer credit outstanding of the Board of Governors of the Federal Reserve System is provided in Table VA-3. The data are in seasonally adjusted annual rates both percentage changes and billions of dollars. The estimate of consumer credit “covers most short- and intermediate-term credit extended to individuals, excluding loans secured by real estate (http://www.federalreserve.gov/releases/g19/current/default.htm). Consumer credit is divided into two categories. (1) Revolving consumer credit (REV in Table VA-3) consists mainly of unsecured credit cards. (2) Non-revolving consumer credit (NREV in Table VA-3) “includes automobile loans and all other loans not included in revolving credit, such as loans for mobile homes, education, boats, trailers or vacations” (http://www.federalreserve.gov/releases/g19/current/default.htm). In Feb 2014, revolving credit was $854 billion, or 27.3 percent of total consumer credit of $3129 billion, and non-revolving credit was $2275 billion, or 72.7 percent of total consumer credit outstanding. Consumer credit grew at relatively high rates before the recession beginning in IVQ2007 (Dec) and extending to IIQ2009 (Jun) as dated by the National Bureau of Economic Research or NBER (http://www.nber.org/cycles/cyclesmain.html). Percentage changes of consumer credit outstanding fell already in 2009. Rates were still negative in 2010 with decline of 1.0 percent in annual data and sharp decline of 7.6 percent in revolving credit. In IVQ 2012, total consumer credit grew at 6.5 percent with increase of revolving credit at 0.3 percent and increase of non-revolving credit at 9.1 percent. Growth continued in Feb 2014 with total credit at 6.4 percent, revolving at minus 3.4 percent and non-revolving at 10.1 percent.

Table VA-3, US, Consumer Credit Outstanding, SA, Annual Rate and Billions of Dollars

	Total ∆%	REV ∆%	NRV ∆%	Total $B	REV $B	NREV $B
2014
Feb	6.4	-3.4	10.1	3129	854	2275
Jan	5.3	-0.3	7.5	3113	857	2256
2013
Dec	7.0	7.0	7.0	3099	857	2242
IVQ	5.5	2.1	6.8	3099	857	2242
IIIQ	5.9	0.4	8.1	3057	852	2205
IIQ	5.8	1.2	7.6	3012	851	2161
IQ	6.2	1.5	8.1	2969	849	2120
2012
IVQ	6.5	0.3	9.1	2924	846	2078
2013	6.0	1.3	7.9	3099	857	2242
2012	6.1	0.4	8.7	2924	846	2078
2011	4.1	0.2	5.9	2757	842	1915
2010	-1.0	-7.6	2.7	2648	841	1807
2009	-3.9	-8.8	-1.0	2553	917	1636
2008	1.3	0.2	2.0	2651	1005	1646
2007	5.9	8.5	4.3	2529	1008	1521

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

Source: Board of Governors of the Federal Reserve System

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

Chart VA-6 of the Board of Governors of the Federal Reserve System total consumer credit outstanding in millions of dollars measured in the right axis and the finance rate on 24-month personal loans at commercial banks, not seasonally adjusted, measured on the left axis. There was sharp decline of total consumer loans outstanding during the global recession followed by strong recovery. There is long-term decline of the financing rate.

Chart VA-6, US, Total Consumer Credit Owned and Securitized NSA and Financing Rate on 24-month Personal Loans at Commercial Banks NSA, Millions of Dollars and Percent, Feb 1972-Feb 2014

Source: Board of Governors of the Federal Reserve System

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

Chart VA-7 of the Board of Governors of the Federal Reserve System provides percentage changes of total consumer credit outstanding in the US and the financing rate on 24-month personal consumer loans at commercial banks, since 1972. The shaded bars are the cyclical contraction dates of the National Bureau of Economic Research (http://www.nber.org/cycles/cyclesmain.html). Consumer credit is cyclical, declining during contractions as shown by negative percentage changes during economic contractions. There is clear upward trend in 2012-2013 but with significant fluctuations and vacillation in the final segment.

Chart VA-7, US, Percent Change of Total Consumer Credit, Seasonally Adjusted at an Annual Rate and Finance Rate on 24-month Personal Loans at Commercial Banks NSA, Feb 1972-Feb 2014

Source: Board of Governors of the Federal Reserve System

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

Table VA-4 provides additional information required for understanding the deficit/debt situation of the United States. The table is divided into four parts: Treasury budget in the 2014 fiscal year beginning on Oct 1, 2013 and ending on Sep 30, 2014; federal fiscal data for the years from 2009 to 2013; federal fiscal data for the years from 2005 to 2008; and Treasury debt held by the public from 2005 to 2013. Receipts increased 10.4 percent in the cumulative fiscal year 2014 ending in Mar 2014 relative to the cumulative in fiscal year 2013. Individual income taxes increased 5.3 percent relative to the same fiscal period a year earlier. Outlays decreased 3.5 percent relative to a year earlier. There are also receipts, outlays, deficit and debt for fiscal year 2013. Total revenues of the US from 2009 to 2012 accumulate to $9021 billion, or $9.0 trillion, while expenditures or outlays accumulate to $14,109 billion, or $14.1 trillion, with the deficit accumulating to $5090 billion, or $5.1 trillion. Revenues decreased 6.5 percent from $9653 billion in the four years from 2005 to 2008 to $9021 billion in the years from 2009 to 2012. Decreasing revenues were caused by the global recession from IVQ2007 (Dec) to IIQ2009 (Jun) and also by growth of only 2.4 percent on average in the cyclical expansion from IIIQ2009 to IVQ2013. In contrast, the expansion from IQ1983 to IIQ1987 was at the average annual growth rate of 5.0 percent and at 7.8 percent from IQ1983 to IVQ1983 (http://cmpassocregulationblog.blogspot.com/2014/03/financial-uncertainty-mediocre-cyclical.html). Because of mediocre GDP growth, there are 28.2 million unemployed or underemployed in the United States for an effective unemployment rate of 17.2 percent (http://cmpassocregulationblog.blogspot.com/2014/04/interest-rate-risks-twenty-eight.html). Weakness of growth and employment creation is analyzed in II Collapse of United States Dynamism of Income Growth and Employment Creation (and earlier http://cmpassocregulationblog.blogspot.com/2014/03/interest-rate-risks-world-inflation.html). In contrast with the decline of revenue, outlays or expenditures increased 30.2 percent from $10,839 billion, or $10.8 trillion, in the four years from 2005 to 2008, to $14,109 billion, or $14.1 trillion, in the four years from 2009 to 2012. Increase in expenditures by 30.2 percent while revenue declined by 6.5 percent caused the increase in the federal deficit from $1186 billion in 2005-2008 to $5090 billion in 2009-2012. Federal revenue was 14.9 percent of GDP on average in the years from 2009 to 2012, which is well below 17.4 percent of GDP on average from 1973 to 2012. Federal outlays were 23.3 percent of GDP on average from 2009 to 2012, which is well above 20.4 percent of GDP on average from 1973 to 2012. The lower part of Table I-2 shows that debt held by the public swelled from $5803 billion in 2008 to $11,982 billion in 2013, by $5478 billion or 106.5 percent. Debt held by the public as percent of GDP or economic activity jumped from 39.3 percent in 2008 to 72.1 percent in 2013, which is well above the average of 38.0 percent from 1973 to 2012. The United States faces tough adjustment because growth is unlikely to recover, creating limits on what can be obtained by increasing revenues, while continuing stress of social programs restricts what can be obtained by reducing expenditures.

Table VA-4, US, Treasury Budget in Fiscal Year to Date Million Dollars

Mar 2014	Fiscal Year 2014	Fiscal Year 2013	∆%
Receipts	1,320,793	1,196,611	10.4
Outlays	1,734,057	1,797,093	-3.5
Deficit	-413,264	-600,482
Individual Income Tax	584,914	555,218	5.3
Corporation Income Tax	117,555	100,287	17.2
Social Insurance	355,908	307,649	15.7
	Receipts	Outlays	Deficit (-), Surplus (+)
$ Billions
Fiscal Year 2013	2,774	3,454	-680
% GDP	16.7	20.8	-4.1
Fiscal Year 2012	2,450	3,537	-1,087
% GDP	15.2	22.0	-6.8
Fiscal Year 2011	2,304	3,603	-1,300
% GDP	15.0	23.4	-8.4
Fiscal Year 2010	2,163	3,457	-1,294
% GDP	14.6	23.4	-8.8
Fiscal Year 2009	2,105	3,518	-1,413
% GDP	14.6	24.4	-9.8
Total 2009-2012	9,021	14,109	-5,090
Average % GDP 2009-2012	14.9	23.3	-8.4
Fiscal Year 2008	2,524	2,983	-459
% GDP	17.1	20.2	-3.1
Fiscal Year 2007	2,568	2,729	-161
% GDP	17.9	19.0	-1.1
Fiscal Year 2006	2,407	2,655	-248
% GDP	17.6	19.4	-1.8
Fiscal Year 2005	2,154	2,472	-318
% GDP	16.7	19.2	-2.5
Total 2005-2008	9,653	10,839	-1,186
Average % GDP 2005-2008	17.3	19.5	-2.1
Debt Held by the Public	Billions of Dollars	Percent of GDP
2005	4,592	35.6
2006	4,829	35.3
2007	5,035	35.1
2008	5,803	39.3
2009	7,545	52.3
2010	9,019	61.0
2011	10,128	65.8
2012	11,281	70.1
2013	11,982	72.1

Source: http://www.fms.treas.gov/mts/index.html CBO (2012NovMBR). CBO (2011AugBEO); Office of Management and Budget 2011. Historical Tables. Budget of the US Government Fiscal Year 2011. Washington, DC: OMB; CBO. 2011JanBEO. Budget and Economic Outlook. Washington, DC, Jan. CBO. 2012AugBEO. Budget and Economic Outlook. Washington, DC, Aug 22. CBO. 2012Jan31. Historical budget data. Washington, DC, Jan 31. CBO. 2012NovCDR. Choices for deficit reduction. Washington, DC. Nov. CBO. 2013HBDFeb5. Historical budget data—February 2013 baseline projections. Washington, DC, Congressional Budget Office, Feb 5. CBO. 2013HBDFeb5. Historical budget data—February 2013 baseline projections. Washington, DC, Congressional Budget Office, Feb 5. CBO (2013Aug12). 2013AugHBD. Historical budget data—August 2013. Washington, DC, Congressional Budget Office, Aug. CBO, Historical Budget Data—February 2014, Washington, DC, Congressional Budget Office, Feb.

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:

1. Monetary Base Control. Most central banks in the world pursue interest rates instead of monetary aggregates, injecting bank reserves to lower interest rates to desired levels. The Bank of Japan (BOJ) has shifted back to monetary aggregates, conducting money market operations with the objective of increasing base money, or monetary liabilities of the government, at the annual rate of 60 to 70 trillion yen. The BOJ estimates base money outstanding at “138 trillion yen at end-2012) and plans to increase it to “200 trillion yen at end-2012 and 270 trillion yen at end 2014” (http://www.boj.or.jp/en/announcements/release_2013/k130404a.pdf).
2. Maturity Extension of Purchases of Japanese Government Bonds. Purchases of bonds will be extended even up to bonds with maturity of 40 years with the guideline of extending the average maturity of BOJ bond purchases from three to seven years. The BOJ estimates the current average maturity of Japanese government bonds (JGB) at around seven years. The BOJ plans to purchase about 7.5 trillion yen per month (http://www.boj.or.jp/en/announcements/release_2013/rel130404d.pdf). Takashi Nakamichi, Tatsuo Ito and Phred Dvorak, wiring on “Bank of Japan mounts bid for revival,” on Apr 4, 2013, published in the Wall Street Journal (http://online.wsj.com/article/SB10001424127887323646604578401633067110420.html ), find that the limit of maturities of three years on purchases of JGBs was designed to avoid views that the BOJ would finance uncontrolled government deficits.
3. Seigniorage. The BOJ is pursuing coordination with the government that will take measures to establish “sustainable fiscal structure with a view to ensuring the credibility of fiscal management” (http://www.boj.or.jp/en/announcements/release_2013/k130404a.pdf).
4. Diversification of Asset Purchases. The BOJ will engage in transactions of exchange traded funds (ETF) and real estate investment trusts (REITS) and not solely on purchases of JGBs. Purchases of ETFs will be at an annual rate of increase of one trillion yen and purchases of REITS at 30 billion yen.
5. Bank Lending Facility and Growth Supporting Funding Facility. At the meeting on Feb 18, the Bank of Japan doubled the scale of these lending facilities to prevent their expiration in the near future (http://www.boj.or.jp/en/announcements/release_2014/k140218a.pdf).

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

Private-sector activity in Japan expanded with the Markit Composite Output PMI^™ Index increasing from 52.0 in Feb to 52.8 in Mar, indicating faster growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/6a8b4439432b42279666caf5ca27da56). Amy Bronwbill, Economist at Markit and author of the report, finds continuing growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/6a8b4439432b42279666caf5ca27da56). The Markit Business Activity Index of Services increased to 52.2 in Mar from 49.3 in Feb (http://www.markiteconomics.com/Survey/PressRelease.mvc/6a8b4439432b42279666caf5ca27da56). Amy Brownbill, Ecoomist at Markit and author of the report, finds concerns with the increase in sales taxes implemented in Apr (http://www.markiteconomics.com/Survey/PressRelease.mvc/6a8b4439432b42279666caf5ca27da56). The Markit/JMMA Purchasing Managers’ Index^™ (PMI™), seasonally adjusted, decreased from 55.5 in Feb to 53.9 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/3a31361eba72447598e052d7a60fba3e). New orders and output grew because of demand in anticipation of the sales tax increase in Apr. New export orders increased for the seventh consecutive month. Amy Brownbill, Economist at Markit and author of the report, finds improving manufacturing conditions with some concerns about the sales tax increase from 5 percent to 8 percent implemented in Apr (http://www.markiteconomics.com/Survey/PressRelease.mvc/3a31361eba72447598e052d7a60fba3e).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	Mar ∆% 0.0 12 months ∆% 1.7 Blog 4/13/14
Consumer Price Index	Feb NSA ∆% 0.0; Jan 12 months NSA ∆% 1.5 Blog 3/30/14
Real GDP Growth	IVQ2013 ∆%: 0.2 on IIIQ2013;  IVQ2013 SAAR 0.7; ∆% from quarter a year earlier: 2.6 % Blog 6/16/13 8/18/13 9/15/13 11/17/13 12/15/13 2/23/14 3/16/14
Employment Report	Feb Unemployed 2.32 million Change in unemployed since last year: minus 450 thousand Unemployment rate: 3.6 % Blog 3/30/14
All Industry Indices	Jan month SA ∆% 1.0 12-month NSA ∆% 3.3 Blog 3/23/14
Industrial Production	Feb SA month ∆%: -2.3 12-month NSA ∆% 6.9 Blog 3/30/14
Machine Orders	Total Feb ∆% -5.9 Private ∆%: -15.3 Feb ∆% Excluding Volatile Orders -8.8 Blog 4/13/14
Tertiary Index	Jan month SA ∆% 0.9 Jan 12 months NSA ∆% 2.0 Blog 3/16/14
Wholesale and Retail Sales	Feb 12 months: Total ∆%: 2.8 Wholesale ∆%: 2.4 Retail ∆%: 3.6 Blog 3/30/14
Family Income and Expenditure Survey	Feb 12-month ∆% total nominal consumption minus 0.6, real minus 2.5 Blog 3/30/14
Trade Balance	Exports Feb 12 months ∆%: 9.8 Imports Feb 12 months ∆% 9.0 Blog 3/23/14

Links to blog comments in Table JPY:

3/30/14 http://cmpassocregulationblog.blogspot.com/2014/03/financial-uncertainty-mediocre-cyclical.html

3/23/14 http://cmpassocregulationblog.blogspot.com/2014/03/interest-rate-risks-world-inflation.html

3/16/2014 http://cmpassocregulationblog.blogspot.com/2014/03/global-financial-risks-recovery-without.html

2/23/14 http://cmpassocregulationblog.blogspot.com/2014/02/squeeze-of-economic-activity-by-carry.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

Japan’s total machinery orders seasonally adjusted in Table VB-1 decreased 5.9 percent seasonally adjusted in Feb 2014. Private sector orders decreased 15.3 percent and decreased 8.8 percent excluding volatile orders. Orders from overseas increased 2.4 percent and manufacturing orders decreased 11.9 percent. Government orders increased 6.2 percent.

Table VB-1, Japan, Machinery Orders, Month ∆%, SA 

2013-2014	Feb 14	Jan 14	Dec 13	Nov 13
Total	-5.9	12.6	-3.1	5.8
Private Sector	-15.3	18.3	-9.2	-1.3
Excluding Volatile Orders	-8.8	13.4	-15.7	9.3
Manufacturing	-11.9	13.4	-17.3	6.0
Non-Manufacturing ex Volatile	-8.4	12.1	-17.2	8.1
Government	6.2	-13.9	6.5	-11.9
From Overseas	2.4	2.7	8.6	-12.2
Through Agencies	-8.2	3.7	3.0	-5.5

Note: Mfg: manufacturing

Source: Japan Economic and Social Research Institute, Cabinet Office

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

Total orders for machinery and total private-sector orders excluding volatile orders for Japan are shown in Chart VB-1 of Japan’s Economic and Social Research Institute at the Cabinet Office. The trend of private-sector orders excluding volatile orders was showing recovery from the drop after Mar 2011 because of the earthquake/tsunami. There was reversal of the trend of increase in total orders with recent decreases and an upward movement in the final data point. Fluctuations still prevent detecting longer-term trends but recovery is still evident from the global recession. There was a major setback by the declines in May 2012 shown in the final segment of Chart VB-1 with partial recovery in Jun 2012, decline again in Jul and Aug 2012 and rebound in total orders in Nov reversed in Dec but decline in orders excluding volatile segments with increase in Nov-Dec 2012. The final segment shows growth in Feb-Mar 2013 interrupted by decline in Apr 2013 followed by increase in May 2013. Orders fell again in Jun 2013, rebounding in Jul-Sep 2013 followed by another fall in Oct 2013. Orders recovered in Nov 2013 but declined in Dec 2013. Orders increased in Jan 2014 and decreased in Feb 2014.

Chart VB-1, Japan, Machinery Orders

Source: Japan Economic and Social Research Institute, Cabinet Office

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

Table VB-2 provides values and percentage changes from a year earlier of Japan’s machinery orders without seasonal adjustment. Total orders of JPY 2,037,411 million in Feb 2014 are divided between JPY 887,671 million overseas orders, or 43.6 percent of the total, and domestic orders of JPY 1,052,773 million, or 51.7 percent of the total, with orders through agencies of JPY 96,967 million, or 4.8 percent of the total. Orders through agencies are not in Table VB-2 because of the minor value and appear only in the note to the table. Twelve-month percentages changes in Feb 2014 continued strongly with increases of 20.0 percent for total orders, 12.4 percent for domestic orders and 10.8 percent for orders excluding volatile components. Overseas orders rose 31.9 percent in 12 months partly because of yen devaluation.

Table VB-2, Japan, Machinery Orders, 12 Months ∆% and Million Yen, Original Series  

	Total	Overseas	Domestic	Private ex Volatile
Value Feb  2014	2,037,411	887,671	1,052,773	700,429
% Total	100.0	43.6	51.7	34.4
Value Feb 2013	1,698,308	672,839	936,776	632,381
% Total	100.0	39.6	55.2	37.2
12-month ∆%	20.0	31.9	12.4	10.8
Feb 2014	20.0	31.9	12.4	10.8
Jan 2014	28.8	29.8	29.0	23.6
Dec 2013	15.1	25.0	8.3	6.7
Nov 2013	8.9	1.3	14.4	16.6
Oct 2013	24.6	29.7	21.4	17.8
Sep 2013	30.3	57.4	18.4	11.4
Aug 2013	25.9	41.8	17.1	10.3
Jul 2013	5.3	4.4	6.9	6.5
Jun 2013	2.7	0.1	4.1	4.9
May 2013	18.1	17.1	20.8	16.5
Apr 2013	-4.3	6.7	-9.9	-1.1
Mar 2013	11.5	27.5	3.3	2.4
Feb 2013	-14.8	-21.0	-10.7	-11.3
Jan 2013	-24.8	-36.7	-11.8	-9.7
Dec 2012	-12.5	-24.1	-3.3	-3.4
Nov 2012	-8.6	-9.6	-8.5	0.3
Oct 2012	-6.9	-12.8	-2.6	1.2
Sep 2012	-7.8	-18.4	-1.8	-7.8
Aug 2012	-18.6	-31.1	-10.2	-6.1
Jul 2012	2.6	-1.9	3.2	1.7
Jun 2012	-10.9	-11.3	-12.4	-9.9
May 2012	-6.8	-7.0	-8.6	1.0
Apr 2012	7.5	-9.6	23.0	6.6
Mar 2012	8.1	-10.0	19.0	-1.1
Feb 2012	-9.3	-8.9	-11.2	8.9
Jan 2012	9.8	18.3	0.5	5.7
Dec 2011	0.8	12.6	-8.5	6.3
Nov 2011	11.0	8.0	13.5	12.5
Oct 2011	-6.8	-15.6	-1.0	1.5
Dec 2010	9.4	3.5	14.1	-0.6
Dec 2009	1.8	0.4	3.6	-1.9
Dec 2008	-23.3	-29.4	-17.4	-24.7
Dec 2007	1.3	9.8	-4.3	-6.4
Dec 2006	0.8	0.9	-0.1	0.1

Note: Total machinery orders = overseas + domestic demand + orders through agencies. Orders through agencies in Feb 2014 were JPY 96,967 million or 4.8 percent of the total and JPY 88,693 or 5.2 percent of the total in Feb 2013, and are not shown in the table. The data are the original numbers without any adjustments and differ from the seasonally adjusted data.

Source: Japan Economic and Social Research Institute, Cabinet Office

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

VC China. China estimates an index of nonmanufacturing purchasing managers 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, easing to 53.4 in Jan 2014. The total index increased to 55.0 in Feb 2014, falling to 54.5 in Mar 2014. 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, easing to 50.9 in Jan 2014. The index of new orders increased to 51.4 in Feb 2014 decreasing to 50.8 in Mar 2014.

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

	Total Index	New Orders	Interm. Input Prices	Subs Prices	Exp
Mar 2014	54.5	50.8	52.8	49.5	61.5
Feb	55.0	51.4	52.1	49.0	59.9
Jan	53.4	50.9	54.5	50.1	58.1
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. The index fell to 53.4 in Jan 2014, increasing to 55.0 in Feb 2014 and decreasing to 54.5 in Mar 2014.

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 fell to 50.5 in Jan 2014 and 50.2 in Feb 2014. The index increased to 50.3 in Mar 2014. 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. The index fell to 53.0 in Jan 2014 and 52.6 in Feb 2014. The index of new orders increased to 52.7 in Mar 2014.

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

	IPM	PI	NOI	INV	EMP	SDEL
Mar 2014	50.3	52.7	50.6	47.8	48.3	49.8
Feb	50.2	52.6	50.5	47.4	48.0	49.9
Jan	50.5	53.0	50.9	47.8	48.2	49.8
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. The index fell to 50.5 in Jan 2014 and 50.2 in Feb 2014. The index rebounded to 50.3 in Mar 2014.

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 2013 is still high at 7.7 percent but at the lowest rhythm in five years.

Chart VC-GDP, China, Gross Domestic Product, Million Yuan and ∆%, 2009-2013

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

Chart VC-FXR provides China’s foreign exchange reserves. FX reserves grew from $2399.2 billion in 2009 to $3821.3 billion in 2013 driven by high growth of China’s trade surplus.

Chart VC-FXR, China, Foreign Exchange Reserves, 2009-2013

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

Chart VC-Trade provides China’s imports and exports. Exports exceeded imports with resulting large trade balance surpluses that increased foreign exchange reserves.

Chart VC-Trade, China, Imports and Exports of Goods, 2009-2013, $100 Million US Dollars

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/b6e487b86c1a4ec48044fb9e79b0e282) is slowing. The overall Flash HSBC China Manufacturing PMI^™ decreased from 48.5 in Feb to 48.1 in Mar, which is the lowest in eight months, while the Flash HSBC China Manufacturing Output Index decreased from 48.8 in Feb to 47.3 in Mar, indicating moderate contraction at the lowest reading in eighteen months. Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds that the index is consistent with weakening manufacturing with policy required to stabilize growth in the rest of the year (http://www.markiteconomics.com/Survey/PressRelease.mvc/b6e487b86c1a4ec48044fb9e79b0e282). The HSBC China Services PMI^™, compiled by Markit, shows marginal deterioration in business activity in China with the HSBC Composite Output, combining manufacturing and services, decreasing from 49.8 in Feb to 49.3 in Mar, indicating standstill (http://www.markiteconomics.com/Survey/PressRelease.mvc/c3e2a5b28178421388c2207fee799a49). Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds need of policies to prevent decelerating growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/c3e2a5b28178421388c2207fee799a49). The HSBC Business Activity index increased from 51.0 in Feb to 51.9 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/c3e2a5b28178421388c2207fee799a49). Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC, finds that services improving (http://www.markiteconomics.com/Survey/PressRelease.mvc/c3e2a5b28178421388c2207fee799a49). The HSBC Purchasing Managers’ Index^™ (PMI^™), compiled by Markit, decreased marginally to 48.0 in Mar from 48.5 in Feb, indicating marginally deteriorating manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/c38b1134929b45d3b6e26f4363fcf01e). New export orders decreased moderately with moderate contraction of total new orders. Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds soft manufacturing in China, posing risks to GDP growth in IQ2014 below target of 7.5 percent (http://www.markiteconomics.com/Survey/PressRelease.mvc/c38b1134929b45d3b6e26f4363fcf01e). Table CNY provides the country data table for China.

Table CNY, China, Economic Indicators

Price Indexes for Industry	Mar 12-month ∆%: minus 2.3 Mar month ∆%: -0.3 Blog 4/13/14
Consumer Price Index	Mar month ∆%: -0.5 Mar 12 months ∆%: 2.4 Blog 4/13/14
Value Added of Industry	Feb month ∆%: 0.61 Jan-Feb 2014/Jan-Feb 2013 ∆%: 8.6 Jan-Feb ∆%: 8.6 Blog 3/16/14
GDP Growth Rate	Year IVQ2013 ∆%: 7.7 Quarter IVQ2013 AE ∆%: 7.4 Blog 1/26/14
Investment in Fixed Assets	Total Jan-Feb 2013 ∆%: 17.9 Real estate development: 19.3 Blog 3/16/14
Retail Sales	Feb month ∆%: 0.71 Dec 12 month ∆%: 13.6 Jan-Feb ∆%: 11.8 Blog 3/16/14
Trade Balance	Mar balance $7.71 billion Exports 12M ∆% minus 6.6 Imports 12M ∆% minus 11.3 Cumulative Jan-Mar: $16.59 billion Blog 4/13/14

Links to blog comments in Table CNY:

3/16/2014 http://cmpassocregulationblog.blogspot.com/2014/03/global-financial-risks-recovery-without.html

1/26/14 http://cmpassocregulationblog.blogspot.com/2014/01/capital-flows-exchange-rates-and.html

Table VC-1 provides China’s exports, imports, trade balance and 12-month percentage changes from Dec 2010 to Mar 2014. China had a trade surplus of $7.71 billion in Mar 2014 with exports declining 6.6 percent in 12 months and imports decreasing 11.3 percent. China had a rare trade deficit of $22.99 billion in Feb 2014 with exports decreasing 18.1 percent in 12 months while imports increased 10.1 percent. Exports increased 10.6 percent in the 12 months ending in Jan 2014 and imports 10.0 percent for trade surplus of $31.87 billion. Exports increased 4.3 percent in the 12 months ending in Dec 2013 while imports increased 8.3 percent for trade surplus of $25.64 billion. Exports surged 12.7 percent in the 12 months ending in Nov 2013 while imports increased 5.3 percent for trade surplus of $33.8 billion. Exports rebounded with growth of 5.6 percent in the 12 months ending in Oct 2013 while imports increased 7.6 percent for trade surplus of $31.11 billion. Exports fell 0.3 percent in the 12 months ending in Sep 2013 while imports increased 7.4 for reduction of the trade surplus to $15.2 billion. Markets reacted positively to China’s trade data in Aug 2013 with exports growing 7.2 percent relative to a year earlier and imports 7.1 percent for increasing trade surplus of $28.52. Exports fell 3.1 percent in Jun 2013 and imports declined 0.7 percent with growth of 5.1 percent of exports in Jul 2013 and 10.9 percent of imports. The trade surplus reached $17.82 billion. Exports increased 1.0 percent in May 2013 relative to a year earlier while imports fell 0.3 percent with trade surplus of $20.43 billion. Exports increased 14.7 percent in Apr 2013 relative to a year earlier and imports 16.8 percent for trade surplus of $18.16 billion. Exports increased 10.0 percent in Mar 2013 relative to a year earlier and imports increased 14.1 percent for trade deficit of $0.88 billion. Exports increased 21.8 percent in Feb 2013 relative to a year earlier and imports fell 15.2 percent for trade surplus of $15.25 billion. China’s trade growth was stronger in Jan 2013 with growth of exports of 25.0 percent in 12 months and of imports of 28.8 percent for trade surplus of $29.15 billion. China’s trade growth strengthened in Dec 2012 with growth in 12 months of exports of 14.1 percent and of imports of 6.0 percent. China’s trade growth weakened again in Nov 2012 with growth of exports of 2.9 percent and no change in imports. China’s trade growth rebounded with growth of exports in 12 months of 11.6 percent in Oct 2012 and 9.9 percent in Sep 2012 after 2.7 percent in Aug 2012 and 1.0 percent in Jul 2012 while imports grew 2.4 percent in both Sep and Oct 2012, stagnating in Nov 2012. As a result, the monthly trade surplus increased from $25.2 billion in Jul 2012 to $31.9 billion in Oct 2012, declining to $19.6 billion in Nov 2012 but increasing to $31.62 billion in Dec 2012. China’s trade growth rebounded in Oct 2012 with growth of exports of 11.6 percent in 12 months and 2.4 percent for imports and trade surplus of $31.9 billion. The number that caught attention in financial markets was growth of 1.0 percent in exports in the 12 months ending in Jul 2012. Imports were also weak, growing 4.7 percent in 12 months ending in Jul 2012. Exports increased 11.3 percent in Jun 2012 relative to a year earlier while imports grew 6.3 percent. The rate of growth of exports fell to 4.9 percent in Apr 2012 relative to a year earlier and imports increased 0.3 percent but export growth was 15.3 percent in May and imports increased 12.7 percent. China reversed the large trade deficit of USD 31.48 billion in Feb 2012 with a surplus of $5.35 billion in Mar 2012, $18.42 billion in Apr 2012, $18.7 billion in May 2012, $31.7 billion in Jun 2012, $25.2 billion in Jul 2012, $26.7 billion in Aug 2012, $27.7 billion in Sep 2012, $31.9 billion in Oct 2012 and $19.6 billion in Nov 2012. Exports fell 0.5 percent in the 12 months ending in Jan 2012 while imports fell 15.3 percent for a still sizeable trade surplus of $27.3 billion. In Feb, exports increased 18.4 percent while imports jumped 39.6 percent for a sizeable deficit of $31.48 billion. There are distortions from the Lunar New Year holidays.

Table VC-1, China, Exports, Imports and Trade Balance USD Billion and ∆%

	Exports USD Billion	∆% Relative Year Earlier	Imports USD Billion	∆% Relative Year Earlier	Balance USD Billion
Mar 2014	170.11	-6.6	162.41	-11.3	7.71
Feb	114.09	-18.1	137.08	10.1	-22.99
Jan	207.13	10.6	175.26	10.0	31.87
Dec 2013	207.74	4.3	182.10	8.3	25.64
Nov	202.20	12.7	168.40	5.3	33.8
Oct	185.41	5.6	154.30	7.6	31.11
Sep	185.64	-0.3	170.44	7.4	15.21
Aug	190.61	7.2	162.09	7.0	28.52
Jul	185.99	5.1	168.17	10.9	17.82
Jun	174.32	-3.1	147.19	-0.7	27.12
May	182.77	1.0	162.34	-0.3	20.43
Apr	187.06	14.7	168.90	16.8	18.16
Mar	182.19	10.0	183.07	14.1	-0.88
Feb	139.37	21.8	124.12	-15.2	15.25
Jan	187.37	25.0	158.22	28.8	29.15
Dec 2012	199.23	14.1	167.61	6.0	31.62
Nov	179.38	2.9	159.75	0.0	19.63
Oct	175.57	11.6	143.58	2.4	31.99
Sep	186.35	9.9	158.68	2.4	27.67
Aug	177.97	2.7	151.31	-2.6	26.66
Jul	176.94	1.0	151.79	4.7	25.15
Jun	180.20	11.3	148.48	6.3	31.72
May	181.14	15.3	162.44	12.7	18.70
Apr	163.25	4.9	144.83	0.3	18.42
Mar	165.66	8.9	160.31	5.3	5.35
Feb	114.47	18.4	145.95	39.6	-31.48
Jan	149.94	-0.5	122.66	-15.3	27.28
Dec 2011	174.72	13.4	158.20	11.8	16.52
Nov	174.46	13.8	159.94	22.1	14.53
Oct	157.49	15.9	140.46	28.7	17.03
Sep	169.67	17.1	155.16	20.9	14.51
Aug	173.32	24.5	155.56	30.2	17.76
Jul	175.13	20.4	143.64	22.9	31.48
Jun	161.98	17.9	139.71	19.3	22.27
May	157.16	19.4	144.11	28.4	13.05
Apr	155.69	29.9	144.26	21.8	11.42
Mar	152.20	35.8	152.06	27.3	0.14
Feb	96.74	2.4	104.04	19.4	-7.31
Jan	150.73	37.7	144.27	51.0	6.46
Dec 2010	154.15	17.9	141.07	25.6	13.08

Source: Ministry of Commerce, People’s Republic of China

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

Table VC-2 provides cumulative exports, imports and the trade balance of China together with percentage growth of exports and imports relative to a year earlier. Exports fell 3.4 percent in Jan-Mar 2014 relative to a year earlier while imports increased 1.9 percent for cumulative surplus of $16.59 billion. Exports fell 1.6 percent and imports increased 10.0 percent for cumulative surplus of $8.88 billion in Jan-Feb 2014. Exports increased 10.6 percent in Jan 2014 and imports 10.0 percent for cumulative surplus of $31.87 billion. Exports increased 7.9 percent in Jan-Dec 2013 relative to the same period a year earlier while imports increased 7.3 percent for cumulative surplus of $259.75 billion. Exports grew 8.3 percent in Jan-Nov 2013 relative to a year earlier while imports increased 7.1 percent for cumulative surplus of $234.15 billion. Exports grew 7.8 percent in Jan-Oct 2013 relative to a year earlier while imports grew 7.3 percent for cumulative trade surplus of $200.46 billion. Exports increased 8.0 percent in Jan-Sep 2013 relative to a year earlier while imports increased 7.3 percent for cumulative surplus of $169.36 billion. Exports increased 9.2 percent in in Jan-Aug 2013 relative to a year earlier and imports 7.3 percent for trade surplus of $154.21 billion. Exports grew 9.5 percent in Jul 2013 relative to a year earlier and imports 7.3 percent with cumulative surplus of $125.71 billion. Exports increased 10.4 percent cumulatively in Jun 2013 and imports 6.7 for cumulative surplus of $107.95 billion. Exports increased 13.5 percent in Jan-May 2013 relative to a year earlier while imports increased 8.2 percent for cumulative surplus of $80.87 billion. Exports increased 17.4 percent in Jan-Apr 2012 relative to a year earlier while imports increased 10.6 percent for cumulative surplus of $60.98 billion. Exports increased 18.4 percent in Jan-Mar 2013 relative to a year earlier while imports increased 8.4 percent for cumulative surplus of $43.07 billion. Cumulative exports in Jan-Feb 2013 grew 23.6 percent relative to a year earlier and imports 5.0 percent for trade surplus of $44.15 billion. There is strong beginning of 2013 with trade surplus of $29.15 in Jan 2013 and growth of exports of 25.0 percent and imports of 28.8 percent. The trade balance of $231.1 billion in 2012 is stronger than the trade balance of $155.14 billion in 2011. The trade balance in 2011 of $155.14 billion is lower than those from 2008 to 2010. China’s trade balance reached $231.1 billion in Jan-Dec 2012 with cumulative growth of exports of 7.9 percent and 4.3 percent of imports, which is much lower than 20.3 percent for exports and 24.9 percent for imports in 2011 and 31.3 percent for exports and 38.7 percent for imports in 2010. There is a rare cumulative deficit of $4.2 billion in Feb 2012 reversed to a small surplus in Mar 2012 and a higher surplus of $19.3 billion in Apr 2012, increasing to $37.9 billion in May, $68.9 billion in Jun 2012, $94.1 billion in Jul 2012, $120.6 billion in Aug 2012, $148.3 billion in Sep 2012, $180.24 billion in Oct 2012, $199.54 billion in Nov 2012 and $231.1 billion in Dec 2012. More observations are required to detect trends of Chinese trade.

Table VC-2, China, Year to Date Exports, Imports and Trade Balance USD Billion and ∆%

	Exports USD Billion	∆% Relative Year Earlier	Imports USD Billion	∆% Relative Year Earlier	Balance USD Billion
Mar 2014	491.34	-3.4	474.75	1.9	16.59
Feb	321.23	-1.6	312.35	10.0	8.88
Jan	207.13	10.6	175.26	10.0	31.87
Dec 2013	2210.04	7.9	1950.29	7.3	259.75
Nov	2002.32	8.3	1768.17	7.1	234.15
Oct	1800.21	7.8	1599.75	7.3	200.46
Sep	1614.86	8.0	1445.50	7.3	169.36
Aug	1429.26	9.2	1275.05	7.3	154.21
Jul	1238.73	9.5	1113.02	7.3	125.71
Jun	1052.82	10.4	944.87	6.7	107.95
May	878.56	13.5	797.69	8.2	80.87
Apr	695.87	17.4	634.88	10.6	60.98
Mar	508.87	18.4	465.80	8.4	43.07
Feb	326.73	23.6	282.58	5.0	44.15
Jan	187.37	25.0	158.22	28.8	29.15
Dec 2012	2048.93	7.9	1817.83	4.3	231.11
Nov	1849.91	7.3	1650.37	4.1	199.54
Oct	1670.90	7.8	1490.67	4.6	180.24
Sep	1495.39	7.4	1347.08	4.8	148.31
Aug	1309.11	7.1	1188.51	5.1	120.61
Jul	1131.24	7.8	1037.14	6.4	94.10
Jun	954.38	9.2	885.46	6.7	68.91
May	774.40	8.7	736.49	6.7	37.92
Apr	593.24	6.9	573.94	5.1	19.3
Mar	430.02	7.6	429.36	6.6	0.66
Feb	264.40	6.9	268.64	7.7	-4.24
Jan	149.94	-0.5	122.66	-15.3	27.28
Dec 2011	1,898.60	20.3	1,743.46	24.9	155.14
Nov	1,724.01	21.1	1585.61	26.4	138.40
Oct	1,549.71	22.0	1,425.68	26.9	124.03
Sep	1,392.27	22.7	1,285.17	26.7	107.10
Aug	1,222.63	23.6	1,129.90	27.5	92.73
Jul	1,049.38	23.4	973.17	26.9	76.21
Jun	874.3	24.0	829.37	27.6	44.93
May	712.37	25.5	689.41	29.4	22.96
Apr	555.30	27.4	545.02	29.6	10.28
Mar	399.64	26.5	400.66	32.6	-1.02
Feb	247.47	21.3	248.36	36.0	-0.89
Jan	150.7	37.7	144.27	51.0	6.46
Dec 2010	1577.93	31.3	1394.83	38.7	183.10

Source: Ministry of Commerce, People’s Republic of China

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

VD Euro Area. Table VD-EUR provides yearly growth rates of the combined GDP of the members of the European Monetary Union (EMU) or euro area since 1996. Growth was very strong at 3.3 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 0.5 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	8.8	3.8
2001	2.4	8.2	2.0
2002	2.3	8.5	0.9
2003	2.1	9.0	0.7
2004	2.2	9.2	2.2
2005	2.2	9.1	1.7
2006	2.2	8.4	3.3
2007	2.2	7.5	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	11.3	-0.7
2013*	1.3	12.0	-0.5
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*	-0.5	0.4	0.2	-1.9	-1.3
2012	-0.7	0.7	0.0	-2.4	-1.6
2011	1.6	3.3	2.0	0.4	0.1
2010	2.0	4.0	1.7	1.7	-0.2
2009	-4.4	-5.1	-3.1	-5.5	-3.8
2008	0.4	1.1	-0.1	-1.2	0.9
2007	3.0	3.3	2.3	1.7	3.5
2006	3.3	3.7	2.5	2.2	4.1
2005	1.7	0.7	1.8	0.9	3.6
2004	2.2	1.2	2.5	1.7	3.3
2003	0.7	-0.4	0.9	0.0	3.1
2002	0.9	0.0	0.9	0.5	2.7
2001	2.0	1.5	1.8	1.9	3.7
2000	3.8	3.1	3.7	3.7	5.0
1999	2.9	1.9	3.3	1.5	4.7
1998	2.8	1.9	3.4	1.4	4.5
1997	2.6	1.7	2.2	1.9	3.9
1996	1.5	0.8	1.1	1.1	2.5

Source: EUROSTAT

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

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

The Flash Eurozone PMI Composite Output Index of the Markit Flash Eurozone PMI^®, combining activity in manufacturing and services, decreased from 53.3 in Feb to 53.2 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/32ff643865a64f0d8b398fa42e9a575d). Chris Williamson, Chief Economist at Markit, finds that the Markit Flash Eurozone PMI index suggests that the index is consistent with growth of GDP as high as 0.5 percent in IQ2014 (http://www.markiteconomics.com/Survey/PressRelease.mvc/32ff643865a64f0d8b398fa42e9a575d). The Markit Eurozone PMI^® Composite Output Index, combining services and manufacturing activity with close association with GDP, decreased from 53.3 in Feb, which is the second highest since the first half of 2011, to 53.1 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/0df8a17005794a228231ee5fc8bbb8f2). Chris Williamson, Chief Economist at Markit, finds growth of GDP at 0.5 percent in IQ2014 (http://www.markiteconomics.com/Survey/PressRelease.mvc/0df8a17005794a228231ee5fc8bbb8f2). The Markit Eurozone Services Business Activity Index decreased from 52.6 in Feb, which is a high in 32 months, to 52.2 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/0df8a17005794a228231ee5fc8bbb8f2). The Markit Eurozone Manufacturing PMI^® decreased to 53.0 in Mar from 53.2 in Feb (http://www.markiteconomics.com/Survey/PressRelease.mvc/76d4f875d0d14fb3b05839a62bd11f8f). New orders and export orders increased for the ninth consecutive month. Chris Williamson, Chief Economist at Markit, finds industrial growth in the euro area at a quarterly rate around 1.0 percent. (http://www.markiteconomics.com/Survey/PressRelease.mvc/76d4f875d0d14fb3b05839a62bd11f8f). Table EUR provides the data table for the euro area.

Table EUR, Euro Area Economic Indicators

GDP	IVQ2013 ∆% 0.2; IVQ2013/IVQ2012 ∆% 0.5 Blog 4/6/14
Unemployment	Feb 2014: 11.9 % unemployment rate; Feb 2014: 18.965 million unemployed Blog 4/6/14
HICP	Feb month ∆%: 0.3 12 months Feb ∆%: 0.7 Blog 3/23/14
Producer Prices	Euro Zone industrial producer prices Feb ∆%: -0.2 Feb 12-month ∆%: -1.7 Blog 4/6/14
Industrial Production	Jan month ∆%: -0.2; Jan 12 months ∆%: 2.1 Blog 3/16/14
Retail Sales	Feb month ∆%: 0.4 Feb 12 months ∆%: 0.8 Blog 4/6/14
Confidence and Economic Sentiment Indicator	Sentiment 102.4 Mar 2014 Consumer minus 9.3 Jan 2014 Blog 4/6/14
Trade	Jan-Dec 2013/Jan-Dec 2012 Exports ∆%: 0.8 Imports ∆%: -3.3 Jan 2014 12-month Exports ∆% 1.0 Imports ∆% -3.2 Blog 3/23/14

Links to blog comments in Table EUR:

4/6/14 http://cmpassocregulationblog.blogspot.com/2014/04/interest-rate-risks-twenty-eight.html

3/23/14 http://cmpassocregulationblog.blogspot.com/2014/03/interest-rate-risks-world-inflation.html

3/16/2014 http://cmpassocregulationblog.blogspot.com/2014/03/global-financial-risks-recovery-without.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/2014/02/PE14_048_811.html

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, decreased from 56.4 in Feb to 55.0 in Mar. The index of manufacturing output reached 57.0 in Mar, declining from 57.4 in Feb, while the index of services decreased to 54.0 in Mar from 55.9 in Feb. The overall Flash Germany Manufacturing PMI^® decreased from 54.8 in Feb to 53.8 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/d968b7b4783742c2bacfba4d0fa40632). New export work volumes increased for an eighth consecutive month with business originating in the US, China and Spain. Oliver Kolodseike, Economist at Markit, finds expansion of Germany’s private sector in the quarter ending in Mar at the highest pace since the middle of 2011 (http://www.markiteconomics.com/Survey/PressRelease.mvc/d968b7b4783742c2bacfba4d0fa40632). 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 56.4 in Feb to 54.3 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/809e149d435c4ce7a97fc1e73fec46b9). Oliver Kolodseike, Senior Economist at Markit and author of the report, finds improving activity by the German private sector (http://www.markiteconomics.com/Survey/PressRelease.mvc/809e149d435c4ce7a97fc1e73fec46b9). The Germany Services Business Activity Index decreased from 55.9 in Feb to 53.0 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/809e149d435c4ce7a97fc1e73fec46b9). The Markit/BME Germany Purchasing Managers’ Index^® (PMI^®), showing close association with Germany’s manufacturing conditions, decreased from 54.8 in Feb to 53.7 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/b2ef5c5cc91c4976a8dd42539e3aec6c). New export orders increased for the ninth consecutive month with demand from the US, Spain and China. Oliver Kolodseike, Senior Economist at Markit and author of the report, finds continuing growth at slower pace (http://www.markiteconomics.com/Survey/PressRelease.mvc/b2ef5c5cc91c4976a8dd42539e3aec6c).Table DE provides the country data table for Germany.

Table DE, Germany, Economic Indicators

GDP	IVQ2013 0.4 ∆%; IV/Q2013/IVQ2012 ∆% 1.3 2013/2012: 0.4% GDP ∆% 1992-2013 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 2/16/14 3/2/14
Consumer Price Index	Mar month NSA ∆%: 0.3 Mar 12-month NSA ∆%: 1.0 Blog 4/13/14
Producer Price Index	Feb month ∆%: 0.0 CSA, minus 0.0 12-month NSA ∆%: -0.9 Blog 3/23/14
Industrial Production	MFG Feb month CSA ∆%: 0.5 12-month NSA: 6.1 Blog 4/13/14
Machine Orders	MFG Feb month ∆%: 0.6 Feb 12-month ∆%: 7.3 Blog 4/13/14
Retail Sales	Feb Month ∆% 1.3 12-Month ∆% 2.0 Blog 4/6/14
Employment Report	Unemployment Rate SA Feb 5.1% Blog 4/6/14
Trade Balance	Exports Feb 12-month NSA ∆%: 4.6 Imports Feb 12 months NSA ∆%: 6.5 Exports Feb month CSA ∆%: minus 1.3; Imports Feb month CSA 0.4 Blog 4/13/14

Links to blog comments in Table DE:

4/6/14 http://cmpassocregulationblog.blogspot.com/2014/04/interest-rate-risks-twenty-eight.html

3/23/14 http://cmpassocregulationblog.blogspot.com/2014/03/interest-rate-risks-world-inflation.html

3/2/14 http://cmpassocregulationblog.blogspot.com/2014/03/financial-risks-slow-cyclical-united.html

2/16/14 http://cmpassocregulationblog.blogspot.com/2014/02/theory-and-reality-of-cyclical-slow.html

1/26/14 http://cmpassocregulationblog.blogspot.com/2014/01/capital-flows-exchange-rates-and.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

The production industries index of Germany in Table VE-1 shows increase of 0.3 percent in Dec 2012 and decrease of 9.4 percent in the 12 months ending in Dec 2012. The index decreased 0.3 percent in Jan 2013 and 1.4 percent in 12 months and increased 0.5 percent in Feb 2013, declining 5.0 percent in 12 months. In Mar 2013, the production index of Germany increased 0.6 percent and fell 9.0 percent in 12 months. The production index jumped 1.0 percent in Apr 2013 and 7.3 percent in 12 months. In May 2013, the production index fell 1.2 percent and 4.5 percent in 12 months. The production index of Germany increased 2.1 percent in Jun 2013 and fell 0.6 percent in 12 months. In Jul 2013, the production industries index fell 0.9 percent and increased 1.9 percent in 12 months. The production industries index increased 1.5 percent in Aug 2013 and fell 2.7 percent in 12 months. In Sep 2013, the production index fell 0.7 percent and increased 4.2 percent in 12 months. In Oct 2013, the production index of Germany fell 1.0 percent and increased 1.2 percent in 12 months. The index of production industries increased 2.3 percent in Nov 2013 and 0.4 percent in 12 months. The index of production industries increased 0.1 percent in Dec 2013 and increased 5.7 percent in 12 months. The production industries index increased 0.7 percent in Jan 2014 and 3.6 percent in 12 months. In Feb 2014, the production industries index increased 0.4 percent and 6.2 percent in 12 months. Germany’s production industries suffered decline of 7.3 percent in Dec 2008 relative to Dec 2007 and decline of 2.3 percent in 2009. Recovery was vigorous with 17.1 percent in the 12 months ending in Dec 2010. The first quarter of 2011 was quite strong when the German economy outperformed the other advanced economies. The performance of Germany’s production industries from 2002 to 2006 was vigorous with average rate of 4.5 percent. Data for the production industries index of Germany fluctuate sharply from month to month and in 12-month rates.

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

	12-Month ∆% NSA	Month ∆% Calendar SA
Feb 2014	6.2	0.4
Jan	3.6	0.7
Dec 2013	5.7	0.1
Nov	0.4	2.3
Oct	1.2	-1.0
Sep	4.2	-0.7
Aug	-2.7	1.5
Jul	1.9	-0.9
Jun	-0.6	2.1
May	-4.5	-1.2
Apr	7.3	1.0
Mar	-9.0	0.6
Feb	-5.0	0.5
Jan	-1.4	-0.3
Dec 2012	-9.4	0.3
Nov	-2.9	-0.5
Oct	4.1	-1.5
Sep	-6.7	1.0
Aug	-0.6	-0.6
Jul	2.4	1.3
Jun	4.2	-0.9
May	-6.3	1.5
Apr	-0.6	-2.4
Mar	-0.1	2.3
Feb	2.4	-0.7
Jan	4.8	0.9
Dec 2011	2.0	-1.5
Nov	3.9	-0.1
Oct	0.1	1.1
Sep	4.5	-1.6
Aug	10.2	-1.0
Jul	5.8	3.2
Jun	-0.8	-1.6
May	18.2	0.8
Apr	5.3	-0.1
Mar	9.8	0.7
Feb	15.8	1.0
Jan	15.1	1.5
Dec 2010	17.1
Dec 2009	-2.3
Dec 2008	-7.3
Dec 2007	-0.1
Dec 2006	2.5
Dec 2005	4.9
Dec 2004	5.3
Dec 2003	5.1
Dec 2002	2.0
Dec 2001	-8.8
Dec 2000	0.2
Dec 1999	6.4
Average ∆% per Year
Dec 1995 to Dec 2013	1.5
Dec 1995 to Dec 2000	2.7
Dec 1995 to Dec 2006	2.2
Dec 2002 to Dec 2006	4.5

Source: Statistiche Bundesamt Deutschland

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

Table VE-2 provides monthly percentage changes of the German production industries index by components from Jul 2013 to Feb 2014. The index increased 0.4 percent in Feb 2014 with increases of 0.5 percent in industry, 0.5 percent in manufacturing and 1.3 percent in durable goods. There were declines of 0.2 percent in capital goods and 0.9 percent in energy. The index increased 2.3 percent in Nov 2013 with increases in all segments except decline of 1.0 percent in energy. The index fell 1.0 percent in Oct 2013 with all segments declining with exception of 0.8 percent for intermediate goods and 0.4 percent for nondurable goods.

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

	Feb 2014	Jan	Dec 2013	Nov	Oct	Sep	Aug	Jul
Production Industries	0.4	0.7	0.1	2.3	-1.0	-0.7	1.5	-0.9
Industry	0.5	0.3	0.2	2.8	-0.9	-1.0	2.2	-1.4
Mfg	0.5	0.3	0.2	2.8	-0.9	-1.0	2.2	-1.4
Intermediate Goods	1.3	0.2	0.7	0.9	0.8	0.4	0.3	-0.3
Capital Goods	-0.2	0.9	-0.7	5.1	-2.8	-2.5	4.6	-2.6
Durable Goods	3.2	-2.6	0.4	1.9	-3.2	1.7	-2.2	-2.8
Nondurable Goods	-0.3	-1.1	1.6	1.2	0.4	-0.6	0.9	-0.1
Energy	-0.9	1.0	-2.4	-1.0	-2.0	1.8	-1.9	0.3

Seasonally Calendar Adjusted

Source: Source: Statistisches Bundesamt Deutschland (Destatis

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

Table VE-3 provides 12-month unadjusted percentage changes of industry and components in Germany. There were percentage declines of 12-month rates in the production index of Germany and all segments in the four months from Dec 2012 to Mar 2013 with exception of nondurables in Jan 2013 and energy in Mar 2013. There is sharp recovery in Apr 2013 with growth of manufacturing by 8.1 percent and capital goods by 11.2 percent. All segments show declines in 12 months in May 2013. There are increases in the 12 months ending in Jun of 0.9 percent in capital goods and 2.5 percent in durable goods. All segments increased in Jul 2013. All segments fell in Aug 2013 with sharp declines. There is strong recovery in Sep with high rates of increase. Many segments increased in the 12 months ending in Oct 2013 with 1.5 percent growth in manufacturing and 1.6 percent in capital goods. All segments increased in Nov 2013 with 1.1 percent in manufacturing and 1.5 percent in capital goods. All segments increased in Dec 2013 with exception of energy. Most segments increased in Jan 2014 with exception of declines for durable goods and nondurable goods. All segments increased in Feb 2014 with exception of energy. Percentage declines in 12 months are quite sharp in Dec 2012 with most percentage changes negative around two-digits. Although there are sharp fluctuations in the data, there is suggestion of deceleration that would be expected from much higher earlier rates. The deceleration is quite evident in single-digit percentage changes from Sep 2011 to Dec 2012 relative to high double-digit percentage changes in Jan-Mar 2011. There are multiple negative 12-month percentage changes across many segments. Growth rates in the recovery from the global recession from IVQ2007 to IIQ2009 were initially very vigorous in comparison with the growth rates before the contraction that are shown in the bottom part of Table VE-3.

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

	IND	MFG	INTG	CG	DG	NDG	EN
2014
Feb	6.1	6.1	7.4	5.7	3.8	4.2	-0.3
Jan	3.1	3.0	3.0	4.9	-2.5	-0.5	1.2
2013
Dec	6.1	6.0	7.4	6.1	5.5	3.7	-0.3
Nov	1.1	1.1	1.1	1.5	0.0	-0.3	-1.5
Oct	1.6	1.5	2.5	1.6	0.0	-1.0	-0.9
Sep	4.6	4.5	4.2	5.6	6.1	2.1	0.4
Aug	-2.7	-2.8	-3.5	-1.6	-7.2	-2.9	-3.4
Jul	1.5	1.4	1.9	0.4	4.0	2.9	2.2
Jun	-0.3	-0.3	-1.8	0.9	2.5	-1.1	-0.9
May	-4.4	-4.4	-3.5	-5.8	-10.4	-1.3	-5.3
Apr	8.2	8.1	4.6	11.2	9.3	8.7	-1.8
Mar	-8.8	-8.7	-8.1	-9.6	-9.3	-7.9	0.5
Feb	-4.8	-4.9	-5.6	-4.7	-6.4	-2.9	-12.0
Jan	-0.7	-0.6	-1.3	-1.8	-2.0	4.7	-4.2
2012
Dec	-9.6	-9.4	-11.8	-8.5	-12.5	-7.0	-2.4
Nov	-3.1	-3.1	-3.9	-2.7	-7.6	-1.2	0.7
Oct	3.9	3.8	2.8	4.0	0.7	7.0	3.2
Sep	-7.6	-7.5	-8.8	-7.1	-11.2	-5.2	4.0
Aug	-1.1	-1.0	-3.2	0.3	0.4	0.7	4.5
Jul	2.0	2.0	0.3	4.6	-2.4	-0.7	2.2
Jun	3.8	3.7	1.9	6.5	7.2	0.3	6.7
May	-7.0	-6.8	-7.5	-6.1	-10.6	-7.7	4.0
Apr	-1.1	-1.1	-2.0	1.9	-5.3	-5.9	3.7
Mar	-0.5	-0.4	-3.1	2.8	-6.2	-2.3	-0.8
Feb	3.2	3.3	0.9	7.3	-0.1	-2.3	5.9
Jan	5.6	5.6	3.0	10.4	4.7	0.1	-3.3
2011
Dec	1.5	1.4	1.8	1.3	0.2	1.4	-9.2
Nov	4.6	4.5	2.9	8.1	2.3	-1.0	-5.8
Oct	0.6	0.7	-0.3	3.2	-2.3	-3.4	-6.1
Sep	5.7	5.7	4.6	9.2	3.4	-0.8	-6.1
Aug	12.4	12.2	9.3	20.4	4.8	1.4	-3.0
Jul	7.9	7.8	5.0	13.7	6.8	0.1	-5.7
Jun	0.5	0.5	0.2	2.3	-10.2	-2.1	-4.7
May	21.5	21.2	17.9	28.3	20.8	12.8	-7.3
Apr	7.5	7.5	6.1	11.1	4.6	1.6	-5.5
Mar	11.2	11.2	10.8	15.0	8.6	2.0	2.8
Feb	17.3	17.1	16.3	23.1	10.1	6.3	-0.4
Jan	17.2	16.9	17.5	23.1	9.9	3.6	-2.6
2010
Dec	17.6	17.6	14.8	25.9	8.5	1.7	2.6
Nov	13.9	13.9	12.9	19.2	7.7	3.9	3.5
Oct	9.9	9.9	9.7	14.0	6.3	0.8	2.5
Sep	9.8	9.5	12.2	10.1	8.3	2.6	2.1
Aug	16.9	17.0	19.3	19.9	18.3	6.9	1.3
Jul	9.0	8.9	13.2	8.7	7.4	0.8	1.9
Jun	16.4	16.2	20.8	16.1	19.7	5.1	-2.8
May	13.1	13.3	20.0	12.0	11.2	1.4	11.1
Apr	14.9	14.9	21.7	15.5	8.8	0.2	9.4
Mar	14.3	14.5	20.4	12.3	11.8	5.8	4.2
Feb	6.8	7.4	10.6	6.5	7.9	-1.0	3.7
Jan	0.4	0.9	6.3	-3.8	0.8	-3.0	0.8
Dec 2010	17.6	17.6	14.8	25.9	8.5	1.7	2.6
Dec 2009	-3.2	-3.1	3.3	-9.9	-0.1	1.1	3.7
Dec 2008	-7.6	-7.4	-14.3	-5.4	-11.2	3.7	-9.0
Dec 2007	0.0	-0.3	-0.6	2.5	-10.0	-2.7	1.6
Dec 2006	3.2	3.1	5.2	2.3	8.6	-0.9	-5.3
Dec 2005	5.8	5.9	3.5	9.0	3.2	2.1	0.6
Dec 2004	5.3	5.5	7.7	3.4	0.8	5.7	9.6
Dec 2003	5.5	5.3	5.5	6.4	1.7	4.4	0.3
Dec 2002	3.7	3.3	5.4	3.4	-5.9	2.3	-2.6

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

Source: Statistisches Bundesamt Deutschland (Destatis)

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

Broader perspective since 2005 is provided by Chart VE-1 of the Statistisches Bundesamt Deutschland, Federal Statistical Agency of Germany. The index of production industries not seasonally adjusted rises by more than one third between 2003 and 2008 with sharp fluctuations and then collapses during the global recession in 2008. Recovery has been in a steep upward trajectory that has recovered at the more recent peaks the losses during the contraction. Recovery stalled recently.

Chart VE-1, Germany, Production Industries, Not Adjusted, 2010=100

Source: Statistiche Bundesamt Deutschland

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

More detail is provided by Chart VE-2 of the Statistiche Bundesamt Deutschland, or Federal Statistical Agency of Germany, with the unadjusted production industries index and trend from 2010 to 2014. There could be some flattening in recent months probably leading into stagnation, mild downturn and probable recovery as depicted by trend.

Chart VE-2, Germany, Production Industries, Not Adjusted, 2010=100

Source: Statistiche Bundesamt Deutschland

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

Table VE-4 provides month and 12-month rates of growth of manufacturing in Germany from Dec 2010 to Feb 2014. There are fluctuations in both monthly rates and in the past 12 months. In Jan 2013, manufacturing fell 0.6 percent and decreased 0.6 percent in 12 months. Manufacturing increased 0.6 percent in Feb 2013, declining 4.9 percent in 12 months. In Mar 2013, manufacturing increased 0.5 percent but fell 8.7 percent in 12 months. There is strong recovery in Apr 2013 with growth of 0.8 percent and 8.1 percent in 12 months. Manufacturing fell 1.2 percent in May 2013 and declined 4.4 percent in 12 months. Recovery is strong in Jun 2013 with growth of 1.9 percent in the month but decline of 0.3 percent in 12 months. Manufacturing fell 1.4 percent in Jul 2013 and increased 1.4 percent in 12 months. In Aug 2013, manufacturing increased 2.2 percent and fell 2.8 percent in 12 months. Manufacturing fell 1.0 percent in Sep 2013 and increased 4.5 percent in 12 months. Manufacturing increased 2.8 percent in Nov 2013 and 1.1 percent in 12 months. In Dec 2013, manufacturing increased 0.2 percent and increased 6.0 percent in 12 months. Manufacturing increased 0.3 percent in Jan 2014 and 3.0 percent in 12 months. In Feb 2014, manufacturing increased 0.5 percent and 6.1 percent in 12 months.

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

	12-Month ∆% NSA	Month ∆% SA and Calendar Adjusted
Feb 2014	6.1	0.5
Jan	3.0	0.3
Dec 2013	6.0	0.2
Nov	1.1	2.8
Oct	1.5	-0.9
Sep	4.5	-1.0
Aug	-2.8	2.2
Jul	1.4	-1.4
Jun	-0.3	1.9
May	-4.4	-1.2
Apr	8.1	0.8
Mar	-8.7	0.5
Feb	-4.9	0.6
Jan	-0.6	-0.6
Dec 2012	-9.4	1.0
Nov	-3.1	-0.3
Oct	3.8	-1.6
Sep	-7.5	-1.4
Aug	-1.0	-0.5
Jul	2.0	1.8
Jun	3.7	-1.3
May	-6.8	1.9
Apr	-1.1	-2.1
Mar	-0.4	1.2
Feb	3.3	0.0
Jan	5.6	0.8
Dec 2011	1.4	-1.6
Nov	4.5	-0.4
Oct	0.7	1.0
Sep	5.7	-1.7
Aug	12.2	-1.1
Jul	7.8	3.5
Jun	0.5	-1.6
May	21.2	1.0
Apr	7.5	0.4
Mar	11.2	0.8
Feb	17.1	1.2
Jan	16.9	0.1
Dec 2010	17.6	1.3

Source: Statistisches Bundesamt Deutschland (Destatis)

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

Chart VE-3 of the Statistisches Bundesamt Deutschland, or Federal Statistical Office of Germany, provides the manufacturing index of Germany from 2010 to 2014. Manufacturing was already flattening in 2007 and fell sharply in 2008 to the beginning of 2010. Manufacturing grew sharply in the initial phase of recovery but has flattened in recent months as revealed by the trend that may be turning upward.

Chart VE-3, Germany, Production Index, Manufacturing, Not Adjusted Index and Trend, 2010=100

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

Table VE-5 provides month and 12-month rates of growth of new orders of manufacturing in Germany from Jan 2010 to Feb 2014. There are fluctuations in both monthly rates and in the past 12 months. Table VE-5 reveals strong fluctuations in an evident deceleration of total orders for industry of Germany with recent improvement. Total orders for manufacturing increased 0.6 percent in Feb 2014 and increased 7.3 percent in 12 months. There is the same behavior for total, foreign and domestic orders with decline in 12-month rates from two-digit levels to single digits and negative changes. An important aspect of Germany is that the bulk of orders is domestic or from other European countries while foreign orders have been growing rapidly. There is weakening world trade affecting export economies. As in other countries, data on orders for manufacturing are highly volatile. Most 12-month percentage changes from Jan 2012 to Sep 2012 in Table VE-5 are negative largely because of the unusual strength of the Germany economy in the beginning of 2011 but more recently because of slowing world economy in 2012-2013.

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

	Total 12 M	Total M	Foreign 12 M	Foreign M	Home 12 M	Home M
2014
Feb	7.3	0.6	8.7	0.2	5.6	1.2
Jan	5.8	0.1	8.2	-1.3	2.9	2.0
2013
Dec	8.4	0.1	10.7	1.8	5.0	-2.2
Nov	4.5	0.7	6.0	-0.4	2.5	2.5
Oct	3.7	-0.3	4.1	0.1	3.1	-0.9
Sep	11.2	3.1	13.7	6.2	8.0	-0.7
Aug	0.0	-0.2	-0.9	-1.6	1.0	1.6
Jul	5.1	-2.1	5.5	-3.8	4.8	0.2
Jun	4.8	4.8	7.9	5.6	0.7	3.7
May	-3.6	-1.0	-1.6	-0.2	-6.2	-2.0
Apr	5.9	-1.7	7.6	-1.0	3.6	-2.5
Mar	-5.6	1.9	-4.4	2.2	-7.2	1.5
Feb	-2.7	1.7	-1.5	1.9	-4.2	1.3
Jan	0.3	-1.0	1.9	-2.2	-1.7	0.7
2012
Dec	-9.1	1.5	-6.7	2.0	-12.6	0.8
Nov	-0.9	-2.9	2.4	-4.8	-5.1	-0.4
Oct	4.5	4.3	7.0	7.2	1.3	0.6
Sep	-8.9	-2.1	-6.6	-3.1	-11.7	-0.7
Aug	-4.4	-0.8	-2.1	-0.2	-7.1	-1.7
Jul	-1.6	0.8	0.6	1.1	-4.2	0.6
Jun	-4.5	-2.2	-6.4	-2.3	-1.7	-2.2
May	-11.0	0.7	-3.7	2.0	-18.8	-1.0
Apr	-3.9	-1.7	-4.4	-2.8	-3.1	-0.3
Mar	-2.2	2.3	-1.2	3.2	-3.3	1.3
Feb	-4.3	0.6	-4.7	1.8	-3.8	-0.8
Jan	-2.6	-2.2	-4.6	-3.7	-0.2	-0.5
2011
Dec	0.0	2.6	-0.3	4.7	0.5	0.1
Nov	-4.8	-3.0	-8.2	-5.1	-0.3	-0.5
Oct	0.1	1.7	2.1	3.2	-2.1	0.0
Sep	2.2	-3.4	1.9	-4.2	2.6	-2.3
Aug	7.1	-0.7	5.2	0.4	9.4	-2.1
Jul	4.9	-2.0	4.6	-5.9	5.4	3.2
Jun	3.5	-0.6	7.8	8.6	-2.0	-10.8
May	23.1	2.6	16.0	-3.9	31.8	11.0
Apr	6.7	1.9	9.6	2.2	3.0	1.2
Mar	9.8	-3.2	12.3	-3.2	6.9	-3.1
Feb	21.5	1.1	24.1	0.6	18.4	1.7
Jan	22.5	3.6	26.1	3.4	18.2	3.9
2010
Dec	21.8	-2.5	26.8	-3.7	15.4	-0.9
Nov	21.4	5.3	27.1	8.5	15.0	1.3
Oct	14.2	0.7	18.2	0.3	10.0	1.2
Sep	13.9	-1.3	15.6	-3.2	11.9	1.3
Aug	22.2	2.3	29.7	4.3	14.5	-0.1
Jul	14.1	-0.6	21.4	-0.6	6.4	-0.6
Jun	27.6	2.5	30.6	3.3	24.2	1.6
May	24.8	-0.2	29.6	0.6	19.4	-1.2
Apr	29.9	3.0	34.0	3.1	25.7	3.0
Mar	29.4	5.0	32.9	5.1	25.8	5.0
Feb	24.0	0.1	28.7	0.8	18.6	-0.7
Jan	17.0	3.8	23.8	4.2	9.8	3.2
Dec 2009	9.1	-1.7	10.5	-2.6	7.3	-0.5
Dec 2008	-28.3	-6.7	-31.5	-9.5	-23.7	-2.9
Dec 2007	7.1	-0.9	9.1	-2.0	4.4	0.2
Dec 2006	2.8	0.8	3.4	0.5	2.2	1.1
Dec 2005	5.0	-0.5	10.4	-1.1	-1.4	0.3
Dec 2004	12.7	6.5	13.0	8.5	12.7	4.9
Dec 2003	10.7	2.4	16.4	5.4	5.1	-0.8
Dec 2002	-0.2	-3.4	-0.8	-6.6	0.2	-0.3
Average ∆% 2003-2007	7.6		10.4		4.5
Average ∆% 2003-2012	2.3		3.9		0.3

Notes: AE: Annual Equivalent; M: Month; M: Calendar and seasonally adjusted; 12 M: Non-adjusted Source: Statistisches Bundesamt Deutschland

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

Orders for capital goods of Germany are shown in Table VE-6. Total capital goods orders increased 0.4 percent in Feb 2014 and increased 7.2 percent in 12 months. Domestic orders increased 1.4 percent in Feb and foreign orders decreased 0.2 percent. There has been deceleration from 2010 and early 2011 with growth rates falling from two digit levels to single digits, and multiple negative changes with recent improvement. An important aspect of Germany’s economy shown in Tables VE-5 and VE-6 is the success in increasing the competitiveness of its economic activities as shown by rapid growth of orders for industry after the recession of 2001 in the period before the global recession beginning in late 2007. Germany adopted fiscal and labor market reforms to increase productivity.

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

	Total 12 M	Total M	Foreign 12 M	Foreign M	Domestic 12 M	Domestic M
2014
Feb	7.2	0.4	8.8	-0.2	4.4	1.4
Jan	7.0	-1.0	9.4	-3.3	3.2	3.3
2013
Dec	10.7	1.2	14.8	4.7	3.2	-4.8
Nov	6.8	2.2	7.4	1.2	5.3	4.0
Oct	2.7	-2.8	2.1	-3.3	3.3	-2.1
Sep	14.6	4.4	17.1	8.3	10.3	-2.0
Aug	3.1	0.0	1.5	-2.0	5.7	3.4
Jul	6.3	-4.4	7.3	-6.3	5.0	-0.7
Jun	9.1	8.4	13.5	9.3	1.8	7.0
May	-3.1	-1.1	-0.4	0.5	-7.8	-3.9
Apr	6.0	-2.0	7.3	-2.1	3.7	-1.9
Mar	-5.9	1.1	-4.4	1.7	-8.2	-0.1
Feb	0.1	2.7	2.7	2.6	-4.0	2.9
Jan	3.1	-0.9	5.8	-1.4	-1.4	-0.4
2012
Dec	-7.7	2.3	-4.6	2.3	-13.3	2.6
Nov	-0.7	-4.3	3.1	-6.2	-6.5	-1.1
Oct	4.6	5.9	6.3	8.7	2.1	1.3
Sep	-7.5	-1.3	-4.8	-2.1	-11.6	-0.1
Aug	-4.6	-2.1	-2.6	-1.1	-7.4	-3.7
Jul	-0.3	1.3	1.2	1.8	-2.7	0.5
Jun	-7.1	-2.5	-9.9	-2.8	-1.9	-1.8
May	-12.0	0.7	-2.8	1.7	-23.9	-0.8
Apr	-3.3	-3.3	-4.2	-4.3	-1.7	-1.5
Mar	2.2	5.0	3.3	7.3	0.2	1.4
Feb	-5.9	1.7	-7.0	2.2	-4.2	1.1
Jan	-3.7	-4.2	-6.5	-4.8	1.0	-3.2
2011
Dec	1.2	3.0	-0.1	3.9	3.5	1.5
Nov	-6.5	-4.0	-10.5	-7.2	0.7	1.3
Oct	3.1	3.6	6.2	6.1	-2.0	-0.3
Sep	2.9	-3.8	2.2	-4.8	4.0	-1.9
Aug	6.7	-0.4	4.5	0.8	10.6	-2.3
Jul	7.2	-5.6	6.4	-9.5	8.8	1.4
Jun	9.1	0.6	13.3	13.1	2.0	-16.0
May	27.5	4.6	17.7	-4.7	43.5	20.3
Apr	11.0	3.9	14.1	4.9	6.3	2.2
Mar	12.0	-6.0	14.4	-5.6	8.5	-6.6
Feb	29.3	2.9	32.5	1.6	24.8	5.1
Jan	26.8	3.4	32.8	3.8	17.7	2.7
2010
Dec	27.4	-5.0	31.2	-7.1	21.1	-1.4
Nov	30.4	9.1	37.0	13.2	20.1	2.3
Oct	20.5	0.3	24.9	-0.7	14.3	2.1
Sep	18.2	-2.3	20.3	-4.6	14.7	1.5
Aug	27.5	5.1	40.0	7.2	11.5	1.8
Jul	14.1	-1.8	28.1	-1.8	-2.5	-1.8
Jun	32.0	3.4	38.7	5.0	22.1	0.6
May	26.2	1.4	36.6	1.5	12.8	1.5
Apr	31.0	3.0	41.4	3.7	18.1	2.0
Mar	25.8	6.3	33.8	7.3	15.7	4.9
Feb	21.2	-0.6	31.3	0.7	8.3	-2.7
Jan	17.0	4.0	29.6	2.3	2.8	7.1
Dec 2009	8.1	-1.2	13.6	-1.5	0.3	-1.0
Dec 2008	-32.2	-7.2	-36.8	-10.0	-24.5	-3.6
Dec 2007	9.4	-0.6	11.6	-2.3	6.1	2.2
Dec 2006	3.5	2.2	3.9	2.9	2.9	1.2
Dec 2005	1.8	-2.1	9.7	-2.5	-8.4	-1.6
Dec 2004	19.5	11.2	18.6	12.2	20.6	9.7
Dec 2003	11.7	2.1	17.2	5.0	5.4	-1.6
Dec 2002	-2.8	-4.3	-3.7	-8.1	-1.8	0.2
Average ∆% 2003-2007	9.0		12.1		4.9
Average ∆% 2003-2012	3.0		4.7		0.5

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

Source: Statistisches Bundesamt Deutschland

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

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

Chart VE-4, Germany, Volume of Total Orders in Manufacturing, Non-Adjusted, 2010=100

Source:  Statistisches Bundesamt Deutschland

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

Chart VE-5 shows non-adjusted total orders in manufacturing and trend. There was sharp recovery from the global recession with subsequent decline. Trend reversed upwardly.

Chart VE-5, Germany, Volume of Total Orders in Manufacturing and Trend, Non-Adjusted, 2010=100

Source: Statistisches Bundesamt Deutschland

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

Twelve-month rates of growth Germany’s exports and imports are shown in Table VE-7. There was sharp decline in the rates in Jun and Jul 2011 to single-digit levels especially for exports. In the 12 months ending in Aug 2011, exports rose 14.6 percent and imports 13.2 percent. In Sep 2011, exports grew 10.4 percent relative to a year earlier and imports grew 11.7 percent. Growth rates in 12 months ending in Oct 2011 fell significantly to 3.5 percent for exports and 9.2 percent for imports. Lower prices may explain part of the decline in nominal values. Exports fell 3.8 percent in 12 months ending in Sep 2012, rebounding to growth of 10.5 percent in Oct 2012 and minus 0.5 percent in Nov 2012 but sharp decline of 7.3 percent in Dec 2012 followed by rebound of 2.4 percent in Jan 2013. Exports fell 3.2 percent in the 12 months ending in Feb 2013 and declined 4.6 percent in the 12 months ending in Mar 2013. In Apr 2013, exports increased 7.7 percent relative to a year earlier. Exports fell 4.8 percent in the 12 months ending in May 2013. Exports fell 5.7 percent in the 12 months ending in Aug 2013 and imports fell 2.3 percent. In the 12 months ending in Sep 2013, exports increased 3.5 percent and imports fell 0.3 percent. Exports increased 0.7 percent in the 12 months ending in Oct 2013 while imports fell 1.5 percent. Exports increased 1.1 percent in the 12 months ending in Nov 2013 and imports fell 0.4 percent. Exports increased 4.5 percent in the 12 months ending in Dec 2013 while imports increased 2.4 percent. Exports increased 2.9 percent in the 12 months ending in Jan 2014 while imports increased 1.5 percent. Exports increased 4.6 percent in the 12 months ending in Feb 2014 and imports increased 6.5 percent. Imports decreased 4.1 percent in the 12 months ending in Sep 2012, rebounding to growth of 5.7 percent in Oct 2012, decreasing 1.5 percent in Nov 2012 and 7.8 percent in Dec 2012 and rebounding 2.7 percent in Jan 2013. Imports fell 5.7 percent in the 12 months ending in Feb 2013 and declined 7.5 percent in Mar 2013. In Apr 2013, imports increased 4.3 percent relative to a year earlier. In May 2013, imports fell 3.1 percent relative to a year earlier. Imports fell 1.2 percent in the 12 months ending in Jun 2013. In Jul 2013, imports increased 0.9 percent relative to a year earlier. Imports fell 2.3 percent in the 12 months ending in Aug 2013. In the 12 months ending in Sep 2013, exports declined 0.3 percent. Imports fell 1.5 percent in the 12 months ending in Oct 2013. Imports fell 0.4 percent in the 12 months ending in Nov 2013 and increased 2.4 percent in the 12 months ending in Dec 2013. Imports increased 1.5 percent in the 12 months ending in Jan 2014 and 6.5 percent in the 12 months ending in Feb 2014. Growth was much stronger in the recovery during 2010 and 2011 from the fall from 2007 to 2009. Germany’s trade grew at high rates in 2006 and 2005.

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

	Exports EURO Billions	12- Month ∆%	Imports EURO Billions	12-Month ∆%
Feb	92.4	4.6	76.1	6.5
Jan	90.7	2.9	75.7	1.5
Dec 2013	82.1	4.5	68.2	2.4
Nov	94.7	1.1	76.5	-0.4
Oct	99.1	0.7	81.3	-1.5
Sep	94.6	3.5	74.3	-0.3
Aug	85.0	-5.7	71.7	-2.3
Jul	93.1	-0.3	76.8	0.9
Jun	92.4	-2.0	75.4	-1.2
May	88.2	-4.8	74.6	-3.1
Apr	94.0	7.7	76.0	4.3
Mar	94.2	-4.6	75.4	-7.5
Feb	88.3	-3.2	71.5	-5.7
Jan	88.2	2.4	74.6	2.7
Dec 2012	78.6	-7.3	66.6	-7.8
Nov	93.7	-0.5	76.8	-1.5
Oct	98.4	10.5	82.5	5.7
Sep	91.4	-3.8	74.5	-4.1
Aug	90.2	5.7	73.4	-0.1
Jul	93.3	9.1	76.2	1.5
Jun	94.3	7.0	76.3	1.4
May	92.7	0.3	77.0	-0.7
Apr	87.2	3.2	72.9	-1.1
Mar	98.7	0.1	81.5	2.1
Feb	91.2	7.9	75.8	4.6
Jan	86.1	8.6	72.6	4.6
Dec 2011	84.8	4.7	72.3	5.6
Nov	94.1	7.4	78.0	5.8
Oct	89.1	3.5	78.1	9.2
Sep	95.0	10.4	77.7	11.7
Aug	85.3	14.6	73.5	13.2
Jul	85.6	5.2	75.0	9.7
Jun	88.1	3.3	75.2	5.6
May	92.4	21.2	77.5	17.4
Apr	84.5	12.4	73.7	18.5
Mar	98.7	15.3	79.8	15.1
Feb	84.5	20.8	72.5	27.6
Jan	79.3	25.2	69.4	26.0
Dec 2010	81.0	20.0	68.4	24.4
Nov	87.6	21.2	73.7	30.9
Oct	86.0	18.7	71.5	19.2
Sep	86.0	21.2	69.5	17.0
Aug	74.4	23.8	64.9	27.1
Jul	81.4	15.3	68.4	24.4
Jun	85.3	27.5	71.2	33.9
May	76.2	25.6	66.1	31.3
Apr	75.2	16.8	62.2	14.4
Mar	85.6	22.0	69.3	18.0
Feb	70.0	9.7	56.8	3.2
Jan	63.4	-0.3	55.1	-1.9
Dec 2009	67.5	1.2	55.0	-7.3
Dec 2008	66.7	-8.6	59.4	-5.1
Dec 2007	73.0	-0.6	62.5	-0.1
Dec 2006	73.4	10.2	62.6	8.5
Dec 2005	66.6	11.5	57.7	18.1
Dec 2004	59.7	9.2	48.9	10.8
Dec 2003	54.7	7.6	44.1	3.9
Dec 2002	50.8	5.5	42.5	6.4
Dec 2001	48.2	-3.7	39.9	-17.5
Dec 2000	50.0		48.4

Source: Statistisches Bundesamt Deutschland

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

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

Chart VE-6, Germany, Exports Original Value and Trend 2010-2014

Source: Statistisches Bundesamt Deutschland

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

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

Chart VE-7, Germany, Imports Original Value and Trend 2010-2014

Source: Statistisches Bundesamt Deutschland

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

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

Chart VE-8, Germany, Trade Balance Original and Trend 2010-2014

Source: Statistisches Bundesamt Deutschland

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

Table VE-8 provides monthly rates of growth of exports and imports of Germany. Exports fell 1.3 percent calendar and seasonally adjusted (CSA) in Feb 2014 while imports increased 0.4 percent. Export growth had been relatively strong from Dec 2012 to Apr 2013 with only one monthly decline of 1.1 percent in Feb 2013. Exports fell 1.8 percent in May 2013 and 0.7 percent in Jul 2013. Exports grew in four consecutive months from Aug to Nov 2013. Export growth and import growth were vigorous in Jan-Mar 2011 when Germany’s economy outperformed most advanced economies but less dynamic and consistent in following months as world trade weakens.

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

	Exports	Imports
Feb 2014	-1.3	0.4
Jan	2.2	4.1
Dec 2013	-0.9	-1.4
Nov	0.7	-1.2
Oct	0.3	3.0
Sep	1.4	-1.9
Aug	1.0	0.1
Jul	-0.7	0.2
Jun	0.7	-0.4
May	-1.8	0.9
Apr	1.4	1.4
Mar	0.7	0.4
Feb	-1.1	-2.8
Jan	0.7	2.8
Dec 2012	0.6	-1.2
Nov	-2.3	-3.9
Oct	0.3	2.6
Sep	-2.7	-0.5
Aug	1.7	-0.1
Jul	0.6	0.2
Jun	-1.3	-1.9
May	4.1	4.3
Apr	-1.0	-4.2
Mar	-0.3	1.1
Feb	1.2	3.4
Jan	2.1	-0.2
Dec 2011	-2.6	-1.7
Nov	3.0	-0.4
Oct	-3.5	-0.4
Sep	1.4	0.1
Aug	2.6	-0.1
Jul	-1.2	0.2
Jun	-0.4	0.7
May	2.3	0.9
Apr	-3.2	-0.6
Mar	4.6	1.9
Feb	1.5	2.5
Jan	0.4	3.1
Dec 2010	0.1	-1.9

Source: Statistisches Bundesamt Deutschland

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

There is extremely important information in Table VE-9 for the current sovereign risk crisis in the euro zone. Table VE-9 provides the structure of regional and country relations of Germany’s exports and imports with newly available data for Feb 2014. German exports to other European Union (EU) members are 54.7 percent of total exports in Feb 2014 and 59.6 percent in cumulative Jan-Feb 2014. Exports to the euro area are 37.8 percent of the total in Feb and 38.2 percent cumulative in Jan-Feb. Exports to third countries are 40.8 percent of the total in Feb and 40.4 percent cumulative in Jan-Feb. There is similar distribution for imports. Exports to non-euro countries are increasing 12.4 percent in the 12 months ending in Feb 2014, increasing 10.8 percent cumulative in Jan-Feb 2014 while exports to the euro area are increasing 3.7 percent in the 12 months ending in Feb 2014 and increasing 3.4 percent cumulative in Jan-Feb 2014. Exports to third countries, accounting for 40.8 percent of the total in Feb 2014, are increasing 1.9 percent in the 12 months ending in Feb 2014 and increasing 0.7 percent cumulative in Jan-Feb 2014, accounting for 40.4 percent of the cumulative total in Jan-Feb 2014. Price competitiveness through devaluation could improve export performance and growth. Economic performance in Germany is closely related to Germany’s high competitiveness in world markets. Weakness in the euro zone and the European Union in general could affect the German economy. This may be the major reason for choosing the “fiscal abuse” of the European Central Bank considered by Buiter (2011Oct31) over the breakdown of the euro zone. There is a tough analytical, empirical and forecasting doubt of growth and trade in the euro zone and the world with or without maintenance of the European Monetary Union (EMU) or euro zone. Germany could benefit from depreciation of the euro because of high share in its exports to countries not in the euro zone but breakdown of the euro zone raises doubts on the region’s economic growth that could affect German exports to other member states.

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

	Feb 2014  € Billions	Feb 12-Month ∆%	Cumulative Jan-Feb 2014 € Billions	Cumulative Jan-Feb 2014/ Jan-Feb 2013 ∆%
Total Exports	92.4	4.6	183.1	3.8
A. EU Members	54.7 % 59.2	3.7	109.2 % 59.6	3.4
Euro Area	34.9 % 37.8	3.7	69.9 % 38.2	3.4
Non-euro Area	19.9 % 21.5	12.4	39.3 % 21.5	10.8
B. Third Countries	37.7 % 40.8	1.8	73.9 % 40.4	0.7
Total Imports	76.1	6.5	151.8	4.0
EU Members	50.2 % 66.0	9.0	98.5 % 64.9	6.3
Euro Area	NA	NA	NA	NA
Non-euro Area	34.6 % 45.5	8.4	68.1 % 44.9	6.2
Third Countries	15.7 % 20.6	10.4	30.4 % 20.0	6.4

Notes: Total Exports = A+B

Source: Statistisches Bundesamt Deutschland

https://www.destatis.de/EN/PressServices/Press/pr/2014/04/PE14_129_51.html

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

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

Period	Average ∆%
1949-2013	3.2
2000-2013	1.0
2000-2012	1.0
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=20140331

The Markit Flash France Composite Output Index increased from 47.9 in Feb to 51.6 in Mar for a 31-month high (http://www.markiteconomics.com/Survey/PressRelease.mvc/66202d09e60b46eab9d481f475f0996f). Jack Kennedy, Senior Economist at Markit and author of the report, finds improvement at home and overseas (http://www.markiteconomics.com/Survey/PressRelease.mvc/66202d09e60b46eab9d481f475f0996f). The Markit France Composite Output Index, combining services and manufacturing with close association with French GDP, increased from 47.9 in Feb to 51.8 in Feb, indicating growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/5aaddb78a6b249768e1cf6075d840289). Jack Kennedy, Senior Economist at Markit and author of the France Services PMI^®, finds return to growth with marginally improving confidence (http://www.markiteconomics.com/Survey/PressRelease.mvc/5aaddb78a6b249768e1cf6075d840289). The Markit France Services Activity index increased from 47.2 in Feb to 51.5 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/5aaddb78a6b249768e1cf6075d840289). The Markit France Manufacturing Purchasing Managers’ Index^® increased to 52.1 in Mar from 49.7 in Feb for the highest reading since Jun 2011 (http://www.markiteconomics.com/Survey/PressRelease.mvc/af898c044ea5428885e085ff7ae49690). Jack Kennedy, Senior Economist at Markit and author of the France Manufacturing PMI^®, finds improving conditions supported by strong growth of new orders (http://www.markiteconomics.com/Survey/PressRelease.mvc/af898c044ea5428885e085ff7ae49690). Table FR provides the country data table for France.

Table FR, France, Economic Indicators

CPI	Mar month ∆% 0.5 12 months ∆%: 0.6 4/13/14
PPI	Feb month ∆%: -0.1 Feb 12 months ∆%: -1.7 Blog 4/13/14
GDP Growth	IVQ2013/IIIQ2013 ∆%:0.3 IVQ2013/IVQ2012 ∆%: 0.8 Blog 3/31/13 5/19/12 6/30/13 9/29/13 11/17/13 12/29/13 2/16/14 4/6/14
Industrial Production	Feb ∆%: Manufacturing 0.3 12-Month ∆%: Manufacturing 1.2 Blog 4/13/14
Consumer Spending	Manufactured Goods Feb ∆%: 0.2 Feb 12-Month Manufactured Goods ∆%: 1.1 Blog 4/6/14
Employment	Unemployment Rate: IVQ2013 9.8% Blog 3/9/13
Trade Balance	Feb Exports ∆%: month -0.2, 12 months 1.3 Feb Imports ∆%: month -5.5, 12 months -4.4 Blog 4/13/14
Confidence Indicators	Historical average 100 Mar Mfg Business Climate 100 Blog 3/30/14

Links to blog comments in Table FR:

4/6/14 http://cmpassocregulationblog.blogspot.com/2014/04/interest-rate-risks-twenty-eight.html

3/30/14 http://cmpassocregulationblog.blogspot.com/2014/03/financial-uncertainty-mediocre-cyclical.html

3/9/14 http://cmpassocregulationblog.blogspot.com/2014/03/rules-discretionary-authorities-and.html

2/16/14 http://cmpassocregulationblog.blogspot.com/2014/02/theory-and-reality-of-cyclical-slow.html

12/29/13 http://cmpassocregulationblog.blogspot.com/2013/12/collapse-of-united-states-dynamism-of.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 provides longer historical perspective of manufacturing in France. Output of manufacturing increased 0.3 percent in Feb 2014 and increased 1.2 percent in the 12 months ending in Fed 2014. Manufacturing in France fell 14.2 percent in the 12 months ending in Dec 2008 and 4.2 percent in Dec 2009. Manfactring recovered with growth of 5.9 percent in the 12 months ending in Dec 2010. Manufacturing fell 0.6 percent in the 12 months ending in Dec 2011 and 3.2 percent in the 12 months ending in Dec 2012.

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

	Month ∆%	12-Month ∆%
Feb 2014	0.3	1.2
Jan	0.4	1.6
Dec 2013	0.2	0.6
Nov	0.2	1.3
Oct	0.2	0.3
Sep	-0.6	-1.3
Aug	1.0	-3.2
Jul	-0.8	-2.2
Jun	-0.3	-0.2
May	-1.1	0.0
Apr	2.5	0.5
Mar	-0.8	-3.6
Feb	0.7	-1.0
Jan	-0.6	-3.7
Dec 2012	0.9	-3.2
Nov	-0.8	-6.0
Oct	-1.4	-3.2
Sep	-2.5	-2.2
Aug	2.1	-0.6
Jul	1.2	-2.6
Jun	-0.1	-3.4
May	-0.6	-5.3
Apr	-1.7	-3.2
Mar	1.9	-2.4
Feb	-2.1	-5.4
Jan	-0.1	-2.9
Dec 2011	-2.0	-0.6
Nov	2.2	1.9
Oct	-0.4	2.0
Sep	-0.9	1.4
Aug	0.0	3.7
Jul	0.4	3.4
Jun	-2.1	3.3
May	1.6	4.8
Apr	-0.9	4.0
Mar	-1.2	5.4
Feb	0.6	9.1
Jan	2.2	8.4
Dec 2013		0.6
Dec 2012		-3.2
Dec 2011		-0.6
Dec 2010		5.9
Dec 2009		-4.2
Dec 2008		-14.2
Dec 2007		-0.8
Dec 2006		2.6
Dec 2005		0.7
Dec 2004		0.9
Dec 2003		0.3
Dec 2002		-1.1
Dec 2001		-5.4
Dec 2000		4.6

Source:

Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=10&date=20140410

Chart VF-1 of the Institut National de la Statistique et des Études Économiques provides France’s index of manufacturing, adjusted for working days and seasonal effects, from Jan 1990 to Feb 2014. Growth was robust in the 1990s and in recovery from the 2001 recession. Manufacturing output fell sharply during the global recession followed by recovery and another trend of decline followed by increase.

Chart VF-1, France, Index of Manufacturing 2010=100, Jan 1990-Feb 2014, Seasonal and Working-Day Adjusted

Source:

Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=10&date=20140410

Chart VF-2 of France’s Institut National de la Statistique et des Études Économiques shows indices of manufacturing in France from 2010 to 2014. Manufacturing, which is CZ in Chart VF-2, fell deeply in 2008 and part of 2009. All curves of industrial indices tend to flatten recently with oscillations and declines and marginal improvement followed by renewed decline/stability in the final segment with jump in Mar-Apr 2013. Manufacturing fell in May-Jul 2013 with mild recovery in Aug 2013 and decline in Sep 2013. Manufacturing increased in Oct-Nov 2013 and fell in Dec 2013. Manufacturing rebounded in Jan-Feb 2014.

Chart VF-2, France, Industrial Production Indices 2010-2014 Legend: CZ : Manufacturing – (C1) : Manufacture of food products and beverages – (C3) : Electrical and electronic equipment; machine equipment – (C4) : Manufacture of transport equipment – (C5) : Other manufacturing

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=10&date=20140410

France has been running a trade deficit fluctuating around €5,000 million as shown in Table VF-2. Exports decreased 0.2 percent in Feb 2014 while imports decreased 5.5 percent. The trade deficit decreased from revised €5613 million in Jan 2014 to €3368 million in Feb 2014.

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

	Exports	Imports	Trade Balance
Feb 2014	36,241	39,609	-3,368
Jan 2014	36,310	41,923	-5,613
Dec 2013	36,897	42,040	-5,143
Nov	35,595	41,348	-5,753
Oct	36,387	41,198	-4,811
Sep	36,535	42,319	-5,784
Aug	36,367	41,169	-4,802
Jul	36,482	42,008	-5,526
Jun	36,044	41,004	-4,960
May	35,913	41,717	-5,7804
Apr	38,308	42,092	-3,784
Mar	36,091	40,802	-4,711
Feb	35,779	41,435	-5,656
Jan	36,539	41,811	-5,272
Dec 2012	37,098	42,527	-5,429
Dec 2011	35,872	41,117	-5,245
Dec 2010	33,724	39,245	-5,521

Source: France, Direction générale des douanes et droits indirects

http://lekiosque.finances.gouv.fr/AppChiffre/Portail_default.asp

Table VF-3 provides month and 12-month percentage changes of France’s exports and imports. Exports decreased 0.2 percent in Feb 2014 and increased 1.3 percent in the 12 months ending in Feb 2014. Imports decreased 5.5 percent in Feb 2014 and decreased 4.4 percent in 12 months. Growth of exports and imports has fluctuated in 2011, 2012 and 2013 because of price surges of commodities and raw materials. Weak economic conditions worldwide also influence trade performance.

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

	Exports Month ∆%	Exports 12-Month ∆%	Imports Month ∆%	Imports 12-Month ∆%
Feb 2014	-0.2	1.3	-5.5	-4.4
Jan 2014	-1.6	-0.6	-0.3	0.3
Dec 2013	3.7	-0.5	1.7	-1.1
Dec 2012		3.4		3.4
Dec 2011		6.4		4.8
Dec 2010		13.1		14.3
Dec 2009		-9.5		-2.1
Dec 2008		-6.9		-10.9
Dec 2007		5.9		8.0
Dec 2006		6.2		6.5
Dec 2005		11.8		15.6
Dec 2004		-3.7		5.8
Dec 2003		7.1		1.6

Source: France, Direction générale des douanes et droits indirects

http://lekiosque.finances.gouv.fr/AppChiffre/Portail_default.asp

Annual data for France’s exports, imports and trade balance are provided in Table VF-4. France’s trade balance deteriorated sharply from 2007 to 2011 with the deficit increasing from €42,494 million in 2007 to €74,301 million in 2011. Annual growth rates of exports have not been sufficiently high to compensate for growth of imports driven in part by commodity price increases. In 2012, the trade deficit declined to €67,097 million with growth of exports of 3.1 percent and of imports of 1.2 percent. The trade deficit declined to €61,237 in 2013 with decline of exports of 1.3 percent and of 2.3 percent for imports.

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

	Exports € Millions	∆%	Imports € Millions	∆%	Balance € Millions
Feb 2014 12 Months	436,307		495,398		-59,091
Year
2013	436,008	-1.3	497,245	-2.3	-61,237
2012	441,729	3.1	508,826	1.2	-67,097
2011	428,387	8.4	502,688	12.3	-74,301
2010	395,039	14.0	447,483	14.2	-52,444
2009	346,481	-17.0	391,872	-17.3	-45,391
2008	417,636	2.7	473,853	5.5	-56,217
2007	406,487	3.0	448,981	5.8	-42,494
2006	394,621	9.5	424,549	10.4	-29,928
2005	360,376	4.4	384,588	9.6	-24,212
2004	345,256	5.4	350,996	7.0	-5,740
2003	327,653		327,884		-231

Source: France, Direction générale des douanes et droits indirects

http://lekiosque.finances.gouv.fr/AppChiffre/Portail_default.asp

VG Italy. Table VG-IT provides percentage changes in a quarter relative to the same quarter a year earlier of Italy’s expenditure components in chained volume measures. GDP has been declining at sharper rates from minus 0.6 percent in IVQ2011 to minus 2.8 percent in IVQ2012, minus 2.4 percent in IQ2013, minus 2.1 percent in IIQ2013 and minus 1.9 percent in IIIQ2013. GDP fell 0.9 percent in IVQ2013 relative to a year earlier. 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 and IVQ2013 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
IVQ	-0.9	-0.1	-1.1	-2.4	1.0
IIIQ	-1.9	-2.0	-1.8	-4.4	-0.4
IIQ	-2.1	-4.4	-2.8	-5.0	0.0
IQ	-2.4	-5.0	-2.9	-6.6	-0.7
2012
IVQ	-2.8	-6.5	-4.1	-7.4	1.0
IIIQ	-2.6	-7.1	-3.9	-8.3	2.0
IIQ	-2.4	-6.9	-3.4	-8.5	2.2
IQ	-1.7	-7.9	-3.2	-8.0	3.0
2011
IVQ	-0.6	-6.8	-1.9	-3.8	3.5
IIIQ	0.4	0.6	-1.1	-2.4	6.1
IIQ	1.1	3.6	0.3	-1.0	7.5
IQ	1.4	9.1	0.6	0.6	11.0
2010
IVQ	2.2	15.6	1.0	1.3	13.4
IIIQ	1.8	13.2	1.2	2.3	12.1
IIQ	1.8	13.4	0.8	1.0	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/114963

The Markit/ADACI Business Activity Index decreased from 52.9 in Feb to 49.5 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/54df1acc1d224a7d8ef9549ec47e0426). Phil Smith, Economist at Markit and author of the Italy Services PMI^®, finds limited contribution of services to growth in IQ2014 (http://www.markiteconomics.com/Survey/PressRelease.mvc/54df1acc1d224a7d8ef9549ec47e0426). The Markit/ADACI Purchasing Managers’ Index^® (PMI^®), increased from 52.3 in Feb to 52.4 in Mar for continuing growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/a4bdd3763ed64d05929fe8360005d344). New export orders grew at the highest rate since Nov. Phil Smith, Economist at Markit and author of the Italian Manufacturing PMI^®, finds continuing growth with new export orders from multiple foreign markets (http://www.markiteconomics.com/Survey/PressRelease.mvc/a4bdd3763ed64d05929fe8360005d344). Table IT provides the country data table for Italy.

Table IT, Italy, Economic Indicators

Consumer Price Index	Feb month ∆%: 0.1 Feb 12-month ∆%: 0.4 Blog 4/6/14
Producer Price Index	Feb month ∆%: 0.0 Feb 12-month ∆%: -1.7 Blog 4/6/14
GDP Growth	IVQ2013/IIIQ2013 SA ∆%: 0.1 IVQ2013/IVQ2012 NSA ∆%: minus 0.9 Blog 3/17/13 6/16/13 8/11/13 9/15/13 11/17/13 12/15/13 2/16/14 3/16/14
Labor Report	Feb 2014 Participation rate 63.6% Employment ratio 55.2% Unemployment rate 13.0% Youth Unemployment 42.3% Blog 4/6/14
Industrial Production	Feb month ∆%: -0.5 12 months CA ∆%: 0.4 Blog 4/13/14
Retail Sales	Jan month ∆%: 0.0 Jan 12-month ∆%: -0.9 Blog 3/30/13
Business Confidence	Mfg Mar 99.2, Oct 98.1 Construction Feb 75.8, Nov 79.8 Blog 4/6/14
Trade Balance	Balance Jan SA €3689 million versus Dec €3701 Exports Jan month SA ∆%: -1.5; Imports Jan month ∆%: -1.6 Exports 12 months Jan NSA ∆%: 0.2 Imports 12 months NSA ∆%: -6.6 Blog 3/23/14

Links to blog comments in Table IT:

4/6/14 http://cmpassocregulationblog.blogspot.com/2014/04/interest-rate-risks-twenty-eight.html

3/30/14 http://cmpassocregulationblog.blogspot.com/2014/03/financial-uncertainty-mediocre-cyclical.html

3/23/14 http://cmpassocregulationblog.blogspot.com/2014/03/interest-rate-risks-world-inflation.html

3/16/2014 http://cmpassocregulationblog.blogspot.com/2014/03/global-financial-risks-recovery-without.html

2/16/14 http://cmpassocregulationblog.blogspot.com/2014/02/theory-and-reality-of-cyclical-slow.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

Italy’s industrial production decreased 0.5 percent in Feb 2014 seasonally adjusted and increased 0.4 percent in 12 months calendar adjusted, as shown in Table VG-1. Industrial production fell 0.8 percent in Dec 2013 and 1.2 percent in 12 months. Industrial production increased 0.1 percent in Nov 2013 and 0.9 percent CA relative to a year earlier. Industrial production increased 0.7 percent in Oct 2013 and fell 0.4 percent in 12 months. Industrial production increased 0.4 percent in Sep 2013 and fell 2.9 percent in 12 months. In Aug 2013, industrial production decreased 0.3 percent and fell 4.6 percent in 12 months. Industrial production decreased 0.5 percent in Jul 2013 and fell 3.8 percent in the 12 months ending in Jul 2013. In the quarter Sep-Nov 2012, industrial production fell cumulatively 3.9 percent, at the annual equivalent rate of 14.9 percent. Industrial production fell 7.7 percent in the 12 months ending in Nov 2012. There have been negative changes with oscillations in monthly industrial production. Industrial production fell 18.8 percent in 2009 after falling 3.2 percent in 2008.

Table VG-1, Italy, Industrial Production ∆%

			Index CA	∆% CA	Index	∆%
2012	-	-	94.7	-6.4	94.3	-6.1
2013	-	-	91.7	-3.2	91.4	-3.1
2013
	Index SA	Quarter ∆%	Index CA	4Q ∆%	Index	∆%
IQ2013	91.8	-0.5	92.3	-4.6	91.6	-6.3
IIQ2013	91.5	-0.3	94.9	-3.9	94.6	-3.6
IIIQ2013	91.3	-0.2	87.2	-3.6	87.0	-2.0
IVQ2013	91.9	0.7	92.5	-0.2	92.3	-0.3
2012	Index  SA	Month ∆%	Index CA	12-Month ∆%	Index NCA	Month ∆%
Feb	96.1	-0.3	96.4	-7.2	99.0	-3.5
Mar	96.3	0.2	104.8	-7.0	105.3	-7.0
Apr	95.1	-1.2	93.2	-9.3	89.4	-12.1
May	95.7	0.6	104.1	-5.7	105.4	-5.7
Jun	94.2	-1.6	99.1	-7.0	99.5	-7.0
Jul	94.7	0.5	108.6	-5.6	107.6	-2.6
Aug	95.4	0.7	61.4	-4.8	62.2	-4.7
Sep	94.1	-1.4	101.4	-4.7	96.5	-10.5
Oct	92.8	-1.4	101.2	-5.7	103.4	0.4
Nov	91.7	-1.2	95.6	-7.7	96.0	-7.7
Dec	92.3	0.7	81.3	-7.1	78.4	-10.0
2013
Jan	92.3	0.0	86.0	-3.3	89.0	-0.2
Feb	91.9	-0.4	92.1	-4.5	90.9	-8.2
Mar	91.3	-0.7	98.9	-5.6	94.8	-10.0
Apr	91.2	-0.1	88.6	-4.9	89.0	-0.4
May	91.4	0.2	99.3	-4.6	100.6	-4.6
Jun	91.9	0.5	96.8	-2.3	94.2	-5.3
Jul	91.4	-0.5	104.5	-3.8	106.8	-0.7
Aug	91.1	-0.3	58.6	-4.6	57.5	-7.6
Sep	91.5	0.4	98.5	-2.9	96.7	0.2
Oct	92.1	0.7	100.8	-0.4	103.0	-0.4
Nov	92.2	0.1	96.5	0.9	93.9	-2.2
Dec	91.5	-0.8	80.3	-1.2	79.9	1.9
2014
Jan	92.5	1.1	87.0	1.2	87.3	-1.9
Feb	92.0	-0.5	92.5	0.4	91.3	0.4

SA: Seasonally Adjusted; CA: Calendar Adjusted     Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/118062

Chart VG-1 provides 12-month percentage changes of Italy’s index of industrial production. Industrial production improved from decline of 3.3 percent the 12 months ending in Jan 2013.

Chart VG-1, Italy, Industrial Production, 12-Month Percentage Changes

Source: Istituto Nazionale di Statistica

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

VH United Kingdom. Annual data in Table VH-UK show the strong impact of the global recession in the UK with decline of GDP of 5.2 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 0.3 percent in 2012. Growth increased to 1.9 percent in 2013. 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 2013, which is relatively high for an advanced economy. The growth rate of GDP between 2000 and 2007 is higher at 3.0 percent. Growth in the current cyclical expansion has been only at 1.0 percent as advanced economies struggle with weak internal demand and world trade. GDP in 2013 was lower by 1.2 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	0.3
2013	1.7
Average Growth Rates ∆% per Year
1948-2013	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*	-3.0
2007-2013*	-1.4
2000-2013	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/q4-2013/index.html

The Business Activity Index of the Markit/CIPS UK Services PMI^® decreased from 58.2 in Feb to 57.6 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/7a1dbe8a0478418a9d36f333468d090f). Chris Williamson, Chief Economist at Markit, finds the combined indices consistent with the UK economy growing at 0.7 percent in IQ2014 (http://www.markiteconomics.com/Survey/PressRelease.mvc/7a1dbe8a0478418a9d36f333468d090f). The Markit/CIPS UK Manufacturing Purchasing Managers’ Index^® (PMI^®) decreased to 55.3 in Mar from 56.2 in Feb (http://www.markiteconomics.com/Survey/PressRelease.mvc/bcb3494ae18f456e9bfbc813f4d3ac25). New export orders increased for the twelfth consecutive month. New orders increased from North America, Europe, China, the Middle East, Brazil and Australia. Rob Dobson, Senior Economist at Markit that compiles the Markit/CIPS Manufacturing PMI^®, finds that manufacturing conditions continue at solid pace (http://www.markiteconomics.com/Survey/PressRelease.mvc/bcb3494ae18f456e9bfbc813f4d3ac25). Table UK provides the economic indicators for the United Kingdom.

Table UK, UK Economic Indicators

CPI	Feb month ∆%: 0.5 Feb 12-month ∆%: 1.7 Blog 3/30/14
Output/Input Prices	Output Prices: Feb 12-month NSA ∆%: 0.5; excluding food, petroleum ∆%: 1.1 Input Prices: Feb 12-month NSA ∆%: -5.7 Excluding ∆%: -5.3 Blog 3/30/14
GDP Growth	IVQ2013 prior quarter ∆% 0.7; year earlier same quarter ∆%: 2.7 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 2/2/14 3/2/14 4/6/14
Industrial Production	Feb 2014/Feb 2013 ∆%: Production Industries 2.7; Manufacturing 3.8 Blog 4/13/14
Retail Sales	Feb month ∆%: 1.7 Feb 12-month ∆%: 3.7 Blog 4/6/14
Labor Market	Nov-Jan Unemployment Rate: 7.2%; Claimant Count 3.5%; Earnings Growth 1.4% Blog 3/23/14 LMGDP 3/23/14
GDP and the Labor Market	IVQ2013 Weekly Hours 101.8, GDP 98.6, Employment 102.2 IQ2008 =100 GDP IVQ13 98.6 IQ2008=100 Blog 3/2/14 3/23/14 4/6/14
Trade Balance	Balance SA Mar minus ₤2058 million Exports Feb ∆%: -0.9; Dec-Feb ∆%: -1.7 Imports Mar ∆%: -1.2 Dec-Feb ∆%: -1.9 Blog 4/13/14

Links to blog comments in Table UK:

4/6/14 http://cmpassocregulationblog.blogspot.com/2014/04/interest-rate-risks-twenty-eight.html

3/30/14 http://cmpassocregulationblog.blogspot.com/2014/03/financial-uncertainty-mediocre-cyclical.html

3/23/14 http://cmpassocregulationblog.blogspot.com/2014/03/interest-rate-risks-world-inflation.html

3/2/14 http://cmpassocregulationblog.blogspot.com/2014/03/financial-risks-slow-cyclical-united.html

2/2/14 http://cmpassocregulationblog.blogspot.com/2014/02/mediocre-cyclical-united-states.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

The UK Office for National Statistics provides the output of production industries with revisions. Table VH-1 incorporates the revisions released in Dec, 2011 (http://www.ons.gov.uk/ons/rel/iop/index-of-production/november-2012/index.html) and the latest available data for Feb 2014. Manufacturing accounts for 68.4 percent of the production industries of the UK and increased 3.8 percent in the 12 months ending in Feb 2014. Capital goods industries increased 3.4 percent in the 12 months ending in Feb 2014 after increasing 3.2 percent in the 12 months ending in Jan 2014. Output of capital goods industries decreased 1.7 percent in the 12 months ending in Dec 2013, increasing 1.8 percent in the 12 months ending in Nov 2013. Capital goods industries fell 2.1 percent in the 12 months ending in May 2013, grew 2.8 percent in the 12 months ending in Apr 2013 and had been growing at very high rates during the current cyclical recovery but falling from the unsustainable high of 12.0 percent in the 12 months ending in Feb 2011. Mining and quarrying increased 11.1 percent in the 12 months ending in Oct 2013 and 3.3 percent in the 12 months ending in Dec 2013, decreasing 1.7 percent in the 12 months ending in Jan 2014. Mining and quarrying increased 0.2 percent in the 12 months ending in Jan 2014. The 12-month rates of growth of the entire index of production industries registered declines for all 12 months from Mar 2011 to Aug 2013 with exception of 1.4 perent in the 12 months ending in Jun 2013. With exception of most months for capital goods and Sep to Dec 2012 for consumer durables, 12-month percentage changes of all segments are mostly negative from Jan to Dec 2012. Energy and mining have been drivers of decline. The upper part of Table VH-1 provides rates of change of yearly output. Manufacturing output fell 10.2 percent in 2009 after falling 2.8 percent in 2008 but grew at 4.2 percent in the initial phase of the recovery in 2010 and 1.8 percent in 2011 but fell 1.7 percent in 2012. Manufacturing fell 0.7 percent in 2013.

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

	PROD IND	MNG	MFG	CON DUR	CONS NDUR	CAP	ENGY
2009	-9.5	-9.7	-10.2	-6.8	-0.8	-12.1	-6.5
2010	2.8	-2.4	4.2	-4.1	-0.3	10.4	-2.5
2011	-1.2	-14.8	1.8	0.6	-0.7	6.7	-10.7
2012	-2.4	-8.7	-1.7	-3.1	-3.8	1.5	-7.0
2013	-0.3	-2.1	-0.7	-2.1	-0.8	1.1	-3.4

		PROD IND	MNG	MFG	CON DUR	CONS NDUR	CAP	ENGY
2011	Dec	-2.5	-14.1	0.9	-3.7	-1.7	7.1	-15.4
2012	Jan	-3.5	-18.9	0.4	-5.5	0.7	4.4	-14.8
	Feb	-1.6	-6.7	-1.4	-6.9	-0.3	-1.0	-4.4
	Mar	-2.0	-5.3	-0.9	-6.4	-1.7	1.4	-7.8
	Apr	-1.3	-9.7	-1.2	-2.7	-5.0	2.7	-5.9
	May	-1.4	-5.6	-1.2	-3.4	-5.9	2.8	-4.4
	Jun	-4.0	-3.0	-4.0	-10.9	-6.3	0.3	-4.8
	Jul	-0.7	-0.4	-0.8	-3.5	-5.0	4.4	-3.6
	Aug	-0.9	1.5	-1.5	-2.9	-3.9	2.1	-2.4
	Sep	-3.7	-16.1	-1.6	1.2	-1.7	0.1	-11.9
	Oct	-3.7	-18.8	-2.5	4.1	-4.7	0.1	-10.7
	Nov	-2.9	-11.8	-2.8	0.5	-5.5	-0.5	-6.9
	Dec	-3.0	-8.1	-2.7	0.7	-6.3	1.1	-5.7
2013	Jan	-3.2	-5.2	-4.2	-1.7	-5.8	-0.4	-3.3
	Feb	-2.3	-6.2	-2.5	-4.0	-5.2	2.9	-7.1
	Mar	-1.8	-10.4	-1.7	0.6	-4.3	2.0	-3.2
	Apr	-1.3	-5.3	-1.1	-1.7	0.5	2.8	-4.3
	May	-2.2	-0.9	-3.2	-4.2	0.3	-2.1	-3.2
	Jun	1.4	-2.8	1.6	1.5	2.5	2.2	-5.1
	Jul	-1.3	-6.8	-1.1	0.9	0.4	0.9	-6.2
	Aug	-1.6	-9.4	-0.9	-2.9	-2.6	0.2	-7.7
	Sep	1.9	11.1	0.1	-2.3	-1.3	1.3	2.6
	Oct	2.8	11.1	2.0	-5.0	1.1	3.4	0.4
	Nov	2.0	1.2	2.1	-2.9	1.7	1.8	-2.6
	Dec	1.9	3.3	1.4	-3.5	3.3	-1.7	-
2014	Jan	2.8	-1.7	3.2	0.8	-1.8	3.2	-5.1
	Feb	2.7	0.2	3.8	5.3	1.6	3.4	-3.8

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

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/iop/index-of-production/february-2014/index.html

Percentage changes in the production industries and major components in a month relative to the prior month are shown in Table VH-2. The UK index of production increased 0.9 percent in Feb 2014 with growth of manufacturing of 1.0 percent and of capital goods of 0.9 percent. Energy increased 1.4 percent and mining and quarrying 3.5 percent. The index of production was flat in Jan 2014 with manufacturing increasing 0.3 percent and capital goods 2.0 percent. The index of production increased 0.5 percent in Dec 2013 with manufacturing increasing 0.4 percent. Mining and quarrying increased 3.3 percent in Dec 2013 and capital goods fell 1.2 percent. Energy increased 2.3 percent. The index of production fell 0.2 percent in Nov 2013 with manufacturing decreasing 0.2 percent while capital goods fell 0.9 percent. The index of production increased 0.2 percent in Oct 2013, with manufacturing increasing 0.2 percent, consumer durable goods decreasing 0.4 percent and capital goods increasing 1.1 percent. All segments increased in Sep 2013 with exception of decline of 0.6 percent for energy. All segments increased in Jun 2013 with exception of energy. There is significant fluctuation in monthly percentage changes. Many segments fell in May and Apr 2013. Capital goods industries fell 2.9 percent in Jan 2013 and increased 1.4 percent in Mar and 3.0 percent in Jun while manufacturing fell 1.5 percent in Jan but increased 1.2 percent in Mar and 2.0 percent in Jun. Performance was strong in Dec 2012 with growth of manufacturing of 1.1 percent and capital goods of 2.3 percent. Fluctuations of monthly production are quite wide.

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

		PROD IND	MNG	MFG	CON DUR	CON NDUR	CAP	EMGY
2011	Dec	0.7	-2.9	0.9	0.3	1.1	0.7	-1.6
2012	Jan	-0.7	-1.4	-	0.6	0.8	-1.4	-0.9
	Feb	-	2.5	-1.3	-0.8	-0.9	-2.5	4.0
	Mar	-0.4	0.1	0.4	0.3	-0.4	2.3	-4.4
	Apr	-0.6	-3.8	-1.0	1.3	-3.0	-1.1	1.0
	May	0.9	-1.0	1.3	-	-	2.3	-
	Jun	-2.3	2.6	-2.9	-3.3	-1.2	-1.3	-0.1
	Jul	2.8	3.8	2.9	3.4	1.6	3.0	1.4
	Aug	-0.7	1.8	-1.3	-1.9	0.3	-2.5	0.8
	Sep	-2.7	-18.3	0.2	1.1	0.4	0.5	-10.6
	Oct	-0.7	-1.4	-1.7	2.4	-3.2	-1.0	0.7
	Nov	0.6	7.7	-0.2	-2.7	-1.0	0.7	3.4
	Dec	0.6	1.1	1.1	0.6	0.2	2.3	-0.3
2013	Jan	-0.9	1.8	-1.5	-1.9	1.3	-2.9	1.6
	Feb	1.0	1.5	0.4	-3.2	-0.3	0.7	-
	Mar	0.1	-4.4	1.2	5.0	0.5	1.4	-0.5
	Apr	-0.1	1.8	-0.4	-0.9	1.9	-0.4	-
	May	-	3.6	-0.9	-2.6	-0.2	-2.6	1.1
	Jun	1.3	0.7	2.0	2.4	0.9	3.0	-2.1
	Jul	0.1	-0.5	0.1	2.9	-0.4	1.7	0.2
	Aug	-1.0	-1.0	-1.1	-5.7	-2.7	-3.2	-0.8
	Sep	0.8	0.3	1.2	1.7	1.7	1.7	-0.6
	Oct	0.2	-1.4	0.2	-0.4	-0.8	1.1	-1.5
	Nov	-0.2	-1.9	-0.2	-0.5	-0.4	-0.9	0.3
	Dec	0.5	3.3	0.4	-0.1	1.8	-1.2	2.3
2014	Jan	-	-3.2	0.3	2.5	-3.6	2.0	-3.5
	Feb	0.9	3.5	1.0	1.2	3.2	0.9	1.4

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

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/iop/index-of-production/february-2014/index.html

Weights of components of the production index and contributions by components to the monthly and 12-month percentage changes of volume are provided by the UK Office for National Statistics and shown in Table VH-3. The 12-month rate of output of the production industries of 2.7 percent was driven by positive contribution of 2.66 percentage points by manufacturing and 0.76 percentage points by water and sewage. The contribution of manufacturing is strong because of its share of 68.4 percent in the production index with growth of 3.8 percent in 12 months. The contributions do not add exactly because of rounding. Mining and quarrying added 0.03 percentage points to the output of the production industries in the 12 months ending in Feb 2014. Manufacturing increased 1.0 percent in Feb 2014, adding 0.69 percentage points. Mining increased 3.5 percent in Feb 2014, adding 0.40 percentage points. Electricity decreased 2.8 percent in Feb, deducting 0.22 percentage points.

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

	Weight %	Volume 12-Month ∆% Ending in Jan 2014	% Point Contrib.	Volume Month ∆% Jan 2014	% Point Contrib.
PROD IND	100.0	2.7	2.7	0.9	0.9
MNG	15.1	0.2	0.03	3.5	0.40
Division 06	12.4	0.9	0.08	6.7	0.53
MFG	68.4	3.8	2.66	1.0	0.69
ELEC	8.6	-8.8	-0.76	-2.8	-0.22
WATER & SEW	7.9	8.5	0.76	0.2	0.02

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

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/iop/index-of-production/february-2014/index.html

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

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

Sector	Summary Description	% of production	Month on same month a year ago growth (%)	Contribution to production (% points)
IoP	Index of Production	100.0	2.7	2.7
B	Total Mining & Quarrying	15.1	0.2	0.03
C	Total Manufacturing	68.4	3.8	2.66
CA	Food, beverages and tobacco	10.9	2.1	0.24
CB	Textiles and leather products	2.1	0.6	0.01
CC	Wood, paper and printing	5.5	2.2	0.11
CD	Coke and petroleum	1.7	-13.1	-0.21
CE	Chemical Products	4.2	5.5	0.23
CF	Pharmaceutical Products	6.4	1.6	0.08
CG	Rubber and plastic products	5.7	13.9	0.75
CH	Metal products	7.7	4.4	0.36
CI	Computer, electronic & optical	4.3	0.7	0.03
CJ	Electrical equipment	2.1	-3.0	-0.07
CK	Machinery and equipment	5.0	9.2	0.46
CL	Transport equipment	7.7	5.8	0.57
CM	Other manufacturing & repair	5.4	1.6	0.10
D	Total Electricity & Gas	8.6	-8.8	-0.76
E	Total Water	7.9	8.5	0.76

Sector	Summary Description	% of production	Month on previous month growth (%)	Contribution to production (% points)
IoP	Index of Production	100.0	0.9	0.9
B	Total Mining & Quarrying	15.1	3.5	0.40
C	Total Manufacturing	68.4	1.0	0.69
CA	Food, beverages and tobacco	10.9	1.4	0.16
CB	Textiles and leather products	2.1	-0.3	-0.01
CC	Wood, paper and printing	5.5	0.8	0.04
CD	Coke and petroleum	1.7	-4.0	-0.06
CE	Chemical Products	4.2	-3.6	-0.16
CF	Pharmaceutical Products	6.4	9.3	0.44
CG	Rubber and plastic products	5.7	-0.8	-0.05
CH	Metal products	7.7	0.6	0.05
CI	Computer, electronic & optical	4.3	0.4	0.02
CJ	Electrical equipment	2.1	-1.0	-0.02
CK	Machinery and equipment	5.0	1.1	0.06
CL	Transport equipment	7.7	2.8	0.28
CM	Other manufacturing & repair	5.4	-1.1	-0.07
D	Total Electricity & Gas	8.6	-2.8	-0.22
E	Total Water	7.9	0.2	0.02

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/iop/index-of-production/february-2014/index.html

The UK’s trade account is in Table VH-5. In Feb 2014, the UK ran a deficit in trade of goods and services (total trade) of ₤2058 million. The deficits in trade of goods was ₤9094 million and ₤8310 million in goods excluding oil. A surplus in services of ₤7036 million contributed to the smaller overall deficit in goods and services (-₤9094 million plus ₤7036 million equal to ₤2058 million). Services have contributed to lower deficits and have softened the impact of the global recession on the UK economy. Exports of goods and services decreased 0.9 percent in Feb 2014 and decreased 1.7 percent in the quarter Dec 2013-Feb 2014 relative to the same quarter a year earlier with imports decreasing 1.2 percent in Feb and decreasing 1.9 percent in Dec 2013-Feb 2014 relative to the same quarter a year earlier. Excluding oil, UK exports of goods decreased 1.6 percent in Feb and fell 1.3 percent in Dec 2013-Feb 2014 relative to the same quarter a year earlier. Imports fell 1.7 percent in Feb and fell 0.7 percent in Dec 2013-Feb 2014 relative to the same quarter a year earlier. Services exports changed 0.0 percent in Feb and increased 1.7 percent in Dec 2013-Feb 2014 relative to the same quarter a year earlier while services imports increased 2.3 percent in Feb and fell 0.4 percent in Dec 2013-Feb 2014 relative to the same quarter a year earlier.

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

	₤ Million SA Feb 2014	Month ∆%    Feb 2014	Dec 2013-Feb 2014 ∆% Dec 2012-Feb 2013
Total Trade
Exports	40,592	-0.9	-1.7
Imports	42,650	-1.2	-1.9
Balance	-2,058
Trade in Goods
Exports	23,547	-1.6	-4.0
Imports	32,641	-2.2	-2.4
Balance	-9,094
Trade in Goods Excluding Oil
Exports	20,756	-1.6	-1.3
Imports	29,066	-1.7	-0.7
Balance	-8,310
Trade in Services
Exports	17,045	0.0	1.7
Imports	10,009	2.3	-0.4
Balance	7,036

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/uktrade/uk-trade/february-2014/index.html

© Carlos M. Pelaez, 2009, 2010, 2011, 2012, 2013, 2014.