Financial Volatility, Mediocre Cyclical United States Economic Growth with GDP Two Trillion Dollars Below Trend, Stagnating Real Disposable per Capita Income, Twenty Seven Million Unemployed/Underemployed, Stagnating Real Wages, World Cyclical Slow Growth and Global Recession Risk: Part V

 

Financial Volatility, Mediocre Cyclical United States Economic Growth with GDP Two Trillion Dollars Below Trend, Stagnating Real Disposable per Capita Income, Twenty Seven Million Unemployed/Underemployed, Stagnating Real Wages, World Cyclical Slow Growth and Global Recession Risk

Carlos M. Pelaez

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

Executive Summary

I Mediocre Cyclical United States Economic Growth with GDP Two Trillion Dollars Below Trend

IA Mediocre Cyclical United States Economic Growth

IA1 Contracting Real Private Fixed Investment

IA2 Swelling Undistributed Corporate Profits

IB Stagnating Real Disposable Income and Consumption Expenditures

IB1 Stagnating Real Disposable Income and Consumption Expenditures

IB2 Financial Repression

II Twenty Seven Million Unemployed or Underemployed

IA1 Summary of the Employment Situation

IA2 Number of People in Job Stress

IA3 Long-term and Cyclical Comparison of Employment

IA4 Job Creation

IIB Stagnating Real Wages

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/ns/cs.aspx?id=28) 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 changed its forecast of the world economy to 3.0 percent in 2013 but accelerating to 3.6 percent in 2014, 3.9 percent in 2015 and 3.9 percent in 2016. Slow-speed recovery occurs in the “major advanced economies” of the G7 that account for $34,543 billion of world output of $72,106 billion, or 47.9 percent, but are projected to grow at much lower rates than world output, 2.0 percent on average from 2013 to 2016 in contrast with 3.6 percent for the world as a whole. While the world would grow 15.2 percent in the four years from 2013 to 2016, the G7 as a whole would grow 8.5 percent. The difference in dollars of 2012 is rather high: growing by 15.2 percent would add around $11.0 trillion of output to the world economy, or roughly, two times the output of the economy of Japan of $5,938 billion but growing by 8.5 percent would add $6.1 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 $27,080 billion, or 37.6 percent of world output. The EMDEs would grow cumulatively 21.9 percent or at the average yearly rate of 5.1 percent, contributing $5.9 trillion from 2013 to 2016 or the equivalent of somewhat less than the GDP of $8,229 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 $14,340 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	72,106	3.0	3.6	3.9	3.9
G7	34,543	1.4	2.2	2.3	2.3
Canada	1,821	2.0	2.3	2.4	2.4
France	2,613	0.3	1.0	1.5	1.7
DE	3,428	0.5	1.7	1.6	1.4
Italy	2,014	-1.8	0.6	1.1	1.3
Japan	5,938	1.5	1.4	1.0	0.7
UK	2,484	1.8	2.9	2.5	2.4
US	16,245	1.9	2.8	3.0	3.0
Euro Area	12,192	-0.5	1.2	1.5	1.5
DE	3,428	0.5	1.7	1.6	1.4
France	2,613	0.3	1.0	1.5	1.7
Italy	2,014	-1.8	0.6	1.1	1.3
POT	212	-1.4	1.2	1.5	1.7
Ireland	211	-0.3	1.7	2.5	2.5
Greece	249	-3.9	0.6	2.9	3.7
Spain	1,323	-1.2	0.9	1.0	1.1
EMDE	27,080	4.7	4.9	5.3	5.4
Brazil	2,248	2.3	1.8	2.7	3.0
Russia	2,004	1.3	1.3	2.3	2.5
India	1,859	4.4	5.4	6.4	6.5
China	8,229	7.7	7.5	7.3	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/ns/cs.aspx?id=28

Continuing high rates of unemployment in advanced economies constitute another characteristic of the database of the WEO (http://www.imf.org/external/ns/cs.aspx?id=28). 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 2013 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 in 2013 for the countries with sovereign debt difficulties in Europe: 16.3 percent for Portugal (POT), 13.1 percent for Ireland, 27.3 percent for Greece, 26.4 percent for Spain and 12.2 percent for Italy, which is lower but still high. The G7 rate of unemployment is 7.1 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	7.1	6.7	6.5	6.3
Canada	7.3	7.0	7.0	6.9	6.8
France	10.2	10.8	11.0	10.7	10.3
DE	5.5	5.3	5.2	5.2	5.2
Italy	10.7	12.2	12.4	11.9	11.1
Japan	4.3	4.0	3.9	3.9	3.9
UK	8.0	7.6	6.9	6.6	6.3
US	8.1	7.4	6.4	6.2	6.1
Euro Area	11.4	12.1	11.9	11.6	11.1
DE	5.5	5.3	5.2	5.2	5.2
France	10.2	10.8	11.0	10.7	10.3
Italy	10.7	12.2	12.4	11.9	11.1
POT	15.7	16.3	15.7	15.1	14.5
Ireland	14.7	13.1	11.2	10.5	10.1
Greece	24.2	27.3	26.3	24.4	21.4
Spain	25.0	26.4	25.5	24.9	24.2
EMDE	NA	NA	NA	NA	NA
Brazil	5.5	5.4	5.6	5.8	6.0
Russia	5.5	5.5	6.2	6.2	6.0
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/ns/cs.aspx?id=28

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. China’s GDP grew 1.4 percent in IQ2012, annualizing to 5.7 percent, and 8.1 percent relative to a year earlier. 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 2.3 percent in IIIQ2013, which annualizes at 9.5 percent and 7.8 percent relative to a year earlier. China grew at 1.7 percent in IVQ2013, which annualized to 7.0 percent and 7.7 percent relative to a year earlier. China’s GDP grew 1.4 percent in IQ2014, which annualizes to 5.7 percent, and 7.4 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 2014.
• 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 (Section I and 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/2014/04/global-financial-instability-recovery.html). In IVQ2013, US GDP grew 0.7 percent at 2.6 percent SAAR and 2.6 percent relative to a year earlier. In IQ2013, US GDP grew 0.0 percent, 2.3 percent relative to a year earlier and 0.1 percent at SAAR.
• 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. In IQ2014, UK GDP increased 0.8 percent and 3.1 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	2.3	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	1.7	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
	IQ2014/IVQ2013	IQ2014/IQ2013
USA	QOQ 0.0 SAAR 0.1	2.3
China	1.4	7.4
UK	0.8	3.1

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 (Section VB and earlier 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 Mar 2014, Japan’s exports grew 1.8 percent in 12 months while imports increased 18.1 percent. The second part of Table V-4 shows that net trade deducted 1.3 percentage points from Japan’s growth of GDP in IIQ2012, deducted 2.2 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 0.7 percent in March after having advanced 1.2 percent in February. The rise in February was higher than previously reported primarily because of stronger gains for durable goods manufacturing and for mining. For the first quarter as a whole, industrial production moved up at an annual rate of 4.4 percent, just slightly slower than in the fourth quarter of 2013. In March, the output of manufacturing rose 0.5 percent, the output of utilities increased 1.0 percent, and the output of mines gained 1.5 percent. At 103.2 percent of its 2007 average, total industrial production in March was 3.8 percent above its level of a year earlier. Capacity utilization for total industry increased in March to 79.2 percent, a rate that is 0.9 percentage point below its long-run (1972–2013) average but 1.2 percentage points higher than a year prior.”In the six months ending in Mar 2014, United States national industrial production accumulated increase of 2.4 percent at the annual equivalent rate of 4.9 percent, which is higher than growth of 3.8 percent in the 12 months ending in Feb 2014. Excluding growth of 1.2 percent in Jan 2014 (revised from 0.6 percent in the prior estimate), growth in the remaining five months from Oct to Mar 2013 accumulated to 1.2 percent or 2.9 percent annual equivalent. Industrial production fell in one of the past six months. Business equipment accumulated growth of 1.7 percent in the six months from Oct 2013 to Mar 2014 at the annual equivalent rate of 3.4 percent, which is higher than growth of 3.2 percent in the 12 months ending in Mar 2014. The Fed analyzes capacity utilization of total industry in its report (http://www.federalreserve.gov/releases/g17/Current/default.htm): “Capacity utilization for total industry increased in March to 79.2 percent, a rate that is 0.9 percentage point below its long-run (1972–2013) average but 1.2 percentage points higher than a year prior.” United States industry apparently decelerated to a lower growth rate with possible acceleration in the past few months. Manufacturing increased 0.5 percent in Mar 2014 after increasing 1.4 percent in Mar 2014 and decreasing 0.9 percent in Jan 2014 seasonally adjusted, increasing 3.4 percent not seasonally adjusted in the 12 months ending in Mar 2014, as shown in Table I-2. Manufacturing grew cumulatively 1.8 percent in the six months ending in Mar 2014 or at the annual equivalent rate of 3.6 percent. Excluding the increase of 1.4 percent in Feb 2014 (revised from 0.9 percent in the prior estimate), manufacturing accumulated growth of 0.4 percent from Oct 2013 to Mar 2014 or at the annual equivalent rate of 0.9 percent. There has been evident deceleration of manufacturing growth in the US from 2010 and the first three months of 2011 into more recent months as shown by 12 months rates of growth. Growth rates appeared to be increasing again closer to 5 percent in Apr-Jun 2012 but deteriorated. The rates of decline of manufacturing in 2009 are quite high with a drop of 18.2 percent in the 12 months ending in Apr 2009. Manufacturing recovered from this decline and led the recovery from the recession. Rates of growth appeared to be returning to the levels at 3 percent or higher in the annual rates before the recession but the pace of manufacturing fell steadily in the past six months with some strength at the margin. Manufacturing fell 21.9 from the peak in Jun 2007 to the trough in Apr 2009 and increased by 20.0 percent from the trough in Apr 2009 to Dec 2013. Manufacturing grew 23.5 percent from the trough in Apr 2009 to Mar 2014. Manufacturing output in Mar 2014 is 3.6 percent below the peak in Jun 2007.

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

	Exports M ∆%	Exports 12 M ∆%	Imports M ∆%	Imports 12 M ∆%
USA	-1.1 Feb	1.8 Jan-Feb	0.4 Feb	-0.1 Jan-Feb
Japan		Mar 2014 1.8 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		Mar 2014 18.1 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	2.9 12-M Feb	1.9 Jan-Feb	0.4 12-M Feb	-1.3 Jan-Feb
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 Feb	-0.9	3.0	-0.1	-2.2
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

The geographical breakdown of exports and imports of Japan with selected regions and countries is provided in Table V-5 for Mar 2014. The share of Asia in Japan’s trade is more than one-half for 54.0 percent of exports and 43.9 percent of imports. Within Asia, exports to China are 18.1 percent of total exports and imports from China 21.8 percent of total imports. While exports to China increased 4.3 percent in the 12 months ending in Mar 2014, imports from China increased 27.0 percent. The second largest export market for Japan in Mar 2014 is the US with share of 17.8 percent of total exports, which is close to that of China, and share of imports from the US of 8.0 percent in total imports. Japan’s exports to the US grew 3.5 percent in the 12 months ending in Mar 2014 and imports from the US grew 16.7 percent. Western Europe has share of 10.5 percent in Japan’s exports and of 10.4 percent in imports. Rates of growth of exports of Japan in Mar 2014 are 3.5 percent for exports to the US, minus 7.2 percent for exports to Brazil and 16.7 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 Mar 2014 are positive for all trading partners except for decline from Brazil. Imports from Asia increased 20.1 percent in the 12 months ending in Mar 2014 while imports from China increased 27.0 percent. Data are in millions of yen, which may have effects of recent depreciation of the yen relative to the United States dollar (USD).

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

Mar 2014	Exports Millions Yen	12 months ∆%	Imports Millions Yen	12 months ∆%
Total	6,382,623	1.8	7,828,878	18.1
Asia	3,446,105	1.4	3,439,233	20.1
China	1,156,006	4.3	1,707,438	27.0
USA	1,135,633	3.5	624,588	16.7
Canada	69,110	-11.6	102,588	13.2
Brazil	46,551	-7.2	76,316	-10.7
Mexico	85,872	-2.5	36,452	16.7
Western Europe	669,224	8.8	817,651	17.4
Germany	179,656	16.7	239,599	28.7
France	54,885	10.1	136,229	31.0
UK	84,800	5.0	55,815	16.9
Middle East	268,199	19.6	1,602,668	22.0
Australia	137,938	-8.3	434,830	8.7

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

World trade projections of the IMF are in Table V-6. There is increasing growth of the volume of world trade of goods and services from 3.0 percent in 2013 to 5.3 percent in 2015 and 5.7 percent on average from 2016 to 2019. World trade would be slower for advanced economies while emerging and developing economies (EMDE) experience faster growth. World economic slowdown would be more challenging with lower growth of world trade.

Table V-6, IMF, Projections of World Trade, USD Billions, USD/Barrel and Annual ∆%

	2013	2014	2015	Average ∆% 2016-2019
World Trade Volume (Goods and Services)	3.0	4.3	5.3	5.7
Exports Goods & Services	3.1	4.5	5.3	5.7
Imports Goods & Services	2.9	4.2	5.2	5.7
World Trade Value of Exports Goods & Services USD Billion	23,083	23,990	25,123	Average ∆% 2006-2015 20,390
Value of Exports of Goods USD Billion	18,591	19,281	20,132	Average ∆% 2006-2015 16,396
Average Oil Price USD/Barrel	104.07	104.17	97.92	Average ∆% 2006-2015 88.84
Average Annual ∆% Export Unit Value of Manufactures	-1.1	-0.3	-0.4	Average ∆% 2006-2015 1.4
Exports of Goods & Services	2013	2014	2015	Average ∆% 2016-2019
Euro Area	1.4	3.4	4.2	4.7
EMDE	4.4	5.0	6.2	6.2
G7	1.4	3.9	4.5	4.9
Imports Goods & Services
Euro Area	0.3	2.8	3.5	4.7
EMDE	5.6	5.2	6.3	6.4
G7	1.1	3.2	4.2	4.9
Terms of Trade of Goods & Services
Euro Area	-0.3	-0.2	-0.7	-0.1
EMDE	0.7	-0.4	-0.6	-0.4
G7	0.7	-0.044	0.3	0.0
Terms of Trade of Goods
Euro Area	0.8	-0.044	0.1	-0.2
EMDE	-0.6	-0.9	-0.9	-0.8
G7	-0.1	-0.3	-0.9	-0.7

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/ns/cs.aspx?id=28

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 55.4 in Apr from 55.5 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/a2e0f7140cbc41cf8c1788e97737f66e). New export orders registered 51.9 in Apr, increasing from 51.1 in Mar, indicating expansion at a faster rate. 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 output increasing at the fastest pace in more than three years (http://www.markiteconomics.com/Survey/PressRelease.mvc/a2e0f7140cbc41cf8c1788e97737f66e). The Markit Flash US Services PMI™ Business Activity Index decreased from 55.3 in Mar to 54.2 in Apr (http://www.markiteconomics.com/Survey/PressRelease.mvc/4b7e0da9b32b4939918a60e7b94169db). Chris Williamson, Chief Economist at Markit, finds that the surveys are consistent with growth of jobs at monthly rate of 100,000 and GDP growth around 2.0 percent annual rate in IIQ2014 (http://www.markiteconomics.com/Survey/PressRelease.mvc/4b7e0da9b32b4939918a60e7b94169db). 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	Mar 12 months NSA ∆%: 1.5; ex food and energy ∆%: 1.7 Mar month SA ∆%: 0.2; ex food and energy ∆%: 0.2 Blog 4/20/14
Producer Price Index	Finished Goods Mar 12-month NSA ∆%: 1.7; ex food and energy ∆% 1.7 Mar month SA ∆% = -0.1; ex food and energy ∆%: 0.1 Final Demand Mar 12-month NSA ∆%: 1.4; ex food and energy ∆% 1.4 Mar month SA ∆% = 0.5; ex food and energy ∆%: 0.6 Blog 4/20/14
PCE Inflation	Mar 12-month NSA ∆%: headline 1.1; ex food and energy ∆% 1.2 Blog 5/4/14
Employment Situation	Household Survey: Apr Unemployment Rate SA 6.3% Blog calculation People in Job Stress Apr: 27.4 million NSA, 16.8% of Labor Force Establishment Survey: Apr Nonfarm Jobs +288,000; Private +273,000 jobs created  Mar 12-month Average Hourly Earnings Inflation Adjusted ∆%: 2.3 Blog 5/4/14
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 IQ2014/IQ2013 2.3 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 IQ2014 SAAR 0.1 Blog 5/4/14
Real Private Fixed Investment	SAAR IQ2014 minus 2.8 ∆% IVQ2007 to IQ2014: minus 3.6% Blog 5/4/14
Corporate Profits	IVQ2013 SAAR: Corporate Profits 2.2; Undistributed Profits -6.7 Blog 3/30/14
Personal Income and Consumption	Mar month ∆% SA Real Disposable Personal Income (RDPI) SA ∆% 0.3 Real Personal Consumption Expenditures (RPCE): 0.7 12-month Mar NSA ∆%: RDPI: 2.2; RPCE ∆%: 2.4 Blog 5/4/14
Quarterly Services Report	IVQ13/IVQ12 NSA ∆%: Information 5.5 Financial & Insurance 5.6 Blog 3/16/14
Employment Cost Index	Compensation Private IQ2014 SA ∆%: 0.3 Mar 12 months ∆%: 1.7 Blog 5/4/14
Industrial Production	Mar month SA ∆%: 0.7 Mar 12 months SA ∆%: 3.8 Manufacturing Mar SA ∆% 0.5 Mar 12 months SA ∆% 2.8, NSA 3.4 Capacity Utilization: 79.2 Blog 4/20/14
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 Mar 5.61 to Apr 1.29 New Orders: From Mar 3.31 to Apr -2.77 Blog 4/20/14
Philadelphia Fed Business Outlook Index	General Index from Mar 9.0 to Apr 16.6 New Orders from Mar 5.7 to Apr 14.8 Blog 4/20/14
Manufacturing Shipments and Orders	New Orders SA Mar ∆% 1.1 Ex Transport 0.6 Jan-Mar NSA New Orders ∆% 1.9 Ex transport 1.1 Blog 5/4/14
Durable Goods	Mar New Orders SA ∆%: 2.6; ex transport ∆%: 2.0 Jan-Mar 14/Jan-Mar 13 New Orders NSA ∆%: 3.6; ex transport ∆% 2.3 Blog 4/27/14
Sales of New Motor Vehicles	Jan-Apr 2014 5,134,255; Jan-Apr 2013 4,980,081. Apr 14 SAAR 16.04 million, Mar 14 SAAR 16.40 million, Apr 2013 SAAR 15.19 million Blog 5/4/14
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	Feb 14 12-M NSA ∆%: Sales Total Business 2.0; Manufacturers 1.2 Retailers 1.6; Merchant Wholesalers 3.2 Blog 4/20/14
Sales for Retail and Food Services	Jan-Mar 2014/Jan-Mar 2013 ∆%: Retail and Food Services 2.2; Retail ∆% 2.2 Blog 4/20/14
Value of Construction Put in Place	Mar SAAR month SA ∆%: 0.2 Mar 12-month NSA: 8.0 Blog 5/4/14
Case-Shiller Home Prices	Feb 2014/Feb 2013 ∆% NSA: 10 Cities 13.1; 20 Cities: 12.9 ∆% Feb SA: 10 Cities 0.9 ; 20 Cities: 0.9 Blog 5/4/14
FHFA House Price Index Purchases Only	Feb SA ∆% 0.6; 12 month NSA ∆%: 6.9 Blog 4/27/14
New House Sales	Mar 2014 month SAAR ∆%: -14.5 Jan-Mar 2013/Jan-Feb 2012 NSA ∆%: -1.8 Blog 4/27/14
Housing Starts and Permits	Mar Starts month SA ∆% minus 2.8; Permits ∆%: -2.4 Jan-Mar 2014/Jan-Mar 2013 NSA ∆% Starts -2.4; Permits  ∆% 6.8 Blog 4/20/14
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	Feb Net Foreign Purchases of Long-term US Securities: $85.7 billion Major Holders of Treasury Securities: China $1273 billion; Japan $1211 billion; Total Foreign US Treasury Holdings Nov $5885 billion Blog 4/20/14
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	Mar 2014 SAAR ∆%: Securities 7.7 Loans 8.5 Cash Assets 36.7 Deposits 5.5 Blog 4/27/14
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:

4/27/14 http://cmpassocregulationblog.blogspot.com/2014/04/financial-fluctuations-united-states.html

4/20/14 http://cmpassocregulationblog.blogspot.com/2014/04/imf-view-world-inflation-waves-squeeze.html

4/13/14 http://cmpassocregulationblog.blogspot.com/2014/04/global-financial-instability-recovery.html

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

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

The Bureau of Labor Statistics (BLS) of the US Department of Labor provides the quarterly employment cost index (ECI). The ECI is highly useful in several ways including: (1) how costs of employees may affect hiring decisions and thus the overall economy; (2) impact of employment costs on inflation and thus monetary policy; and (3) relation of employee costs to inflation on issues such as welfare of the working population and their ability to consume that could affect economic growth. The BLS estimates total compensation composed of wages and salaries, which are about 70 percent of total compensation, and benefits, accounting for the remaining 30 percent (http://www.bls.gov/news.release/pdf/eci.pdf 1). There is vast theoretical and empirical literature on how benefits interact with wage determination. The ECI is considered initially with current data in Table VA-1 and subsequently with charts of the BLS on evolution over the past decade. The BLS provides data for the entire civilian population, the private sector and state/local government. The data are available quarterly and for the 12 months of the ending month of the quarter. Total compensation 12-month percentage changes have moderated for the entire civilian population, the private sector and state and local government. In the 12 months ending in Mar 2014, total compensation increased 1.7 percent for the private sector, which is marginally higher than inflation of 1.5 percent in the 12 months ending in Mar 2014 (http://www.bls.gov/cpi/data.htm), 1.8 percent for the entire civilian population and 1.9 percent for state and local government. Wages and salaries in the 12 months ending in Mar 2014 increased at relatively subdued rates of 1.7 percent for the private sector, which is slightly above inflation of 1.5 percent in the 12 months ending in Mar 2014 (http://www.bls.gov/cpi/data.htm), 1.6 percent for the entire civilian population and only 1.2 percent for state/local workers. Wages have been losing or gaining slightly relative to headline CPI inflation of 1.5 percent in the 12 months ending in Mar 2014 (http://www.bls.gov/cpi/data.htm). Compensation benefits of the private sector increased at 1.8 percent in the 12 months ending in Mar 2014, which is close to 1.7 percent for wages and salaries.

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

	IVQ13 SA	IQ14 SA	12 M Mar 13 NSA	12 M  Jun 13 NSA	12 M  Sep 13 NSA	12 M Dec 13 NSA	12 M Mar 14 NSA
Civilian
Comp	0.5	0.3	1.9	1.9	1.9	2.0	1.8
Wages/ Salaries	0.5	0.3	1.6	1.7	1.6	1.9	1.6
Benefits	0.6	0.4	2.4	2.2	2.2	2.2	2.1
Private
Comp	0.5	0.3	1.9	1.9	1.9	2.0	1.7
Wages/ Salaries	0.5	0.2	1.7	1.9	1.8	2.1	1.7
Benefits	0.4	0.3	2.0	1.9	2.0	1.9	1.8
State local Govt
Comp	0.7	0.5	1.9	1.8	1.7	1.9	1.9
Wages/ Salaries	0.3	0.3	1.0	1.0	0.9	1.1	1.2
Benefits	1.0	1.7	3.5	3.3	2.9	3.3	3.0

Notes: Civilian includes private industry plus state and local government; SA: seasonally adjusted; NSA: not seasonally adjusted; Comp: compensation; Govt: government; 12M: 12 months

Source: US Bureau of Labor Statistics

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

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

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

Source: US Bureau of Labor Statistics

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

Chart VA-2 provides 12 months percentage rates of change of wages and salaries for the entire civilian population. The rates collapsed with the global recession and have flattened around 1.5 percent since 2010 while inflation has accelerated and decelerated following world inflation waves (http://cmpassocregulationblog.blogspot.com/2014/04/imf-view-world-inflation-waves-squeeze.html).

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

Source: US Bureau of Labor Statistics

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

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

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

Source: US Bureau of Labor Statistics

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

ECI total compensation 12-months percentage changes from 2001 to 2013 for the private sector are shown in Chart VA-4. Behavior is similar as for total civilian compensation. Private-sector compensation had stabilized around 2 percent with inflation rising to 2.7 percent in the 12 months ending in Mar 2012. Compensation increase of 1.9 percent in the 12 months ending in Mar 2013 exceeded 12-month inflation of 1.5 percent. Compensation increased 1.9 percent in the 12 months ending in Jun 2013, almost equal to 12-month CPI inflation of 1.8 percent. Compensation at 1.9 percent in Sep 2013 exceeded 12-month CPI inflation of 1.2 percent. Compensation of 2.0 percent in the 12 months ending in Dec 2013 exceeded CPI inflation of 1.5 percent. Compensation of 1.7 percent in Mar 2014 exceeded CPI inflation of 1.5 percent.

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

Source: US Bureau of Labor Statistics

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

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

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

Source: US Bureau of Labor Statistics

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

Chart VA-6 provides 12-month percentage rates of change of the consumer price index of the US. Inflation has risen sharply into 2011 with 3.0 percent in the 12 months ending in Dec while wage and salary increases in the private sector have risen by 1.6 percent in the 12 months ending in Dec. Wages and salaries rose 1.8 percent in the 12 months ending in Mar 2012 while inflation was 2.7 percent in the 12 months ending in Mar 2012. Wage and salaries of the private sector increased 1.8 percent in the 12 months ending in Jun 2012, which is almost equal to inflation of 1.7 percent. Wages and salaries increased 1.8 percent in the 12 months ending in Sep 2012 while inflation was 2.0 percent. Wages and salaries increased 1.7 percent in Dec 2012 while inflation was 1.7 percent. Wages and salaries increased 1.7 percent in the 12 months ending in Mar 2013 while inflation was 1.5 percent. Wages and salaries increased 1.9 percent in the 12 months ending in Jun 2013 while inflation was 1.8 percent. The increase of wages and salaries of 1.8 percent in the 12 months ending in Sep 2013 exceeded inflation of 1.2 percent. Wages and salaries increased 2.1 percent in the 12 months ending in Dec 2013, exceeding CPI inflation of 1.5 percent in the 12 months ending in Dec 2013. Wages and salaries increased 1.7 percent in the 12 months ending in Mar 2014, slightly higher than CPI inflation of 1.5 percent.

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

Source: US Bureau of Labor Statistics

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

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

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

Source: US Bureau of Labor Statistics

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

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

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

Source: US Bureau of Labor Statistics

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

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

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

Source: US Bureau of Labor Statistics

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

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

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

Source: US Bureau of Labor Statistics

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

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

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

Source: US Bureau of Labor Statistics

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

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

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

Source: US Bureau of Labor Statistics

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

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

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

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

Motor vehicle sales and production in the US have been in long-term structural change. Table VA-2 provides the data on new motor vehicle sales and domestic car production in the US from 1990 to 2010. New motor vehicle sales grew from 14,137 thousand in 1990 to the peak of 17,806 thousand in 2000 or 29.5 percent. In that same period, domestic car production fell from 6,231 thousand in 1990 to 5,542 thousand in 2000 or -11.1 percent. New motor vehicle sales fell from 17,445 thousand in 2005 to 11,772 in 2010 or 32.5 percent while domestic car production fell from 4,321 thousand in 2005 to 2,840 thousand in 2010 or 34.3 percent. In Apr 2014, light vehicle sales accumulated to 5,134,255, which is higher by 3.1 percent relative to 4,980,081 a year earlier (http://motorintelligence.com/m_frameset.html). The seasonally adjusted annual rate of light vehicle sales in the US reached 16.04 million in Apr 2014, lower than 16.40 million in Mar 2014 and higher than 15.19 million in Apr 2013 (http://motorintelligence.com/m_frameset.html).

Table VA-2, US, New Motor Vehicle Sales and Car Production, Thousand Units

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

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

Chart VA-14 of the Board of Governors of the Federal Reserve provides output of motor vehicles and parts in the United States from 1972 to 2014. Output virtually stagnated since the late 1990s.

Chart VA-14, US, Motor Vehicles and Parts Output, 1972-2014

Source: Board of Governors of the Federal Reserve System

http://www.federalreserve.gov/releases/g17/Current/default.htm

Manufacturers’ shipments increased 0.3 percent in Mar 2014 and 0.9 percent in Feb 2014 after decreasing 0.7 percent in Jan 2014. New orders increased 1.1 percent in Mar 2014, after increasing 1.5 percent in Feb 2014 and decreasing 1.0 percent in Jan 2014, as shown in Table VA-3. These data are very volatile. Volatility is illustrated by increase of 2642.2 percent of new orders of nondefense aircraft in Sep 2012 following decline by 97.2 percent in Aug. New orders excluding transportation equipment increased 0.6 percent in Mar 2014 after increasing 0.7 percent in Feb 2014 and decreasing 0.1 percent in Jan 2014. Capital goods new orders, indicating investment, increased 1.7 percent in Mar 2014 after decreasing 1.7 percent in Feb 2014 and decreasing 3.7 percent in Jan 2014. New orders of nondefense capital goods increased 8.2 percent in Mar 2014 after decreasing 2.6 percent in Feb 2014 and decreasing 5.3 percent in Jan 2014. Excluding more volatile aircraft, capital goods orders increased 3.5 percent in Mar 2014 after decreasing 0.9 percent in Feb 2014 and increasing 0.8 percent in Jan 2014.

Table VA-3, US, Value of Manufacturers’ Shipments and New Orders, SA, Month ∆%

	Mar 2013 ∆%	Feb 2013  ∆%	Jan 2014  ∆%
Total
S	0.3	0.9	-0.7
NO	1.1	1.5	-1.0
Excluding Transport
S	0.1	0.8	-0.7
NO	0.6	0.7	-0.1
Excluding Defense
S	0.2	1.0	-0.7
NO	0.7	1.4	-1.3
Durable Goods
S	1.2	1.0	-0.6
NO	2.9	2.3	-1.4
Machinery
S	2.2	2.2	-3.1
NO	2.7	-0.6	-1.3
Computers & Electronic Products
S	1.4	-0.8	-0.2
NO	5.3	1.4	3.1
Computers
S	0.9	-3.6	-8.1
NO	7.8	64.2	-48.2
Transport Equipment
S	1.5	1.9	-0.4
NO	4.0	6.8	-6.2
Automobiles
S	-4.2	4.1	-1.5
Motor Vehicles
S	0.6	4.1	-0.6
NO	1.1	3.8	-0.9
Nondefense Aircraft
S	5.4	-5.2	3.5
NO	8.4	12.5	-22.1
Capital Goods
S	2.1	0.2	-1.8
NO	9.4	-1.7	-3.7
Nondefense Capital Goods
S	2.1	0.4	-1.7
NO	8.2	-2.6	-5.3
Capital Goods ex Aircraft
S	1.5	0.8	-1.5
NO	3.5	-0.9	0.8
Nondurable Goods
S	-0.6	0.9	-0.7
NO	-0.6	0.9	-0.7

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

Source: US Census Bureau

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

Chart VA-15 of the US Census Bureau provides new orders of manufacturers from Apr 2013 to Mar 2014. There is significant volatility that prevents discerning clear trends.

Chart VA-15, US, Manufacturers’ New Orders 2013-2014 Seasonally Adjusted, Month ∆%

Source: US Census Bureau

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

Chart VA-3 of the US Census Bureau provides total value of manufacturers’ new orders, seasonally adjusted, from 1992 to 2014. Seasonal adjustment reduces sharp oscillations. The series dropped nearly vertically during the global recession but rose along a path even steeper than in the high-growth period before the recession. The final segment suggests deceleration but similar segments occurred in earlier periods followed with continuing growth and stability currently.

Chart VA-16, US, Value of Total Manufacturers’ New Orders, Seasonally Adjusted, 1992-2014

Source: US Census Bureau

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

Additional perspective on manufacturers’ shipments and new orders is provided by Table VA-4. Values are cumulative millions of dollars in Jan-Mar 2014 not seasonally adjusted (NSA). Shipments of all manufacturing industries in Jan-Mar 2014 total $1432.3 billion and new orders total $1434.2 billion, growing respectively by 1.7 percent and 1.9 percent relative to the same period in 2013. Excluding transportation equipment, shipments grew 1.8 percent and new orders increased 1.1 percent. Excluding defense, shipments grew 1.3 percent and new orders grew 1.9 percent. Durable goods shipments reached $682.0 billion in Jan-Mar 2014, or 47.6 percent of the total, growing by 3.5 percent, and new orders $683.9 billion, or 47.7 percent of the total, growing by 3.9 percent. Important information in Table VA-4 is the large share of nondurable goods with shipments of $750.3 billion or 52.4 percent of the total, growing by 0.1 percent. Capital goods have relatively high value of $245.9 billion for shipments, growing 2.9 percent, and new orders $257.3 billion, increasing 1.6 percent, which could be an indicator of future investment. Excluding aircraft, capital goods shipments reached $195.9 billion, growing 2.4 percent, and new orders $208.2 billion, increasing 2.4 percent. There is no suggestion in these data that the US economy is close to recession but manufacturing accounts for 11.1 percent of US national income in IVQ2013. These data are not adjusted for inflation.

Table VA-4, US, Value of Manufacturers’ Shipments and New Orders, NSA, Millions of Dollars 

Jan-Mar 2014	Shipments	∆% 2013/ 2012	New Orders	∆% 2013/ 2012
Total	1,432,326	1.7	1,434,223	1.9
Excluding Transport	1,230,287	1.3	1,226,497	1.1
Excluding Defense	1,398,054	1.8	1,402,530	1.9
Durable Goods	682,025	3.5	683,922	3.9
Machinery	103,189	2.9	110,371	6.4
Computers & Electronic Products	82,339	4.3	63,703	4.5
Computers	1,204	-24.3	1,037	-42.2
Transport Equipment	202,039	4.0	207,726	6.7
Automobiles	27,965	-12.0
Motor Vehicles	61,123	9.1	61,666	9.2
Nondefense Aircraft	32,965	12.4	40,120	12.0
Capital Goods	245,941	2.9	257,278	1.6
Nondefense Capital Goods	218,067	3.7	231,367	1.4
Capital Goods ex Aircraft	195,939	2.4	208,233	2.4
Nondurable Goods	750,301	0.1	750,301	0.1
Food Products	191,498	4.9
Petroleum Refineries	196,407	-3.9
Chemical Products	186,597	-0.9

Note: Transport: transportation Source: US Census Bureau

Source: US Census Bureau

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

Chart VA-17 of the US Census Bureau provides value of manufacturer’s new orders not seasonally adjusted from Jan 1992 to Mar 2014. Fluctuations are evident, which are smoothed by seasonal adjustment in the earlier Chart VA-16. The series drops nearly vertically during the global contraction and then resumes growth in a steep upward trend, flattening recently.

Chart VA-17, US, Value of Total Manufacturers’ New Orders, Not Seasonally Adjusted, 1992-2014

Source: US Census Bureau

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

Construction spending at seasonally adjusted annualized rate (SAAR) reached $942.5 billion in Mar 2013, which was higher by 0.2 percent than in the prior month of Feb 2014, as shown in Table VA-5. Residential investment, with $374.5 billion accounting for 39.7 percent of total value of construction, increased 0.7 percent in Mar and nonresidential investment, with $568.0 billion accounting for 60.3 percent of the total, decreased 0.1 percent. Public construction decreased 0.6 percent while private construction increased 0.5 percent. Data in Table VA-5 show that nonresidential construction at $568.0 billion is much higher in value than residential construction at $374.5 billion while total private construction at $679.6 billion is much higher than public construction at $262.9 billion, all in SAAR. Residential and nonresidential construction contributed positively to growth of GDP in the US in all quarters in 2012. Nonresidential investment deducted 0.57 percentage points from GDP growth in IQ2013 while residential construction added 0.34 percentage points. Nonresidential construction added 0.56 percentage points to GDP growth in IIQ2013 with residential construction adding 0.40 percentage points. Nonresidential construction added 0.58 percentage points to GDP growth in IIIQ2013 while residential construction added 0.31 percentage points. Nonresidential construction added 0.68 percentage points to GDP growth in IVQ2013 while residential construction deducted 0.26 percentage points. In 2012, residential construction added 0.32 percentage points to GDP growth and added 0.01 percentage points in 2011. Residential construction added 0.33 percentage points to GDP growth in 2013. Nonresidential construction added 0.85 percentage points to GDP growth in 2012 and 0.84 percentage points in 2011. Nonresidential construction added 0.33 percentage points to GDP growth in 2013. In IQ2014, residential construction deducted 0.18 percentage points from GDP growth and nonresidential construction deducted 0.25 percentage points (Section I and earlier http://cmpassocregulationblog.blogspot.com/2014/03/financial-uncertainty-mediocre-cyclical.html).

Table VA-5, Construction Put in Place in the United States Seasonally Adjusted Annual Rate Million Dollars and Month and 12-Month ∆%  

Mar 2014	Mar 2014 SAAR  $ Millions	Month ∆%	12-Month ∆%
Total	942,508	0.2	8.4
Residential	374,505	0.7	15.2
Nonresidential	568,003	-0.1	4.4
Total Private	679,590	0.5	12.5
Private Residential	369,800	0.8	16.0
New Single Family	185,660	0.2	13.2
New Multi-Family	39,147	4.4	32.5
Private Nonresidential	309,791	0.2	8.6
Total Public	262,917	-0.6	-0.8
Public Residential	4,705	-6.6	-26.7
Public Nonresidential	258,212	-0.5	-0.2

SAAR: seasonally adjusted annual rate; B: billions

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

Further information on construction spending is provided in Table VA-6. The original monthly estimates not-seasonally adjusted (NSA) and their 12-month rates of change are provided in the first two columns while the SAARs and their monthly changes are provided in the final two columns. There has been improvement in construction in the US. There are only six declines in the monthly rate from Dec 2011 to Mar 2014. Growth in 12 months fell from 9.5 percent in Dec 2012 to 4.9 percent in Dec 2013, rebounding 8.0 percent in Mar 2014.

Table VA-6, US, Value and Percentage Change in Value of Construction Put in Place, Dollars Millions and ∆%

	Value NSA Month $ Millions	12-Month ∆% NSA	Value SAAR $ Millions	Month ∆% SA*
Mar 2014	69,142	8.0	942,508	0.2
Feb	62,978	7.8	940,779	-0.2
Jan	64,511	9.1	942,494	-0.4
Dec 2013	71,502	4.9	946,712	2.0
Nov	77,931	1.1	928,312	0.6
Oct	85,193	4.5	922,898	0.7
Sep	85,383	5.7	916,520	1.4
Aug	85,677	4.9	903,786	0.1
Jul	83,104	5.3	902,854	0.6
Jun	81,722	4.9	897,113	0.1
May	77,327	7.0	896,134	2.0
Apr	70,535	6.5	878,396	1.1
Mar	64,036	5.3	869,164	-0.1
Feb	58,395	4.3	869,909	0.8
Jan	59,143	6.2	863,136	-2.3
Dec 2012	68,136	9.5	883,550	0.1
Nov	77,091	12.0	882,685	2.3
Oct	81,520	9.8	863,065	-1.2
Sep	80,812	7.2	873,259	2.2
Aug	81,712	6.0	854,048	-0.3
Jul	78,897	9.4	856,348	0.1
Jun	77,876	6.9	855,779	1.3
May	72,240	9.8	844,709	1.4
Apr	66,223	7.8	833,243	0.8
Mar	60,796	7.5	826,641	0.4
Feb	55,981	10.8	823,331	0.7
Jan	55,671	9.3	817,616	0.0
Dec 2011	62,242	3.4	817,569	1.0

SAAR: Seasonally Adjusted Annual Rate

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

The sharp contraction of the value of construction in the US is revealed by Table VA-7. Construction spending in Jan-Mar 2014, not seasonally adjusted, reached $196.6 billion, which is higher by 8.3 percent than $181.5 billion in the same period in 2013. The depth of the contraction is shown by the decline of construction spending from $255.4 billion in Jan-Mar 2006 to $196.6billion in the same period in 2014, or decline by minus 23.0 percent. The decline in inflation-adjusted terms is much higher. The all-items not seasonally adjusted CPI (consumer price index) increased from 199.8 in Mar 2006 to 236.293 in Mar 2014 (http://www.bls.gov/cpi/data.htm) or by 18.3 percent. The comparable decline from Jan-Mar 2005 to Jan-Feb 2014 is minus 12.6 percent. Construction spending in Jan-Mar 2014 increased by 7.5 percent relative to the same period in 2003. Construction spending is lower by 4.0 percent in Jan-FMar 2014 relative to the same period in 2009. Construction has been weaker than the economy as a whole.

Table VA-7, US, Value of Construction Put in Place in the United States, Not Seasonally Adjusted, $ Millions and ∆%

Jan-Mar 2014 $ MM	196,631
Jan-Mar 2013	181,574
∆% to 2014	8.3
Jan-Mar 2012 $ MM	173,448
∆% to 2014	13.4
Jan-Mar 2011 $ MM	158,035
∆% to 2014	24.4
Jan-Mar 2010 $MM	169,833
∆% to 2014	15.8
Jan-Mar 2009	204,864
∆% to 2014	-4.0
Jan-Mar 2006 $ MM	255,391
∆% to 2014	-23.0
Jan-Mar 2005 $ MM	224,867
∆% to 2014	-12.6
Jan-Mar 2003 $ MM	182,909
∆% to 2014	7.5

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

Chart VA-18 of the US Census Bureau provides value of construction spending in the US not seasonally adjusted from 2002 to 2014. There are wide oscillations requiring seasonal adjustment to compare adjacent data. There was sharp decline during the global recession followed in recent periods by a stationary series that may be moving upward again with vacillation in the final segment.

Chart VA-18, Value of Construction Spending not Seasonally Adjusted, Millions of Dollars, 2002-2014

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

Monthly construction spending in the US in Jan-Mar and Sep-Dec not seasonally adjusted is shown in Table VA-8 for the years between 2002 and 2014. The value of $69.1 billion in Mar 2014 is higher by 8.0 percent than $64.0 billion in Mar 2013. Construction fell by 25.5 percent from the peak of $92.9 billion in Mar 2006 to $69.1 billion in Mar 2014. The data are not adjusted for inflation or changes in quality.

Table VA-8, US, Value of Construction Spending Not Seasonally Adjusted, Millions of Dollars

Year	Jan	Feb	Mar	Sep	Oct	Nov	Dec
2002	59,516	58,588	63,782	76,542	75,710	71,362	63,984
2003	59,877	58,526	64,506	83,841	83,133	77,915	71,050
2004	64,934	64,138	73,238	92,538	90,582	86,394	77,733
2005	71,474	72,048	81,345	103,269	102,339	97,549	88,172
2006	81,058	81,478	92,855	104,191	101,582	95,339	86,436
2007	79,406	79,177	88,905	105,150	103,847	94,822	84,218
2008	77,349	77,227	82,779	96,755	95,612	86,067	76,645
2009	66,944	66,296	71,624	81,213	79,949	71,906	64,098
2010	55,586	54,019	60,228	74,764	73,470	68,019	60,202
2011	50,955	50,544	56,536	75,372	74,222	68,809	62,242
2012	55,671	55,981	60,796	80,812	81,520	77,091	68,136
2013	59,143	58,395	64,036	85,383	85,193	77,931	71,502
2014	64,511	62,978	69,142	NA	NA	NA	NA

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

Chart VA-19 of the US Census Bureau shows SAARs of construction spending for the US since 1993. Construction spending surged in nearly vertical slope after the stimulus of 2003 combining near zero interest rates together with other housing subsidies and subsequent slow adjustment in 17 doses of increases by 25 basis points between Jun 2004 and Jun 2006. Construction spending collapsed after subprime mortgages defaulted with the fed funds rate increasing from 1.00 percent in Jun 2004 to 5.25 percent in Jun 2006. Subprime mortgages were programmed for refinancing in two years after increases in homeowner equity in the assumption that fed funds rates would remain low forever or increase in small increments (Gorton 2009EFM see http://cmpassocregulationblog.blogspot.com/2011/07/causes-of-2007-creditdollar-crisis.html). Price declines of houses or even uncertainty prevented refinancing of subprime mortgages that defaulted, causing the financial crisis that eventually triggered the global recession. Chart VA-9 shows a trend of increase in the final segment but it is difficult to assess if it is sustainable.

Chart VA-19, US, Construction Expenditures SAAR 1993-2014

Source: US Census Bureau

http://www.census.gov/briefrm/esbr/www/esbr050.html

Construction spending at SAARs in the four months Jan-Mar and Dec is shown in Table VA-9 for the years between 2002 and 2014. There is a peak in 2005 to 2007 with subsequent collapse of SAARs and rebound in 2012-2014.

Table VA-9, US, Value of Construction Spending SAAR Millions of Dollars

Year	Jan	Feb	Mar	Dec
2002	858,654	862,338	844,551	855,921
2003	863,855	859,225	851,132	948,491
2004	938,826	938,656	960,946	1,037,684
2005	1,036,187	1,056,492	1,065,262	1,178,305
2006	1,183,861	1,199,767	1,213,270	1,153,491
2007	1,149,899	1,156,008	1,167,402	1,108,958
2008	1,106,047	1,092,331	1,094,910	993,515
2009	962,704	959,907	954,984	832,565
2010	816,132	795,808	805,985	779,895
2011	757,039	754,169	763,058	817,569
2012	817,616	823,331	826,641	883,550
2013	863,136	869,909	869,164	946,712
2014	942,494	940,799	942,508	NA

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

Chart VA-20 of the US Census Bureau provides SAARs of value of construction from 2002 to 2014. There is clear acceleration after 2003 when fed funds rates were fixed at 1.0 percent from Jun 2003 until Jun 2004. Construction peaked in 2005-2006, stabilizing in 2007 at a lower level and then collapsed in a nearly vertical drop until 2011 with increases into 2012 and marginal drop in Jan 2013 followed by increase in Feb 2013 and decline in Mar 2013 followed by continuing increase in Apr-May 2013. Construction stabilized in Jun 2013 and increased in Jul-Aug 2013. Construction declined in Sep 2013 and increased in Oct-Dec 2013 and Jan-Mar 2014.

Chart VA-20, US, Construction Expenditures SAAR 2002-2014

Source: US Census Bureau

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

Chart VA-20 of the US Census Bureau provides monthly residential construction in the US not seasonally adjusted from 2002 to 2014. There was steep increase until 2006 followed by sharp contraction. The series stabilized at the bottom and increased in the final segment with subsequent stability.

Chart VA-20, US, Residential Construction, Not Seasonally Adjusted, Millions of Dollars, 2002-2014

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

Chart VA-21 of the US Census Bureau provides monthly nonresidential construction in the US not seasonally adjusted. There is similar acceleration until 2006 followed by milder contraction than for residential construction. The final segment appears stationary.

Chart VA-21, US, Nonresidential Construction, Not Seasonally Adjusted, Millions of Dollars, 2002-2014

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

Annual available data for the value of construction put in place in the US between 1993 and 2013 are provided in Table VA-10. Data from 1993 to 2001 are available for public and private construction with breakdown in residential and nonresidential only for private construction. Data beginning in 2002 provide aggregate residential and nonresidential values. Total construction value put in place in the US increased 85.2 percent between 1993 and 2013 but most of the growth, 65.3 percent, was concentrated in 1993 to 2000 with increase of 12.0 percent between 2000 and 2013. Total value of construction increased 6.1 percent between 2002 and 2013 with value of nonresidential construction increasing 26.0 percent while value of residential construction fell 16.1 percent. Value of total construction fell 18.6 percent between 2005 and 2013, with value of residential construction declining 45.4 percent while value of nonresidential construction rose 15.5 percent. Value of total construction fell 23.0 percent between 2006 and 2013, with value of nonresidential construction increasing 2.7 percent while value of residential construction fell 45.6 percent. In 2002, nonresidential construction had share of 52.6 percent in total construction while the share of residential construction was 47.4 percent. In 2013, the share of nonresidential construction in total value rose to 62.5 percent while that of residential construction fell to 37.5 percent.

Table VA-10, Annual Value of Construction Put in Place 1993-2012, Millions of Dollars and ∆% 

	Total	Private Nonresidential	Private Residential
1993	485,548	150,006	208,180
1994	531,892	160,438	241,033
1995	548,666	180,534	228,121
1996	599,693	195,523	257,495
1997	631,853	213,720	264,696
1998	688,515	237,394	296,343
1999	744,551	249,167	326,302
2000	802,756	275,293	346,138
2001	840,249	273,922	364,414
	Total	Total Nonresidential	Total Residential
2002	847,874	445,914	401,960
2003	891,497	440,246	451,251
2004	991,356	452,948	538,408
2005	1,104,136	486,629	617,507
2006	1,167,222	547,408	619,814
2007	1,152,351	651,883	500,468
2008	1,067,564	709,818	357,746
2009	903,201	649,273	253,928
2010	804,561	555,449	249,112
2011	788,014	535,357	252,657
2012	856,953	570,429	286,524
2013	899,949	562,113	337,836
∆% 1993-2013	85.2
∆% 1993-2000	65.3
∆% 2000-2013	12.0
∆% 2002-2013	6.1	26.0	-16.1
∆% 2005-2013	-18.6	15.5	-45.4
∆% 2006-2013	-23.0	2.7	-45.6

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

Table I-4 shows the euphoria of prices during the housing boom and the subsequent decline. House prices rose 94.3 percent in the 10-city composite of the Case-Shiller home price index and 77.2 percent in the 20-city composite between Feb 2000 and Feb 2005. Prices rose around 100 percent from Feb 2000 to Feb 2006, increasing 121.6 percent for the 10-city composite and 101.7 percent for the 20-city composite. House prices rose 36.4 percent between Feb 2003 and Feb 2005 for the 10-city composite and 31.1 percent for the 20-city composite propelled by low fed funds rates of 1.0 percent between Jun 2003 and Jun 2004. Fed funds rates increased by 0.25 basis points at every meeting of the Federal Open Market Committee (FOMC) from Jun 2004 until Jun 2006, reaching 5.25 percent. Simultaneously, the suspension of auctions of the 30-year Treasury bond caused decline of yields of mortgage-backed securities with intended decrease in mortgage rates. Similarly, between Feb 2003 and Feb 2006, the 10-city index gained 55.6 percent and the 20-city index increased 49.2 percent. House prices have fallen from Feb 2006 to Feb 2014 by 19.4 percent for the 10-city composite and 18.6 percent for the 20-city composite. Measuring house prices is quite difficult because of the lack of homogeneity that is typical of standardized commodities. In the 12 months ending in Feb 2014, house prices increased 13.1 percent in the 10-city composite and increased 12.9 percent in the 20-city composite. Table I-4 also shows that house prices increased 78.5 percent between Feb 2000 and Feb 2014 for the 10-city composite and increased 64.1 percent for the 20-city composite. House prices are close to the lowest level since peaks during the boom before the financial crisis and global recession. The 10-city composite fell 20.5 percent from the peak in Jun 2006 to Feb 2014 and the 20-city composite fell 19.9 percent from the peak in Jul 2006 to Feb 2014. The final part of Table I-4 provides average annual percentage rates of growth of the house price indexes of Standard & Poor’s Case-Shiller. The average annual growth rate between Dec 1987 and Dec 2013 for the 10-city composite was 3.7 percent. Data for the 20-city composite are available only beginning in Jan 2000. House prices accelerated in the 1990s with the average rate of the 10-city composite of 5.0 percent between Dec 1992 and Dec 2000 while the average rate for the period Dec 1987 to Dec 2000 was 3.8 percent. Although the global recession affecting the US between IVQ2007 (Dec) and IIQ2009 (Jun) caused decline of house prices of slightly above 30 percent, the average annual growth rate of the 10-city composite between Dec 2000 and Dec 2013 was 3.6 percent while the rate of the 20-city composite was 3.1 percent.

Table I-4, US, Percentage Changes of Standard & Poor’s Case-Shiller Home Price Indices, Not Seasonally Adjusted, ∆%

	10-City Composite	20-City Composite
∆% Feb 2000 to Feb 2003	42.4	35.2
∆% Feb 2000 to Feb 2005	94.3	77.2
∆% Feb 2003 to Feb 2005	36.4	31.1
∆% Feb 2000 to Feb 2006	121.6	101.7
∆% Feb 2003 to Feb 2006	55.6	49.2
∆% Feb 2005 to Feb 2014	-8.1	-7.4
∆% Feb 2006 to Feb 2014	-19.4	-18.6
∆% Feb 2009 to Feb 2014	16.4	15.5
∆% Feb 2010 to Feb 2014	14.7	14.8
∆% Feb 2011 to Feb 2014	18.1	18.9
∆% Feb 2012 to Feb 2014	22.7	23.3
∆% Feb 2013 to Feb 2014	13.1	12.9
∆% Feb 2000 to Feb 2014	78.5	64.1
∆% Peak Jun 2006 Feb 2014	-20.5
∆% Peak Jul 2006 Feb 2014		-19.9
Average ∆% Dec 1987-Dec 2013	3.7	NA
Average ∆% Dec 1987-Dec 2000	3.8	NA
Average ∆% Dec 1992-Dec 2000	5.0	NA
Average ∆% Dec 2000-Dec 2013	3.6	3.1

Source: http://us.spindices.com/index-family/real-estate/sp-case-shiller

Prices in 13 of the 20 cities fell in Feb 2014 (https://www.spice-indices.com/idpfiles/spice-assets/resources/public/documents/88929_cshomeprice-release-0429.pdf?force_download=true). Monthly house prices increased sharply from Feb 2013 to Jan 2014 for both the 10- and 20-city composites. In Jan 2013, the seasonally adjusted 10-city composite increased 0.8 percent and the 20-city increased 0.8 percent while the 10-city not seasonally adjusted changed 0.0 percent and the 20-city changed 0.0 percent. House prices increased at high monthly percentage rates from Feb to Nov 2013. With the exception of Feb through Apr 2012, house prices seasonally adjusted declined in every month for both the 10-city and 20-city Case-Shiller composites from Dec 2010 to Jan 2012, as shown in Table I-5. The most important seasonal factor in house prices is school changes for wealthier homeowners with more expensive houses. Without seasonal adjustment, house prices fell from Dec 2010 throughout Mar 2011 and then increased in every month from Apr to Aug 2011 but fell in every month from Sep 2011 to Feb 2012. The not seasonally adjusted index registers decline in Mar 2012 of 0.1 percent for the 10-city composite and is flat for the 20-city composite. Not seasonally adjusted house prices increased 1.4 percent in Apr 2012 and at high monthly percentage rates until Sep 2012. House prices not seasonally adjusted stalled from Oct 2012 to Jan 2013 and surged from Feb to Sep 2013, decelerating in Oct 2013-Feb 2014. Declining house prices cause multiple adverse effects of which two are quite evident. (1) There is a disincentive to buy houses in continuing price declines. (2) More mortgages could be losing fair market value relative to mortgage debt. Another possibility is a wealth effect that consumers restrain purchases because of the decline of their net worth in houses.

Table I-5, US, Monthly Percentage Change of S&P Case-Shiller Home Price Indices, Seasonally Adjusted and Not Seasonally Adjusted, ∆%

	10-City Composite SA	10-City Composite NSA	20-City Composite SA	20-City Composite NSA
Feb 2014	0.9	0.0	0.8	0.0
Jan	0.8	-0.1	0.8	-0.1
Dec 2013	0.7	-0.1	0.7	-0.1
Nov	0.9	0.0	0.9	-0.1
Oct	1.1	0.2	1.1	0.2
Sep	1.0	0.7	1.0	0.7
Aug	1.0	1.3	1.0	1.3
Jul	0.7	1.9	0.7	1.8
Jun	1.0	2.2	0.9	2.2
May	1.0	2.5	0.9	2.5
Apr	1.7	2.6	1.6	2.6
Mar	1.8	1.3	1.8	1.3
Feb	1.2	0.3	1.1	0.2
Jan	0.8	0.0	1.0	0.0
Dec 2012	1.0	0.2	1.0	0.2
Nov	0.7	-0.3	0.8	-0.2
Oct	0.7	-0.2	0.7	-0.1
Sep	0.5	0.3	0.6	0.3
Aug	0.5	0.8	0.5	0.9
Jul	0.3	1.5	0.4	1.6
Jun	0.9	2.1	1.0	2.3
May	0.7	2.2	0.8	2.4
Apr	0.5	1.4	0.5	1.4
Mar	0.4	-0.1	0.5	0.0
Feb	0.0	-0.9	0.0	-0.8
Jan	-0.2	-1.1	-0.1	-1.0
Dec 2011	-0.4	-1.2	-0.4	-1.1
Nov	-0.5	-1.4	-0.5	-1.3
Oct	-0.5	-1.3	-0.5	-1.4
Sep	-0.4	-0.6	-0.4	-0.7
Aug	-0.3	0.1	-0.3	0.1
Jul	-0.2	0.9	-0.2	1.0
Jun	-0.1	1.0	-0.1	1.2
May	-0.4	1.0	-0.4	1.0
Apr	-0.2	0.6	-0.2	0.6
Mar	-0.4	-1.0	-0.5	-1.0
Feb	-0.4	-1.3	-0.3	-1.2
Jan	-0.2	-1.1	-0.2	-1.1
Dec 2010	-0.2	-0.9	-0.2	-1.0

Source: http://us.spindices.com/index-family/real-estate/sp-case-shiller

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 (https://www.boj.or.jp/en/mopo/outlook/gor1404b.pdf). For fiscal 2013, the forecast is of growth of GDP between 2.2 and 2.3 percent, with the all items CPI less fresh food of 0.8 percent (https://www.boj.or.jp/en/mopo/outlook/gor1404b.pdf). The critical difference is forecast of the CPI excluding fresh food of 3.0 to 3.5 percent in 2014, 1.9 to 2.8 percent in 2015 and 2.0 to 3.0 in 2016. Consumer price inflation in Japan excluding fresh food was 0.3 percent in Mar 2013 and 1.3 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
Apr 2014	+2.2 to +2.3 [+2.2]	+0.8
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
Apr 2014	+0.8 to +1.3 [+1.1]	+3.0 to +3.5 [+3.3]	+1.0 to +1.5 [+1.3]
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
Apr 2014	+1.2 to +1.5 [+1.5]	+1.9 to +2.8 [+2.6]	+1.2 to +2.1 [+1.9]
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]
2016
Apr 2014	+1.0 to +1.5 [+1.3]	+2.0 to +3.0 [+2.8]	+1.3 to +2.3 [+2.1]

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

Source: Policy Board, Bank of Japan

https://www.boj.or.jp/en/mopo/outlook/gor1404b.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	Mar NSA ∆% 0.3; Mar 12 months NSA ∆% 1.6 Blog 4/27/14
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	Mar Unemployed 2.46 million Change in unemployed since last year: minus 340 thousand Unemployment rate: 3.6 % Blog 5/4/14
All Industry Indices	Feb month SA ∆% -1.1 12-month NSA ∆% 2.2 Blog 4/27/14
Industrial Production	Mar SA month ∆%: 0.3 12-month NSA ∆% 7.0 Blog 5/4/14
Machine Orders	Total Feb ∆% -5.9 Private ∆%: -15.3 Feb ∆% Excluding Volatile Orders -8.8 Blog 4/13/14
Tertiary Index	Feb month SA ∆% -1.0 Feb 12 months NSA ∆% 0.9 Blog 4/20/14
Wholesale and Retail Sales	Mar 12 months: Total ∆%: 8.6 Wholesale ∆%: 7.6 Retail ∆%: 11.0 Blog 5/4/14
Family Income and Expenditure Survey	Mar 12-month ∆% total nominal consumption 9.3, real 7.2 Blog 5/4/14
Trade Balance	Exports Mar 12 months ∆%: 1.8 Imports Mar 12 months ∆% 18.1 Blog 4/27/14

Links to blog comments in Table JPY:

4/27/14 http://cmpassocregulationblog.blogspot.com/2014/04/financial-fluctuations-united-states.html

4/20/14 http://cmpassocregulationblog.blogspot.com/2014/04/imf-view-world-inflation-waves-squeeze.html

4/13/14 http://cmpassocregulationblog.blogspot.com/2014/04/global-financial-instability-recovery.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

In Mar 2014, industrial production in Japan increased 0.3 percent and increased 7.0 percent in the 12 months ending in Mar 2014, as shown in Table VB-1. Decline of 2.8 percent in Jun interrupted four consecutive monthly increases from Feb through May 2013. Another interruption occurred in Aug with decrease of 0.4 percent and decline of 0.6 percent in 12 months. There was a third interruption with decline of 2.3 percent in Feb 2014 but increase of 7.0 percent in 12 months. Japan’s industrial production is strengthening with growth of 1.4 percent in Dec 2012, 0.9 percent in Feb 2013, 0.3 percent in Mar 2013, 0.6 percent in Apr 2013, 2.1 percent in May 2013, 2.7 percent in Jul 2013, 1.5 percent in Sep 2013, 0.6 percent in Oct 2013 and 0.9 percent in Dec 2013. Improvement continued with 3.9 percent in Jan 2014. Growth in 12 months improved from minus 10.0 percent in Feb 2013 to 7.2 percent in Dec 2013, 10.6 percent in Jan 2014 and 7.0 percent in Feb-Mar 2014. Industrial production fell 21.9 percent in 2009 after falling 3.4 percent in 2008 but recovered by 15.6 percent in 2010. The annual average in calendar year 2011 fell 2.8 percent largely because of the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Industrial production increased 0.6 percent in 2012 and fell 0.8 percent in 2013.

Table VB-1, Japan, Industrial Production ∆%

	∆% Month SA	∆% 12 Months NSA
Mar 2014	0.3	7.0
Feb	-2.3	7.0
Jan	3.9	10.6
Dec 2013	0.5	7.2
Nov	0.3	4.8
Oct	0.6	5.4
Sep	1.5	5.3
Aug	-0.5	-0.6
Jul	2.7	1.9
Jun	-2.8	-4.7
May	2.1	-1.0
Apr	0.6	-3.2
Mar	0.3	-7.0
Feb	0.9	-10.0
Jan	-0.7	-6.4
Dec 2012	1.4	-7.6
Nov	-1.0	-5.5
Oct	0.3	-4.7
Sep	-2.2	-7.6
Aug	-1.4	-4.1
Jul	-0.5	0.1
Jun	-0.8	-0.6
May	-1.8	7.6
Apr	-0.5	15.1
Mar	0.2	16.6
Calendar Year
2013		-0.8
2012		0.6
2011		-2.8
2010		15.6

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

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

The employment report for Japan in Mar 2014 is in Table VB-2. The rate of unemployment seasonally adjusted decreased to 4.2 percent in Sep 2012 from 4.3 percent in Jul 2012 and remained at 4.2 percent in Oct 2012, declining to 4.1 percent in Nov 2012, increasing to 4.2 percent in Dec 2012, stabilizing at 4.2 percent in Jan 2013 and increasing to 4.3 percent in Feb 2013. The seasonally adjusted rate of unemployment fell to 4.1 percent in Apr and May 2013. The rate of unemployment not seasonally adjusted stood at 4.1 percent in Apr 2013 and 0.3 percentage points lower from a year earlier. The rate of unemployment fell to 3.9 percent in Jun 2013 seasonally and not seasonally adjusted. In Jul 2013, the rate of unemployment fell to 3.8 percent seasonally adjusted and remained at 3.9 percent not seasonally adjusted. The rate of unemployment rose to 4.1 percent in Aug 2013 and fell to 4.0 percent seasonally adjusted in Sep 2013. The rate of unemployment stabilized at 4.0 percent in Oct 2013 and 4.0 percent in Nov 2013. The rate of unemployment fell to 3.7 percent in Dec 2013 and 3.7 percent in Jan 2014. The rate of unemployment fell to 3.6 percent in Feb 2014 and 3.6 percent in Mar 2014. The employment rate stood at 56.8 percent in Mar 2014 and increased 0.5 percentage points from a year earlier.

Table VB-2, Japan, Employment Report Mar 2014 

Mar 2014 Unemployed	2.46 million
Change since last year	-340 thousand; ∆% –12.1
Unemployment rate	SA 3.6%, 0.0 from earlier month; NSA 3.8%, -0.5 from earlier year
Population ≥ 15 years	110.81 million
Change since last year	∆% 0.0
Labor Force	65.44 million
Change since last year	∆% 0.3
Employed	62.98 million
Change since last year	∆% 0.8
Labor force participation rate	59.1
Change since last year	0.2
Employment rate	56.8%
Change since last year	0.5

Source: Japan, Statistics Bureau, Ministry of Internal Affairs and Communications

http://www.stat.go.jp/english/data/roudou/results/month/index.htm

Chart VB-1 of Japan’s Statistics Bureau at the Ministry of Internal Affairs and Communications provides the unemployment rate of Japan from 2010 to 2014. The sharp decline in Sep 2011 was the best reading in 2011 but the rate increased in the final quarter of the year, declining in Feb 2012 and stabilizing in Mar 2012 but increasing to 4.6 percent in Apr 2012 and declining again to 4.4 percent in May 2012 and 4.3 percent in both Jun and Jul 2012 with further decline to 4.2 percent in Aug, Sep and Oct 2012, 4.1 percent in Nov 2012, 4.2 percent in Dec 2012, 4.2 percent in Jan 2013, 4.3 percent in Feb 2013 and 4.1 percent in Mar-May 2013. The rate of unemployment fell to 3.9 percent in Jun 2013 and 3.8 percent in Jul 2013. The rate of unemployment rose to 4.1 percent in Aug 2013, falling to 4.0 percent in Sep 2013. The rate of unemployment stabilized at 4.0 percent in Oct 2013 and 4.0 percent in Nov 2013. The rate of unemployment fell to 3.7 percent in Dec 2013 and 3.7 percent in Jan 2014. The rate of unemployment fell to 3.6 percent in Feb 2014 and 3.6 percent in Mar 2014.

Chart VB-1, Japan, Unemployment Rate, Seasonally Adjusted

Source: Japan, Statistics Bureau, Ministry of Internal Affairs and Communications

http://www.stat.go.jp/english/data/roudou/results/month/index.htm

During the “lost decade” of the 1990s from 1991 to 2002 (Pelaez and Pelaez, The Global Recession Risk (2007), 82-3), Japan’s GDP grew at the average yearly rate of 1.0 percent, the CPI at 0.1 percent and the implicit deflator at minus 0.8 percent. Japan’s growth rate from the mid 1970s to 1992 was 4 percent (Ito 2004). Table VB-3 provides Japan’s rates of unemployment, participation in labor force and employment for 1968, 1975, 1980 and 1985 and yearly from 1990 to 2013. The rate of unemployment jumped from 2.1 percent in 1991 to 5.4 percent in 2002, which was a year of global economic weakness. The participation rate dropped from 64.0 percent in 1992 to 61.2 percent in 2002 and the employment rate fell from 62.6 percent in 1992 to 57.9 percent in 2002. The rate of unemployment rose from 3.9 percent in 2007 to 5.1 percent in 2010, falling to 4.6 percent in 2011, 4.3 percent in 2012 and 4.0 percent in 2013. The participation rate fell from 60.4 percent in 2007 to 59.6 percent in 2010, falling to 59.3 percent in 2011 and 59.1 in 2012 and increasing to 59.3 percent in 2013. The employment rate fell from 58.1 in percent in 2007 to 56.6 percent in 2010 and 56.5 percent in 2011 and 2012, increasing to 56.9 percent in 2013. The global recession adversely affected labor markets in advanced economies.

Table VB-3, Japan, Rates of Unemployment, Participation in Labor Force and Employment, %

	Participation Rate	Employment Rate	Unemployment Rate
1953	70.0	68.6	1.9
1960	69.2	68.0	1.7
1965	65.7	64.9	1.2
1970	65.4	64.6	1.1
1975	63.0	61.9	1.9
1980	63.3	62.0	2.0
1985	63.0	61.4	2.6
1990	63.3	61.9	2.1
1991	63.8	62.4	2.1
1992	64.0	62.6	2.2
1993	63.8	62.2	2.5
1994	63.6	61.8	2.9
1995	63.4	61.4	3.2
1996	63.5	61.4	3.4
1997	63.7	61.5	3.4
1998	63.3	60.7	4.1
1999	62.9	59.9	4.7
2000	62.4	59.5	4.7
2001	62.0	58.9	5.0
2002	61.2	57.9	5.4
2003	60.8	57.6	5.3
2004	60.4	57.6	4.7
2005	60.4	57.7	4.4
2006	60.4	57.9	4.1
2007	60.4	58.1	3.9
2008	60.2	57.8	4.0
2009	59.9	56.9	5.1
2010	59.6	56.6	5.1
2011	59.3	56.5	4.6
2012	59.1	56.5	4.3
2013	59.3	56.9	4.0

Source: Japan, Statistics Bureau, Ministry of Internal Affairs and Communications

http://www.stat.go.jp/english/data/roudou/results/month/index.htm

The survey of household income and consumption of Japan in Table VB-4 is showing noticeable improvement in recent months relative to earlier months. Table VB-4 shows increase of nominal consumption of 9.3 percent in the 12 months ending in Mar 2014 and 7.2 percent in real terms. There likely effects of anticipating consumption before the increase in the value added tax on consumption in Apr 2014. There are multiple segments of increasing real consumption: housing increasing 12.7 percent in nominal terms and 12.9 percent in real terms. Transportation/communications increased 12.8 percent in real terms and 14.2 percent in nominal terms. Clothing and footwear increased 12.7 percent in nominal terms and 12.3 percent in real terms. Education decreased 12.8 percent in real terms and 12.1 percent in nominal terms. Fuel, light and water charges increased 8.4 percent in nominal terms and increased 2.0 percent in real terms. Real household income decreased 3.3 percent; real disposable income decreased 3.2 percent; and real consumption expenditures increased 7.5 percent.

Table VB-4, Japan, Family Income and Expenditure Survey, 12-month ∆% Relative to a Year Earlier

Mar 2014	Nominal	Real
Households of Two or More Persons
Total Consumption	9.3	7.2
Excluding Housing, Vehicles & Remittance	10.8	8.6
Food	5.9	3.4
Housing	12.7	12.9
Fuel, Light & Water Charges	8.4	2.0
Furniture & Household Utensils	85.4	82.5
Clothing & Footwear	12.7	12.3
Medical Care	10.7	11.1
Transport and Communications	14.2	12.8
Education	-12.1	-12.8
Culture & Recreation	13.2	11.6
Other Consumption Expenditures	0.4	-1.6*
Workers’ Households
Income	-1.4	-3.3
Disposable Income	-1.3	-3.2
Consumption Expenditures	9.6	7.5

*Real: nominal deflated by CPI excluding imputed rent

Source: Ministry of Internal Affairs and Communications, Statistics Bureau, Director General for Policy Planning and Statistical Research and Training Institute

http://www.stat.go.jp/english/data/kakei/156.htm

Chart VB-2 of the Ministry of Internal Affairs and Communication provides year-on-year change of real consumption expenditures. There is improvement followed by deterioration in the final segment with wide oscillations. There was deterioration in Nov 2011, renewed strength in Dec 2011, another decline in Jan 2012 and increase in Feb and Mar 2012 with stabilization in Apr and May 2012 but sharp decline into Jun 2012. Recovery in Jul and Aug 2012 was interrupted in Sep-Oct 2012 and new increases in Nov 2012, Jan 2013, Feb 2013, Mar 2013 and Apr 2013 (http://www.stat.go.jp/english/data/kakei/156.htm). Total consumption decreased 1.6 percent in real terms in May 2013 and decreased 1.9 percent in nominal terms relative to a year earlier. Real consumption fell 0.4 percent in Jun 2013 and nominal consumption declined 0.1 percent. Consumption rebounded in Jul 2013 with increase of real consumption by 0.1 percent and nominal consumption by 1.0 percent. In Aug 2013, real consumption fell 1.6 percent relative to a year earlier and 0.5 percent in nominal terms. There was marked improvement in Sep 2013 with growth of nominal consumption of 5.2 percent in 12 months and 3.7 percent in real consumption. Nominal consumption increased 2.1 in Nov 2013 and real consumption increased 0.2 percent. Nominal consumption increased 2.7 percent in Dec 2013 and real consumption increased 0.7 percent. In Jan 2014, nominal consumption increased 2.8 percent and real consumption 1.1 percent. Nominal consumption decreased 0.6 percent in Feb 2014 and real consumption decreased 2.5 percent. Nominal consumption increased 9.3 percent in Mar 2014 and real consumption 7.2 percent.

Chart VB-2, Japan, Real Percentage Change of Consumption Year-on-Year

Source: Ministry of Internal Affairs and Communications, Statistics Bureau, Director General for Policy Planning and Statistical Research and Training Institute

http://www.stat.go.jp/english/data/kakei/156.htm

Percentage changes in 12 months of nominal and real consumption expenditures in Japan are provided in Table VB-5. Real consumption increased 7.2 percent in the 12 months ending in Mar 2013 while nominal consumption increased 9.3 percent, partly in anticipation of the increase in the value added tax in Apr 2014. Real consumption fell 2.5 percent in the 12 months ending in Feb 2014 and nominal consumption fell 0.6 percent. Real consumption expenditures increased 1.1 percent in the 12 months ending in Jan 2014 and nominal consumption expenditures 2.8 percent. Real consumption expenditures increased 0.7 percent in the 12 months ending in Dec 2013 and nominal consumption expenditures increased 2.7 percent. Real consumption expenditures increased 0.2 percent in the 12 months ending in Nov 2013 and nominal consumption expenditures increased 2.1 percent. Real consumption expenditures increased 0.9 percent in the 12 months ending in Oct 2013 and nominal consumption expenditures increased 2.3 percent. Real consumption expenditures increased 3.7 percent in the 12 months ending in Sep 2013 and nominal consumption expenditures 5.2 percent. Real consumption expenditures fell 1.6 percent in Aug 2013 relative to a year earlier and nominal consumption expenditures fell 0.5 percent. There is recovery in Jul 2013 with real consumption expenditures increasing 0.1 percent and nominal consumption expenditures increasing 1.0 percent. Real consumption expenditures decreased 0.4 percent in the 12 months ending in Jun 2013 and 0.1 percent in nominal terms. Declines in May and Jun 2013 interrupted growth from Jan to Apr 2013. There was sharp decline in nominal consumption of 8.8 percent in Mar 2011 and 8.2 percent in real consumption because of the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Dec was the first month in 2011 with increases in 12 months in both nominal and real consumption expenditures followed by Feb 2012 through Aug 2012. Nominal and real consumption fell in both Sep and Oct 2012 and increased in Nov 2012. Real consumption fell 0.7 percent in the 12 months ending in Dec 2012 and nominal consumption fell 0.8 percent. Real consumption expenditures increased 2.4 percent in the 12 months ending in Jan 2013 and 2.1 percent in nominal terms. Nominal consumption increased 0.8 percent in Feb 2013 and nominal consumption increased 0.1 percent. Real consumption increased 5.2 percent in the 12 months ending in Mar 2013 and nominal consumption 4.1 percent. Consumption was an important driver of GDP growth in Japan in IQ2012. Real GDP grew at the seasonally adjusted annual rate (SAAR) of 3.7 percent in IQ2012 with private consumption contributing 0.9 percentage points for the highest contribution to growth (Table VB-2 at http://cmpassocregulationblog.blogspot.com/2014/03/global-financial-risks-recovery-without_5314.html). There was deceleration in IIQ2012 with growth of GDP at SAAR of minus 1.7 percent and contribution of 1.0 percentage points of personal consumption. In IIIQ2012, Japan’s GDP contracted at the SAAR of 3.2 percent and personal consumption deducted 1.1 percentage points. Japan’s GDP grew at the SAAR of 0.1 percent in IVQ2012 with personal consumption contributing 1.1 percentage points. Japan’s GDP growth in IQ2013 was at 4.5 percent SAAR with highest contribution of 2.6 percentage points by personal consumption expenditures. In IIQ2013, Japan’s GDP grew at 4.1 percent SAAR with personal consumption expenditures contributing 1.6 percentage points. Japan’s GDP grew at 0.9 percent SAAR in IIIQ2013 with personal consumption expenditures contributing 0.5 percentage points. In IVQ2013, Japan’s GDP grew at 0.7 percent SAAR with personal consumption expenditures contributing 1.0 percentage points.

Table VB-5, Japan, Family Income and Expenditure Survey 12-months ∆% Relative to a Year Earlier

	Nominal Consumption Expenditures ∆% Relative to a Year Earlier	Real Consumption Expenditures ∆% Relative to a Year Earlier
Mar 2014	9.3	7.2
Feb	-0.6	-2.5
Jan	2.8	1.1
Dec 2013	2.7	0.7
Nov	2.1	0.2
Oct	2.3	0.9
Sep	5.2	3.7
Aug	-0.5	-1.6
Jul	1.0	0.1
Jun	-0.1	-0.4
May	-1.9	-1.6
Apr	0.8	1.5
Mar	4.1	5.2
Feb	0.1	0.8
Jan	2.1	2.4
Dec 2012	-0.8	-0.7
Nov	0.1	0.2
Oct	-0.5	-0.1
Sep	-1.2	-0.9
Aug	1.4	1.8
Jul	1.2	1.7
Jun	1.5	1.6
May	4.3	4.0
Apr	3.2	2.6
Mar	4.1	3.4
Feb	2.7	2.3
Jan	-2.1	-2.3
Dec 2011	0.3	0.5
Nov	-3.8	-3.2
Oct	-0.6	-0.4
Sep	-1.9	-1.9
Aug	-3.9	-4.1
Jul	-1.8	-2.1
Jun	-3.9	-3.5
May	-1.6	-1.2
Apr	-2.5	-2.0
Mar	-8.8	-8.2
Feb	-0.1	0.5
Jan	-0.9	-0.3
Dec 2010	-3.2	-3.3
Dec 2009	0.3	2.1

Source:

Source: Ministry of Internal Affairs and Communications, Statistics Bureau, Director General for Policy Planning and Statistical Research and Training Institute

http://www.stat.go.jp/english/data/kakei/156.htm

Japan is experiencing weak internal demand as in most advanced economies, interrupted by strong growth in IQ2012 but renewed weakening at the end of IIQ2012, beginning of IIIQ2012 with recovery in IVQ2012, IQ2013, IIQ2013 and IIIQ2013. Recovery continued in IVQ2013. Table VB-6 provides Japan’s wholesale and retail sales. There is strong performance in May 2013 with growth of 0.8 percent for retail sales followed by 1.6 percent in Jun 2013. Retail sales fell 0.3 percent in Jul 2013, rebounding 1.1 percent in Aug 2013. Retail sales increased 3.0 percent in the 12 months ending in Sep 2013 and 2.4 percent in the 12 months ending in Oct 2013. Retail sales increased 4.1 percent in the 12 months ending in Nov 2013 and 2.5 percent in the 12 months ending in Dec 2013. Retail sales grew 4.4 percent in the 12 months ending in Jan 2014 and 3.6 percent in the 12 months ending in Feb 2014. Japan’s retail sales increased 11.0 percent in the 12 months ending in Mar 2014 in part anticipating the increase in the tax on the value added of consumption. Retail sales are recovering from deep drops in Mar and Apr 2011 following the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Retail sales have been increasing in 12-month percentage changes from Dec 2011 through May 2012. Retail sales fell again by 1.3 percent in Jul 2012, increasing 1.3 percent in Aug 2012 and 0.4 percent in Sep 2012 but declining 1.2 percent in Oct 2012, rebounding by 0.9 percent in Nov 2012 and only 0.2 percent in Dec 2012 but contracting 1.1 percent in Jan 2013 and 2.2 percent in Feb 2013.

Table VB-6, Japan, Wholesale and Retail Sales 12 Month ∆%

	Total	Wholesale	Retail
Mar 2014	8.6	7.6	11.0
Feb	2.5	2.0	3.6
Jan	4.4	4.4	4.4
Dec 2013	2.8	2.9	2.5
Nov	2.9	2.4	4.1
Oct	2.0	1.8	2.4
Sep	2.8	2.7	3.0
Aug	0.6	0.4	1.1
Jul	1.3	2.0	-0.3
Jun	0.5	0.1	1.6
May	0.6	0.5	0.8
Apr	-0.1	-0.1	-0.2
Mar	-1.3	-1.8	-0.3
Feb	-1.6	-1.3	-2.2
Jan	-0.3	0.1	-1.1
Dec 2012	-1.7	-2.5	0.2
Nov	-0.9	-1.6	0.9
Oct	-1.6	-1.8	-1.2
Sep	-3.6	-5.1	0.4
Aug	-2.7	-4.4	1.3
Jul	-3.1	-4.0	-1.3
Jun	-2.6	-3.6	-0.2
May	2.7	2.6	3.0
Apr	1.8	0.4	5.0
Mar	3.2	0.9	9.3
Feb	-0.1	-1.3	3.1
Jan	-2.1	-3.8	1.6
Dec 2011	-0.8	-2.0	2.5
Nov	-2.3	-2.4	-2.2
Oct	1.1	0.8	1.9
Sep	0.3	0.8	-1.1
Aug	3.1	5.2	-2.6
Jul	2.3	3.0	0.6
Jun	3.1	3.8	1.2
May	1.3	2.3	-1.3
Apr	-2.6	-1.7	-4.8
Mar	-1.3	1.2	-8.3
Feb	5.3	7.2	0.1
Jan	3.3	4.6	0.1
Dec 2010	3.5	5.7	-2.1
Calendar Year
2013	0.9	0.8	1.0
2012	-0.9	-2.0	1.8
2011	1.0	1.9	-1.0
2010	2.4	2.3	2.6
2009	-20.5	-25.6	-2.3
2008	1.2	1.5	0.3

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

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

VC China. China estimates an index of nonmanufacturing purchasing managers based on a sample of 1200 nonmanufacturing enterprises across the country (http://www.stats.gov.cn/english/pressrelease/t20121009_402841094.htm). Table CIPMNM provides this index and components. The total index increased from 55.7 in Mar 2012 to 58.0 in Mar 2012, decreasing to 53.9 in Aug 2013. The index decreased from 56.0 in Nov 2013 to 54.6 in Dec 2013, 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 IQ2014 relative to the same period in 2013 was 7.4 percent, as shown in Table VC-GDP. Secondary industry accounts for 44.9 percent of GDP in IQ2014. In IQ2014, industry alone accounts for 39.9 percent of GDP and construction with the remaining 5.0 percent. Tertiary industry accounts for 49.0 percent of cumulative GDP in IQ2014 and primary industry for 6.1 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 strategy is shifting to lower growth rates with improvement in living standards. 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 9.5 percent in IIIQ2013. Annual equivalent growth was 7.0 percent in IVQ2013, declining to 5.7 percent in IQ2014.

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

Cumulative GDP IQ2014	Value Current CNY Billion	2014 Year-on-Year Constant Prices ∆%
GDP	12,821.3	7.4
Primary Industry	777.6	3.5
Farming	777.6	3.5
Secondary Industry	5,758.7	7.3
Industry	5,121.7	7.1
Construction	637.0	9.3
Tertiary Industry	6,285.0	7.8
Transport, Storage, Post	691.7	5.7
Wholesale, Retail Trades	1,298.2	9.8
Hotel & Catering Services	266.8	5.9
Financial Intermediation	929.1	9.5
Real Estate	880.5	3.0
Other	2,218.7	8.9
Growth in Quarter Relative to Prior Quarter	∆% on Prior Quarter	∆% Annual Equivalent
2014
IQ2014	1.4	5.7
2013
IVQ2013	1.7	7.0
IIIQ2013	2.3	9.5
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 IQ2014 relative to the same period in 2013 was 7.4 percent, as shown in Table VC-GDPA. Secondary industry accounts for 44.9 percent of GDP of which industry alone for 39.9 percent in cumulative IQ2014 and construction with the remaining 5.0 percent. Tertiary industry accounts for 49.0 percent of GDP in cumulative IQ2014 and primary industry for 6.1 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 strategy is changing to lower growth rates while improving living standards. 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 7.4 percent in IVQ2013 relative to a year earlier and 1.7 percent relative to IIIQ2013, which is equivalent to 7.0 percent per year. GDP grew 7.4 percent in IQ2014 relative to a year earlier and 1.4 percent in IQ2014 that is equivalent to 5.7 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	IQ 2014
GDP	7.7	7.5	7.8	7.7	7.4
Primary Industry	3.4	3.0	3.4	4.0	3.5
Secondary Industry	7.8	7.6	7.8	7.8	7.3
Tertiary Industry	8.3	8.3	8.4	8.3	7.1
GDP ∆% Relative to a Prior Quarter	1.5	1.8	2.3	1.7	1.4
	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/2ccceaf2598440a1879d0a0a508a7b1f) is slowing. The overall Flash HSBC China Manufacturing PMI^™ increased from 48.0 in Mar to 48.3 in Apr, while the Flash HSBC China Manufacturing Output Index increased from 47.2 in Mar to 48.0 in Apr, indicating moderate contraction. Exports orders changed direction to contraction. Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds that the index is consistent with manufacturing stabilizing at weak levels, requiring policy to stabilize growth in the rest of the year (http://www.markiteconomics.com/Survey/PressRelease.mvc/2ccceaf2598440a1879d0a0a508a7b1f). 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	Mar month ∆%: 0.81 Jan-Mar 2014/Jan-Mar 2013 ∆%: 8.7 Blog 4/20/14
GDP Growth Rate	Year IQ2014 ∆%: 7.4 Quarter IQ2014 AE ∆%: 5.7 Blog 4/20/14
Investment in Fixed Assets	Total Jan-Mar 2013 ∆%: 17.6 Real estate development: 16.8 Blog 4/20/14
Retail Sales	Mar month ∆%: 1.23 Mar 12 month ∆%: 12.2 Jan-Mar ∆%: 12.0 Blog 4/20/14
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:

4/20/14 http://cmpassocregulationblog.blogspot.com/2014/04/imf-view-world-inflation-waves-squeeze.html

4/13/14 http://cmpassocregulationblog.blogspot.com/2014/04/global-financial-instability-recovery.html

VD Euro Area. Table VD-EUR provides yearly growth rates of the combined GDP of the members of the European Monetary Union (EMU) or euro area since 1996. Growth was very strong at 3.3 percent in 2006 and 3.0 percent in 2007. The global recession had strong impact with growth of only 0.4 percent in 2008 and decline of 4.4 percent in 2009. Recovery was at lower growth rates of 2.0 percent in 2010 and 1.6 percent in 2011. EUROSTAT estimates growth of GDP of the euro area of minus 0.7 percent in 2012 and minus 0.5 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, increased from 53.1 in Mar to 54.0 in Apr (http://www.markiteconomics.com/Survey/PressRelease.mvc/10eff218657b4d30a2627449bcdacd14). 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 IIQ2014 (http://www.markiteconomics.com/Survey/PressRelease.mvc/10eff218657b4d30a2627449bcdacd14). 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	Mar 2014: 11.8 % unemployment rate; Mar 2014: 18.913 million unemployed Blog 5/4/14
HICP	Mar month ∆%: 0.9 12 months Feb ∆%: 0.5 Blog 4/20/14
Producer Prices	Euro Zone industrial producer prices Feb ∆%: -0.2 Feb 12-month ∆%: -1.7 Blog 4/6/14
Industrial Production	Feb month ∆%: 0.2; Feb 12 months ∆%: 1.7 Blog 4/20/14
Retail Sales	Feb month ∆%: 0.4 Feb 12 months ∆%: 0.8 Blog 4/6/14
Confidence and Economic Sentiment Indicator	Sentiment 102.0 Apr 2014 Consumer minus 8.6 Apr 2014 Blog 5/4/14
Trade	Jan-Feb 2014/Jan-Feb 2013 Exports ∆%: 1.9 Imports ∆%: -1.3 Feb 2014 12-month Exports ∆% 2.9 Imports ∆% 0.4 Blog 4/20/14

Links to blog comments in Table EUR:

4/20/14 http://cmpassocregulationblog.blogspot.com/2014/04/imf-view-world-inflation-waves-squeeze.html

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

EUROSTAT estimates the rate of unemployment in the euro area at 11.8 percent in Mar 2014, as shown in Table VD-1. The number of unemployed in Mar 2014 was 18.913 million, which was 0.316 million lower than 19.229 million in Mar 2013. The rate of unemployment stabilized from 12.0 percent in Mar 2013 to 11.8 percent in Mar 2014.

Table VD-1, Euro Area, Unemployment Rate and Number of Unemployed, % and Millions, SA 

	Unemployment Rate %	Number Unemployed Millions
Mar 2014	11.8	18.913
Feb	11.8	18.935
Jan	11.8	18.970
Dec 2013	11.8	18.966
Nov	11.9	19.089
Oct	11.9	19.097
Sep	12.0	19.223
Aug	12.0	19.202
Jul	12.0	19.196
Jun	12.0	19.205
May	12.0	19.235
Apr	12.0	19.242
Mar	12.0	19.229
Feb	12.0	19.214
Jan	12.0	19.179
Dec 2012	11.8	18.976
Nov	11.7	18.845
Oct	11.7	18.734
Sep	11.5	18.481
Aug	11.4	18.316
Jul	11.4	18.258
Jun	11.3	18.157
May	11.2	17.942
Apr	11.1	17.791
Mar	10.9	17.522
Feb	10.8	17.293
Jan	10.7	17.078
Dec 2011	10.6	16.971
Nov	10.6	16.858
Oct	10.4	16.576
Sep	10.3	16.397
Aug	10.1	16.147
Jul	10.1	15.983
Jun	9.9	15.762
May	9.9	15.694
Apr	9.8	15.546
Mar	9.9	15.640
Feb	9.9	15.670
Jan	10.0	15.756
Dec 2010	10.0	15.879

Source: EUROSTAT

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

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

Table VD-2 shows the disparity in rates of unemployment in the euro area with 11.8 percent for the region as a whole and 18.913 million unemployed but 5.1 percent in Germany and 2.191 million unemployed. At the other extreme is Spain with rate of unemployment of 25.3 percent and 5.777 million unemployed. The rate of unemployment of the European Union in Mar 2014 is 10.5 percent with 25.699 million unemployed.

Table VD-2, Unemployed and Unemployment Rate in Countries and Regions, Millions and %

Mar 2014	Unemployment Rate %	Unemployed Millions
Euro Zone	11.8	18.913
Germany	5.1	2.191
France	10.4	3.056
Netherlands	7.2	0.642
Finland	8.5	0.227
Portugal	15.2	0.807
Ireland	11.8	0.257
Italy	12.7	3.248
Greece	26.7*	1.318*
Spain	25.3	5.777
Belgium	8.5	0.420
European Union	10.5	25.699

*Jan 2014

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

Chart VD-1 of EUROSTAT illustrates the wide difference in rates of unemployment in countries and regions.

Chart VD-1, Unemployment Rate in Various Countries and Regions

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 Economic Sentiment Indicator of the European Economic Commission, Economic and Financial Affairs, provides correlation with the economic cycle since 1990, capturing all three recessions in the period and even the threat of recession from 1994 to 1995. The latest chart of this index accessible in the link in parenthesis shows trend of decline in 2011 and 2012 that has punctured the historical average of 100 and resumed downward trend in 2012 followed by recovery moving closer to the average (http://ec.europa.eu/economy_finance/db_indicators/surveys/index_en.htm). Table VD-3 provides the index increasing from 89.8 in May 2013 to 102.0 in Apr 2014. The index is above the minimum value of 70.1 reached in Mar 2009, surpassing the average of 100.

Table VD-3, Euro Area, Indicators of Confidence and Economic Sentiment SA

	ESI	IND	SERV	CON	RET	CONS
Historical Average	100.0	-6.9	9.1	-13.2	-9.2	-18.2
Maximum	118.6 05-00	7.9 04-07	35.4     08-98	2.4 05-00	5.2 06-90	6.0 02-90
Minimum	70.1 03-09	-38.1 03-09	-26.1 03-09	-34.3 03-09	-24.8 01-93	-46.0 09-93
Apr 2014	102.0	-3.6	3.5	-8.6	-2.6	-30.3
Mar	102.5	-3.3	4.5	-9.3	-2.5	-28.7
Feb	101.2	-3.5	3.3	-12.7	-3.0	-28.5
Jan	101.0	-3.8	2.4	-11.7	-3.4	-29.8
Dec 2013	100.4	-3.4	0.4	13.5	-5.0	-26.4
Nov	98.8	-3.9	-0.8	-15.3	-7.7	-30.4
Oct	98.1	-5.0	-3.6	-14.4	-7.7	-29.1
Sep	97.3	-6.6	-3.2	-14.8	-6.8	-28.3
Aug	95.7	-7.8	-5.1	-15.5	-10.5	-32.6
Jul	92.9	-10.6	-7.7	-17.3	-13.9	-32.1
Jun	91.7	-11.2	-9.5	-18.7	-14.5	-31.2
May	89.8	-13.0	-9.2	-21.7	-16.7	-32.5

ESI: Economic Sentiment Index; IND: Industry; SERV: Services; CON: Consumer; RET: Retail Trade; CONS: Construction

Source: European Commission Services

http://ec.europa.eu/economy_finance/db_indicators/surveys/index_en.htm

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, increased from 54.3 in Mar to 56.3 in Apr. The index of manufacturing output reached 58.7 in Apr, increasing from 57.0 in Mar, while the index of services increased to 55.0 in Apr from 53.0 in Mar. The overall Flash Germany Manufacturing PMI^® increased from 53.7 in Mar to 54.2 in Apr (http://www.markiteconomics.com/Survey/PressRelease.mvc/12201026cdcd4270bd6e985a45333ef7). New export work volumes increased for a ninth consecutive month with business originating in the US, Europe and Asia. Oliver Kolodseike, Economist at Markit, finds continuing expansion of Germany’s private sector with strength in new orders and employment (http://www.markiteconomics.com/Survey/PressRelease.mvc/12201026cdcd4270bd6e985a45333ef7). 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	Mar month ∆%: -0.3 CSA, minus 0.2 12-month NSA ∆%: -0.9 Blog 4/20/14
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	Mar Month ∆% -0.7 12-Month ∆% -1.9 Blog 5/4/14
Employment Report	Unemployment Rate SA Mar 5.1% Blog 5/4/14
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:

4/20/14 http://cmpassocregulationblog.blogspot.com/2014/04/imf-view-world-inflation-waves-squeeze.html

4/13/14 http://cmpassocregulationblog.blogspot.com/2014/04/global-financial-instability-recovery.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

Germany’s labor market continues to show strength not found in most of the advanced economies, as shown in Table VE-1. The number unemployed, not seasonally adjusted, decreased from 2.37 million in Mar 2013 to 2.32 million in Mar 2014, or 2.1 percent, while the unemployment rate fell from 5.6 percent in Mar 2013 to 5.5 percent in Mar 2014. The number of persons in employment, not seasonally adjusted, increased from 38.89 million in Mar 2013 to 40.09 million in Mar 2014, or 0.5 percent, while the employment rate increased from 63.4 percent in Mar 2013 to 63.7 percent in Mar 2014. The number unemployed, seasonally adjusted, fell from 2.20 million in Feb 2014 to 2.19 million in Mar 2014, while the unemployment rate remained at 5.1 percent in Mar 2014 relative to 5.1 percent in Feb 2014. The number of persons in employment, seasonally adjusted, increased from 40.56 million in Feb 2014 to 40.60 million in Mar 2014, or 0.1 percent. The employment rate seasonally adjusted did not change from 64.5 in Feb 2014 to 64.5 in Mar 2014.

Table VE-1, Germany, Unemployment Labor Force Survey

	Mar 2014	Feb 2014	Mar 2013
NSA
Number Unemployed Millions	2.32 ∆% Mar 2014 /Feb 2013: -1.3 ∆% Mar 2014/Mar 2013: -2.1	2.35	2.37
% Rate Unemployed	5.5	5.5	5.6
Persons in Employment Millions	40.09 ∆% Mar 2014/Feb 2014: -1.0 ∆% Mar 2014/Mar 2013: 0.5	40.48	39.89
Employment Rate	63.7	64.3	63.4
SA
Number Unemployed Millions	2.19 ∆% Mar 2014/Feb  2014: -0.5 ∆% Mar 2014/Mar 2013: –4.4	2.20	2.29
% Rate Unemployed	5.1	5.1	5.4
Persons in Employment Millions	40.60 ∆% Mar 2014/Feb 2014: 0.1 ∆% Mar 2014/Mar 2013: 0.9	40.56	40.24
Employment Rate	64.5	64.5	64.0

NSA: not seasonally adjusted; SA: seasonally adjusted

Source: Statistisches Bundesamt Deutschland

https://www.destatis.de/EN/PressServices/Press/pr/2014/04/PE14_153_132.html

The unemployment rate in Germany as percent of the labor force in Table VE-2 stood at 6.5 percent in Sep, Oct and Nov 2012, increasing to 6.7 percent in Dec 2012, 7.4 percent in Jan 2013, 7.3 in Mar 2013 and 7.1 percent in Apr 2013. The unemployment rate fell to 6.8 percent in May 2013 and 6.6 percent in Jun 2013 and rose to 6.8 percent in Jul-Aug 2013. The rate fell to 6.6 percent in Sep 2013 and 6.5 percent in Oct 2013 and Nov 2013. The unemployment rate increased to 6.7 percent in Dec 2013 and 7.3 percent in Jan 2013. The unemployment rate reached 7.3 percent in Feb 2014 and 7.1 percent in Mar 2014. The unemployment rate fell to 6.8 percent in Apr 2014. The rate is much lower than 11.1 percent in 2005 and 9.6 percent in 2006.

Table VE-2, Germany, Unemployment Rate in Percent of Labor Force

	Percent of Labor Force
Apr 2014	6.8
Mar	7.1
Feb	7.3
Jan	7.3
Dec 2013	6.7
Nov	6.5
Oct	6.5
Sep	6.6
Aug	6.8
Jul	6.8
Jun	6.6
May	6.8
Apr	7.1
Mar	7.3
Feb	7.4
Jan	7.4
Dec 2012	6.7
Nov	6.5
Oct	6.5
Sep	6.5
Aug	6.8
Jul	6.8
Jun	6.6
May	6.7
Apr	7.0
Mar	7.2
Feb	7.4
Jan	7.3
Dec 2011	6.6
Nov	6.4
Oct	6.5
Sep	6.6
Aug	7.0
Jul	7.0
Jun	6.9
May	7.0
Apr	7.3
Mar	7.6
Feb	7.9
Jan	7.9
Dec 2010	7.1
Dec 2009	7.8
Dec 2008	7.4
Dec 2007	8.1
Dec 2006	9.6
Dec 2005	11.1

Source: Statistisches Bundesamt Deutschland

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

Chart VE-1 of Statistisches Bundesamt Deutschland, or Federal Statistical Office of Germany, shows the long-term decline of the rate of unemployment in Germany from more than 12 percent in early 2005 to 6.6 percent in Dec 2011, increasing to 6.7 percent in Dec 2012, 6.8 percent in Apr 2013 and 6.6 percent in May 2013. The unemployment rate rose slightly to 6.8 percent in Aug 2013, falling to 6.6 percent in Sep 2013 and 6.5 percent in Oct 2013. The rate remained at 6.5 percent in Nov 2013, increasing to 6.7 percent in Dec 2013 and 7.3 in Jan 2014. The rate remained at 7.3 percent in Feb 2014, declining to 7.1 percent in Mar 2014. The rate fell to 6.8 percent in Apr 2014.

Chart VE-1, Germany, Unemployment Rate, Unadjusted, Percent

Source: Statistisches Bundesamt Deutschland

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

Retail sales in Germany adjusted for inflation re provided in Table VE-3. There have been sharp fluctuations in monthly and 12-month percentage changes. In Mar 2014, retail sales decreased 0.7 percent and decreased 1.9 percent in 12 months. Retail sales increased 0.4 percent in Feb 2014 and 1.9 percent in 12 months.

Table VE-3, Retail Sales in Germany Adjusted for Inflation

	12-Month ∆% NSA	Month ∆% SA and Calendar Adjusted
Mar 2014	-1.9	-0.7
Feb	1.9	0.4
Jan	0.9	2.0
Dec 2013	-0.8	-1.6
Nov	1.3	1.0
Oct	0.2	-0.4
Sep	0.6	0.0
Aug	0.5	0.2
Jul	3.4	0.0
Jun	-2.6	-0.9
May	0.5	0.7
Apr	2.8	0.2
Mar	-2.9	0.0
Feb	-3.0	-0.6
Jan	2.6	1.5
Dec 2012	-3.1	-0.7
Nov	0.5	0.6
Oct	1.5	-0.5
Sep	-3.1	-0.1
Aug	0.0	0.3
Jul	-1.0	-1.0
Jun	4.6	0.5
May	-0.7	0.1
Apr	-4.7	-0.5
Mar	4.2	0.9
Feb	2.5	0.8
Jan	2.0	-2.2
Dec 2011	0.8	1.3
Nov	0.9	-0.8
Oct	-0.4	0.5
Sep	1.2	0.1
Aug	3.4	-0.6
Jul	-2.4	0.6
Jun	-2.0	2.0
May	4.5	-1.6
Apr	4.8	0.9
Mar	-2.9	-2.5
Feb	3.0	1.2
Jan	3.3	0.8
Dec 2010	-0.2	0.3
Dec 2009	-2.2
Dec 2008	3.4
Dec 2007	-6.2
Dec 2006	1.3

Source: Statistisches Bundesamt Deutschland (Destatis)

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

Chart VE-2 of the Statistisches Bundesamt Deutschland, Federal Statistical Office of Germany, shows retail sales at constant prices from 2010 to 2014. There appear to be fluctuations without trend.

Chart VE-2, Germany, Turnover in Retail Trade at Constant Prices 2010=100

Source: Statistisches Bundesamt Deutschland (Destatis), Federal Statistical Office of Germany

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

Chart VE-3 of the Federal Statistical Office of Germany provides retail sales at current prices. The final segment suggests a trend of increase.

Chart VE-3, Germany, Turnover in Retail Sales at Current Prices, Original Values, 2010=100

Source: Statistisches Bundesamt Deutschland (Destatis), Federal Statistical Office of Germany

https://www.destatis.de/EN/FactsFigures/Indicators/ShortTermIndicators/ShortTermIndicators.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 decreased from 51.8 in Mar to 50.5 in Apr (http://www.markiteconomics.com/Survey/PressRelease.mvc/c03ddfbae2cc44e090af4dfd7fe021c5). Jack Kennedy, Senior Economist at Markit and author of the report, finds slowing activity, and new business with increasing reduction of employment (http://www.markiteconomics.com/Survey/PressRelease.mvc/c03ddfbae2cc44e090af4dfd7fe021c5). 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	Mar month ∆%: -0.5 Feb 12 months ∆%: -2.1 Blog 5/4/14
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 Mar ∆%: 0.4 Mar 12-Month Manufactured Goods ∆%: 0.6 Blog 5/4/14
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 Apr Mfg Business Climate 100 Blog 4/27/14

Links to blog comments in Table FR:

4/27/14 http://cmpassocregulationblog.blogspot.com/2014/04/financial-fluctuations-united-states.html

4/13/14 http://cmpassocregulationblog.blogspot.com/2014/04/global-financial-instability-recovery.html

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

The monthly report of household expenditures in consumption goods for France is in Table VF-1. Total consumption increased 0.4 percent in Mar 2014 after decreasing 0.1 percent in Feb 2014 and decreasing 1.8 percent in Jan 2014. Consumption of manufactured products increased 0.4 percent in Mar 2014 after decreasing 0.1 percent in Feb 2014 and decreasing 1.3 percent in Jan 2014. Total consumption decreased 1.2 percent in Mar 2014 relative to Mar 2013 and consumption of manufactured goods increased 0.6 percent in Mar 2014 relative to Mar 2013. Consumption of energy increased 0.4 percent in Mar 2014 and decreased 8.3 percent in 12 months. Internal demand is weak throughout most advanced economies.

Table VF-1, France, Household Expenditures in Consumption Goods, Month ∆% Chained Billion Euros Trading-Days SA

	Total	Food	Eng. Goods	Energy	Mfg Goods
Mar 2014	0.4	0.1	-0.2	0.4	0.4
Mar 2014/Mar 2013	-1.2	-2.2	2.9	-8.3	0.6
Feb 2014	-0.1	-0.3	0.3	-0.2	-0.1
Jan 2014	-1.8	-0.3	-0.8	-0.9	-1.3
Dec 2013	0.2	0.0	0.5	-0.3	0.7
Nov 2013	1.3	-0.2	0.3	1.2	0.2
Oct	-0.2	0.5	0.1	-0.8	0.5
Sep	-0.1	-0.1	0.1	-0.1	-0.1
Aug	-0.3	-0.2	0.1	-0.2	-0.2
Jul	0.3	0.2	0.1	0.0	0.5
Jun	-0.6	-0.1	0.4	-0.9	-0.2
May	0.7	0.5	-0.1	0.2	0.7
Apr	-0.9	-1.2	0.4	-0.1	-0.5
Mar	1.0	0.9	-0.5	0.6	0.5
Feb	0.0	-0.2	-0.1	0.3	-0.3
Jan	0.5	0.2	-0.3	0.6	-0.1
Dec 2012	-0.2	0.0	0.3	-0.6	0.1
Nov	-0.2	-0.1	-0.3	0.3	-0.4
Oct	-0.1	-0.3	0.1	0.1	0.0
Sep	0.0	-0.1	0.0	0.1	0.0
Aug	-0.6	0.0	-0.3	-0.4	-0.6
Jul	0.0	-0.1	0.2	0.0	0.1
Jun	0.7	0.5	0.0	0.2	0.6
May	0.0	-0.1	0.7	-0.5	0.7
Apr	0.1	0.0	-1.3	1.5	-1.3
Mar	-3.2	-0.8	0.3	-2.8	-0.9
Feb	2.9	0.7	0.0		1.3
Jan	0.7	0.5	-0.2	1.4	0.4
Dec 2011	-0.6	-0.4	-0.2	0.1	-0.8
Nov	-0.4	0.1	-0.1	-2.3	-0.3
Oct	-0.2	-0.3	0.2	-0.4	-0.2
Sep	-0.4	0.2	-0.1	-3.0	-0.3
Aug	0.9	0.2	0.3	2.5	1.0
Jul	-0.2	-0.1	-0.2	0.5	-0.3
Jun	0.3	-0.1	0.2	1.6	0.5
May	0.2	-0.2	-0.2	4.1	-0.7
Apr	-2.2	0.2	-1.3	-6.3	-1.5
Mar	-0.9	-0.2	-0.5	-1.3	-1.1
Feb	0.9	0.3	0.9	-2.0	1.5
Jan	-0.5	-0.2	0.4	-5.2	0.3
Dec 2010	0.5	0.1	-0.2	4.1	0.0

Eng. Goods: Engineered Goods

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=19&date=20140430

Chart VF-1 of the Institut National de la Statistique et des Études Économiques of France provides consumption of manufactured goods in France in volumes of chained 2005 billion euro from Jan 1980 to Mar 2014. Consumption of manufactured goods increased above the level before the global recession but shows declining trend in recent months with possible stabilization.

Chart VF-1, France, Consumption of Manufactured Goods, Volume Chained 2005 Billion, Seasonally and Working Day Adjusted, Jan 1980 to Mar 2014

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=19&date=20140430

Chart VF-4 of Institut National de la Statistique et des Études Économiques of France provides growth of total consumption in France. There is downward trend of monthly consumption with fluctuations and stability in the final segment followed by another drop in Jan-Feb 2013 and increase in Mar 2013 but renewed decrease in Apr 2013. Consumption rose again in May 2013 and fell in Jun 2013. Consumption increased in Jul 2013 and fell in Aug-Oct 2013. Consumption rose in Nov 2013 driven by electricity and fell marginally in Dec 2013. Consumption fell in Jan 2014 and rebounded in Mar 2014.

Chart VF-2, France, Total Consumption of Goods, Billions of Euros Trading and Seasonally Adjusted and Quarterly ∆%

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=19&date=20140430

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	Apr month ∆%: 0.2 Apr 12-month ∆%: 0.6 Blog 5/4/14
Producer Price Index	Mar month ∆%: -0.2 Mar 12-month ∆%: -1.9 Blog 5/4/14
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	Mar 2014 Participation rate 63.8% Employment ratio 55.6% Unemployment rate 12.7% Youth Unemployment 42.7% Blog 5/4/14
Industrial Production	Feb month ∆%: -0.5 12 months CA ∆%: 0.4 Blog 4/13/14
Retail Sales	Feb month ∆%: -0.2 Feb 12-month ∆%: -1.0 Blog 5/4/13
Business Confidence	Mfg Mar 99.2, Oct 98.1 Construction Feb 75.8, Nov 79.8 Blog 4/6/14
Trade Balance	Balance Feb SA €3443 million versus Jan €3695 Exports Feb month SA ∆%: -0.9; Imports Feb month ∆%: -0.1 Exports 12 months Feb NSA ∆%: 3.0 Imports 12 months NSA ∆%: -2.2 Blog 4/20/14

Links to blog comments in Table IT:

4/20/14 http://cmpassocregulationblog.blogspot.com/2014/04/imf-view-world-inflation-waves-squeeze.html

4/13/14 http://cmpassocregulationblog.blogspot.com/2014/04/global-financial-instability-recovery.html

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

Data on Italy’s labor market since 2004 are provided in Table VG-1. The unemployment rate has risen from 6.2 percent in Dec 2006 to 12.7 percent in Mar 2014. The rate of youth unemployment for ages 15 to 24 years increased from 20.0 percent in Dec 2006 to 42.7 percent in Mar 2014. As in other advanced economies, unemployment has reached high levels.

Table VG-1, Italy, Labor Report

	Participation Rate %	Employment Ratio %	Unemployment Rate %	Unemployment Rate 15-24 Years %
Mar 2014	63.8	55.6	12.7	42.7
Feb	63.6	55.4	12.7	42.8
Jan	63.6	55.4	12.7	42.9
Dec 2013	63.5	55.4	12.6	41.7
Nov	63.6	55.4	12.7	42.1
Oct	63.5	55.5	12.4	41.6
Sep	63.5	55.5	12.4	40.8
Aug	63.5	55.5	12.3	40.6
Jul	63.4	55.6	12.1	40.1
Jun	63.5	55.7	12.1	39.3
May	63.5	55.6	12.1	38.2
Apr	63.3	55.6	12.0	40.0
Mar	63.5	55.7	12.0	39.6
Feb	63.7	56.1	11.8	38.3
Jan	63.7	56.0	11.9	38.2
Dec 2012	63.7	56.3	11.5	37.6
Nov	63.7	56.4	11.3	37.6
Oct	63.8	56.5	11.3	36.1
Sep	63.7	56.7	10.9	36.1
Aug	63.6	56.7	10.7	34.6
Jul	63.7	56.8	10.8	35.5
Jun	63.8	56.8	10.8	34.5
May	63.7	56.9	10.4	35.9
Apr	63.8	56.9	10.6	34.6
Mar	63.5	56.9	10.3	35.0
Feb	63.3	56.9	10.0	33.8
Jan	63.2	57.1	9.5	32.1
Dec 2011	63.0	56.9	9.5	31.8
Nov	62.7	56.8	9.3	31.9
Oct	62.6	57.0	8.8	30.5
Sep	62.5	56.8	8.9	30.6
Aug	62.5	57.1	8.5	29.1
Jul	62.2	56.9	8.4	28.8
Jun	62.0	57.0	8.0	27.8
May	62.1	57.0	8.1	27.8
Apr	61.7	56.9	7.7	27.5
Mar	62.1	57.1	7.9	27.7
Feb	61.8	56.9	7.9	27.6
Jan	61.9	56.9	8.0	28.5
Dec 2010	62.1	56.9	8.2	28.5
Dec 2009	62.3	57.0	8.4	26.7
Dec 2008	62.5	58.2	6.9	22.8
Dec 2007	63.1	58.9	6.5	21.6
Dec 2006	62.5	58.6	6.2	20.0
Dec 2005	62.6	57.8	7.5	23.4
Dec 2004	62.4	57.5	7.9	23.7

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/120308

Table VG-2 provides more detail on the labor report for Italy in Mar 2014. The level of employment increased 73,000 from Feb 2014 to Mar 2014 and fell 124,000 from Mar 2013 to Mar 2014. Unemployment decreased 5,000 in Feb 2014 and increased 194,000 from a year earlier. A dramatic aspect found in most advanced economies is the high rate of unemployment of youth at 42.7 percent in Mar 2014 for ages 15 to 24 years.

Table VG-2, Italy, Labor Report, NSA

Mar 2014	1000s	Change from Prior Month 1000s	∆% from Prior Month	Change from Prior Year 1000s	∆% from Prior Year
EMP	22,356	73	0.3	-124	-0.6
UNE	3,248	-5	-0.2	194	6.4
INA   15-64	14,278	-75	-0.5	-174	-1.2
EMP 15-24	915	13	1.4	-59	-6.0
UNE 15-24	683	9	1.3	43	6.8
INA 15-24	4,393	-25	-0.6	-21	-0.5
EMP %	55.6		0.2		-0.2
UNE %	12.7		-0.1		0.7
Youth UNE %  15-24	42.7		0.0		3.1
INA % 15-64	36.2		-0.2		-0.3

Notes: EMP: Employed; UNE: Unemployed; INA 15-64: Inactive aged 15 to 64; EMP %: Employment Rate; UNE %: Unemployment Rate; Youth UNE % 15-24: Youth Unemployment Rate aged 15 to 24; INA % 15-64: Inactive Rate aged 15 to 64.

Source: Istituto Nazionale di Statistica

Chart VG-1 of the Istituto Nazionale di Statistica provides the rate of unemployment in Italy. The rate increased from 12.0 percent in Mar 2013 to 12.7 percent in Mar 2014.

Chart VG-1, Italy, Rate of Unemployment, %

Source: Istituto Nazionale di Statistica

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

Chart VG-2 of the Istituto Nazionale di Statistica provides the total number of employed persons in Italy. The level of employment dropped from 22.480 million in Mar 2013 to 22.356 million in Mar 2014.

Chart VG-2, Italy, Total Number of Employed Persons, Millions, SA

Source: Istituto Nazionale di Statistica

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

An important part of the analysis of Blanchard (2011WEOSep, 2012WEOApr) is the much more difficult adjustment of economies with need of fiscal consolidation in the presence of weak economic growth. Demand has significantly weakened throughout the advanced economies. There are many sound fundamentals in Italy such as high income and competitive companies. The restraints consist of low economic growth with high debt/GDP ratio. Table VG-3 provides growth of retail sales for Italy. Retail sales fell 0.2 percent in Feb 2014 relative to Jan 2014, decreased 0.4 percent in Dec-Feb 2014 relative to Sep-Nov 2013, decreased 1.0 percent in Feb 2014 relative to Feb 2013 and decreased 0.9 percent cumulatively in Jan-Feb 2014 relative to Jan-Feb 2013. Food retail sales outperform non-food retail sales.

Table VG-3, Italy, Retail Sales ∆%

	Feb 2014/  Jan 2014 SA	Dec-Feb 14/   Sep-Nov 13 SA	Feb 2014/ Feb 2013 NSA	Jan-Feb 2014/ Jan-Feb 2013
Food	-0.1	-0.5	-1.0	-0.7
Non-food	-0.2	-0.4	-1.2	-1.2
Total	-0.2	-0.4	-1.0	-0.9

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/120101

Chart VG-3 provides 12-month percentage changes of retail sales at current prices. There is improvement in the final segment from Feb to May 2013 with sharper decline in Jun 2013 and recovery in Jul-Aug 2013. Sales declined again in Sep 2013, increasing in Oct-Nov 2013. Sales fell in Dec 2013 and improved in Jan 2014. Sales stabilized in Feb 2014.

Chart VG-3, Italy, Percentage Changes of Retail Sales in 12 Months

Source: Istituto Nazionale di Statistica

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

A longer perspective of retail sales in Italy is provided by monthly and 12-month percentage changes in 2011, Jan-Dec 2012, Jan-Dec 2013, Jan-Feb 2014 and annual rates for 2011, 2012 and 2013 in Table VG-4. Retail sales did not decline very sharply during the global recession but fell 0.8 percent in 2011, 1.7 percent in 2012 and 2.1 percent in 2013. There is an evident declining trend in 2011 with few monthly increases and similar weakness in 2012 with multiple monthly declines. Negative percentage changes in 12 months increased to more than 3 percent with decrease of 3.2 percent in the 12 months ending in Mar 2013 and decrease of 3.0 percent in the 12 months ending in Jun 2013. Retail sales fell 0.2 percent in Feb 2014 and fell 1.0 percent in 12 months.

Table VG-4, Italy, Retail Sales Month and 12-Month ∆%

	Month ∆% SA	12-Month ∆% NSA
Feb 2014	-0.2	-1.0
Jan	0.0	-0.9
Dec 2013	-0.3	-2.6
Nov	0.0	0.2
Oct	0.0	-1.6
Sep	-0.3	-2.8
Aug	0.0	0.2
Jul	-0.2	-0.8
Jun	-0.1	-3.0
May	0.1	-1.2
Apr	0.0	-2.9
Mar	-0.2	-3.2
Feb	0.0	-4.8
Jan	-0.5	-2.8
Dec 2012	0.1	-3.4
Nov	-0.2	-2.4
Oct	-0.7	-3.4
Sep	-0.1	-1.0
Aug	0.0	-0.4
Jul	-0.2	-3.1
Jun	-0.1	0.2
May	-0.1	-1.1
Apr	-1.2	-6.3
Mar	0.3	2.3
Feb	-0.4	0.7
Jan	1.0	-0.9
Dec 2011	-0.9	-3.2
Nov	-0.5	-1.5
Oct	0.7	-0.9
Sep	-0.3	-1.1
Aug	-0.4	0.1
July	0.0	-1.7
Jun	-0.4	-0.6
May	-0.5	-0.3
Apr	0.9	3.3
Mar	-0.2	-1.9
Feb	-0.3	0.1
Jan	-0.2	-0.5
Dec 2010	0.5	0.6
2013		-2.1
2012		-1.7
2011		-0.8

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/120101

Italy’s index of business confidence in manufacturing and construction is provided in Table VG-5. There has been improvement of manufacturing confidence below the historical average of 100 from 98.3 in Dec 2013 to 99.9 in Apr 2014 with decline to 97.8 in Jan 2014 and increase to 99.3 in Mar 2014. Order books improved from minus 27 in Dec 2013 to minus 21 in Apr 2014. There is deterioration in construction with the index moving from 81.8 in Dec 2013 to 74.8 in Apr 2014.

Table VG-5, Italy, Index of Business Confidence in Manufacturing and Construction 2005=100

	Apr     2014	Mar      2014	Feb  2014	Jan      2014	Dec       2013
Mfg Confidence	99.9	99.3	99.1	97.8	98.3
Order Books	-21	-23	-24	-27	-27
Stocks Finished Products	-1	-1	-3	-1	-4
Production Expectation	5	5	5	5	4
Construction Confidence	74.8	75.6	76.7	76.1	81.8
Order Books	-50	-54	-50	-50	-43
Employment	-24	-18	-21	-23	-21

Mfg: manufacturing

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/120127

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 1.7 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 1.2 percent as advanced economies struggle with weak internal demand and world trade. GDP in 2013 was lower by 1.4 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*	-1.3
2000-2013	1.5

*Absolute change from 2007 to 2012

Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/gva/gross-domestic-product--preliminary-estimate/q1-2014/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	Mar month ∆%: 0.2 Mar 12-month ∆%: 1.6 Blog 4/20/14
Output/Input Prices	Output Prices: Mar 12-month NSA ∆%: 0.5; excluding food, petroleum ∆%: 1.0 Input Prices: Mar 12-month NSA ∆%: -6.5 Excluding ∆%: -5.8 Blog 4/20/14
GDP Growth	IQ2014 prior quarter ∆% 0.8; year earlier same quarter ∆%: 3.1 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 5/4/14
Industrial Production	Feb 2014/Feb 2013 ∆%: Production Industries 2.7; Manufacturing 3.8 Blog 4/13/14
Retail Sales	Mar month ∆%: 0.1 Mar 12-month ∆%: 4.2 Blog 4/27/14
Labor Market	Dec-Feb Unemployment Rate: 6.9%; Claimant Count 3.4%; Earnings Growth 1.7% Blog 4/20/14 LMGDP 5/4/14
GDP and the Labor Market	IVQ2013 Weekly Hours 101.8, GDP 98.6, Employment 102.2 IQ2008 =100 GDP IQ14 99.3 IQ2008=100 Blog 5/4/14
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:

4/27/14 http://cmpassocregulationblog.blogspot.com/2014/04/financial-fluctuations-united-states.html

4/20/14 http://cmpassocregulationblog.blogspot.com/2014/04/imf-view-world-inflation-waves-squeeze.html

4/13/14 http://cmpassocregulationblog.blogspot.com/2014/04/global-financial-instability-recovery.html

4/6/14 http://cmpassocregulationblog.blogspot.com/2014/04/interest-rate-risks-twenty-eight.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 important analysis of the relation of GDP and the labor market (http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q1-2014--april-gdp-update/index.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2013-q4--march-gdp-update/index.html

http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q4-2013--february-labour-market-update/index.html

http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q4-2013--january-gdp-update/index.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q3-2013--december-gdp-update/index.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q3-2013--november-gdp-update/sum-nov-gdp.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q3-2013--october-gdp-update/sum-october-gdp.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2013-q2--august-labour-market-update/index.html

http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2013-q1--may-labour-market-update/sum-may13-labour.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2013-q1--may-labour-market-update/index.html

http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2012-q4--january-gdp-update/sum-jan13.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2012-q4--february-labour-market-update/sum-2012-q4---february-labour-update.html). The UK economy grew 0.8 percent in IVQ2013 but output is still 0.6 percent below the level before the global recession in IQ2008 (http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q1-2014--april-gdp-update/index.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2013-q4--march-gdp-update/index.html

(http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q4-2013--january-gdp-update/index.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q3-2013--december-gdp-update/sum-dec-gdp.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q3-2013--october-gdp-update/sum-october-gdp.html). Chart VH-1 of the UK Office for National Statistics (http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q1-2014--april-gdp-update/index.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q3-2013--october-gdp-update/sum-october-gdp.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2013-q1--may-labour-market-update/sum-may13-labour.html) shows weakening output but relatively faster increases in employment and hours worked. Output growth and labor market improvement are converging.

Chart VH-1, UK, Employment Level Ages 16 and Over, Total Weekly Hours and GDP, 2008-2013

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q1-2014--april-gdp-update/index.html

Table VH-L1 of the UK Office for national Statistics provides the data for GDP and the labor market (http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q1-2014--april-gdp-update/index.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2013-q4--march-gdp-update/index.html

http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q4-2013--february-gdp-update/index.html

http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q4-2013--february-labour-market-update/index.html

http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q4-2013--january-gdp-update/index.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q3-2013--december-gdp-update/sum-dec-gdp.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q3-2013--november-gdp-update/sum-nov-gdp.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q3-2013--october-gdp-update/sum-october-gdp.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2013-q2--august-labour-market update/index.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2013-q1--may-gdp-update/index.html http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/2013-q1--may-labour-market-update/sum-may13-labour.html) provides total weekly hours, output and employment quarterly from 2008 to 2013. Improving output has been accompanied recently by improvements in hours worked and employment. From IQ2008 to IVQ2013, employment increased 2.2 percent and hours worked 1.8 percent while GDP was still 1.4 percent lower. In IQ2014, GDP grew 0.8 percent relative to IVQ2013 and 3.1 percent relative to IQ2013 and is now only 0.6 percent below the peak in IQ2008 (http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q1-2014--april-gdp-update/index.html).

Table VH-L1, UK, Indices of Quarterly Employment Ages 16 and Over, Total Hours Worked and GDP, 2008-2014

			Index, Q1 2008 =100
	GDP, CVM	Employment, Aged 16 +	Total weekly hours, Aged 16 +
	YBEZ	MGRZ	YBUS
2008 Q1	100.0	100.0	100.0
Q2	99.1	100.1	98.9
Q3	97.7	99.6	98.9
Q4	95.6	99.4	98.3
2009 Q1	93.2	98.9	96.7
Q2	92.8	97.9	96.3
Q3	92.8	97.8	95.8
Q4	93.2	97.9	95.8
2010 Q1	93.7	97.6	95.7
Q2	94.7	98.2	96.5
Q3	95.0	98.9	97.0
Q4	94.8	98.7	97.4
2011 Q1	95.3	99.0	97.4
Q2	95.4	99.0	96.3
Q3	95.9	98.5	97.1
Q4	95.8	98.8	97.3
2012 Q1	95.8	99.2	98.0
Q2	95.5	99.9	98.5
Q3	96.2	100.2	99.6
Q4	96.0	100.8	99.8
2013 Q1	96.3	100.7	100.1
Q2	97.1	100.9	100.4
Q2	97.9	101.5	101.4
Q4	98.6	102.2	101.8
2014 Q1	99.3	:	:

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q1-2014--april-gdp-update/index.html

Chart VH-2 of the UK Office for National Statistics provides comparison of output performance during four cycles in the 1970s, 1980s, 1990s and 2000s. Output is indexed to the pre-recession peak. For example, the index for the current economic cycles is 100 for IQ2008. Output performance was stronger in the earlier economic cycles.

Chart VH-2, UK, Index of Output in Economic Cycles

UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q4-2013--january-gdp-update/index.html

Table VH-L2 provides output in the four economic cycles. Output increased 8.8 percent in the cycle of the early 1970s, 11.7 percent in the cycle of the 1980s and 15.8 percent in the cycle of the 1990s. Output is 1.3 percent below the pre-recession peak in IQ2008.

Table VH-L2, Index of Output in Economic Cycles, Pre-Contraction = 100

Early 70s (1973 Q2=100)	Early 80s (1979 Q4=100)	Early 90s (1990 Q2=100)	Latest (2008 Q1=100)
ABMI	ABMI	ABMI	ABMI
100.0	100.0	100.0	100.0
99.1	99.0	99.1	99.1
99.1	97.3	98.4	97.6
96.8	97.1	98.3	95.6
98.6	95.8	97.9	93.2
99.5	95.4	97.6	92.8
98.4	95.4	97.9	92.8
98.6	96.6	98.4	93.2
97.2	96.6	98.6	93.7
97.0	97.1	99.4	94.6
98.4	98.3	100.3	95.0
100.0	98.3	101.4	94.8
99.1	99.0	102.1	95.3
100.0	100.4	103.2	95.4
102.1	101.3	104.1	95.9
102.3	102.5	105.5	95.8
101.8	103.8	107.1	95.7
102.5	104.8	108.7	95.4
104.1	104.2	109.6	96.1
104.6	104.6	110.1	96.0
105.5	106.3	110.9	96.5
106.7	107.5	112.3	97.3
107.6	109.2	112.9	98.0
106.7	109.2	114.2	98.7
111.3	110.1	114.8
108.8	111.7	115.8

UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q4-2013--january-gdp-update/index.html

Table VH-1 provides quarter on quarter chained value measures of GDP since 1998 in the first estimate for IQ2014 (http://www.ons.gov.uk/ons/rel/gva/gross-domestic-product--preliminary-estimate/q1-2014/index.html). GDP grew 0.8 percent in IQ2014 relative to IVQ2013. Growth of 0.8 percent in IIIQ2012 interrupted three consecutive quarters of weakness in GDP growth. Most advanced economies are underperforming relative to the period before the global recession. The UK Office for National Statistics analyzes that the decline in the impulse of growth in the UK originated in weakness in markets in the UK and worldwide. The UK Office for National Statistics estimates that GDP in IVQ2013 is lower by 0.6 percent relative to the peak in IQ2008 (http://www.ons.gov.uk/ons/rel/elmr/gdp-and-the-labour-market/q1-2014--april-gdp-update/index.html). The UK Office for National Statistics estimates the contraction of 7.2 percent from peak to trough (http://www.ons.gov.uk/ons/rel/gva/gross-domestic-product--preliminary-estimate/q1-2014/stb-gdp-preliminary-estimate--q1-2014.html), which is roughly equal at 7.1 percent to compounding the quarterly rates in Table VH-1 from IIQ2008 to IIQ2009.

Table VH-1, UK, Percentage Change of GDP from Prior Quarter, Chained Value Measures ∆%

	IQ	IIQ	IIIQ	IV
2014	0.8
2013	0.4	0.8	0.8	0.7
2012	0.0	-0.4	0.8	-0.2
2011	0.5	0.1	0.6	-0.1
2010	0.5	1.0	0.4	-0.2
2009	-2.5	-0.4	0.0	0.4
2008	0.1	-0.9	-1.4	-2.1
2007	1.0	1.3	1.2	0.1
2006	0.4	0.3	0.2	0.8
2005	0.8	1.3	1.0	1.3
2004	0.7	0.4	0.1	0.7
2003	0.5	1.3	1.3	1.3
2002	0.5	0.7	0.8	1.0
2001	0.8	0.7	0.5	0.1
2000	1.4	1.0	0.3	0.3
1999	0.3	0.0	1.9	1.3
1998	0.8	0.8	0.7	1.0

Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/gva/gross-domestic-product--preliminary-estimate/q1-2014/index.html

There are four periods in growth of GDP in a quarter relative to the same quarter a year earlier in the UK in the years from 2000 to the present as shown in Table VH-2. (1) Growth rates were quite high from 2000 to 2007. (2) There were six consecutive quarters of contraction of GDP from IIIQ2008 to IVQ2009. Contractions relative to the quarter a year earlier were quite sharp with the highest of 4.3 percent in IVQ2008, 6.8 percent in IQ2009, 6.3 percent in IIQ2009 and 5.0 percent in IIIQ2009. (3) The economy bounced strongly with 2.0 percent in IIQ2010, 2.4 percent in IIIQ2010 and 1.8 percent in IVQ2010. (4) Recovery in 2011 did not continue at rates comparable to those in 2000 to 2007 and even relative to those in the final three quarters of 2010. Growth relative to the same quarter a year earlier fell from 1.8 percent in IVQ2010 to 1.7 percent in IQ2011, 0.8 percent in IIQ2011, 1.0 percent in IIIQ2011 and 1.1 percent in IVQ2011 but only 0.6 percent in IQ2012, increase of 0.1 percent in IIQ2012 relative to IQ2011, increase of 0.3 percent in IIIQ2012 and 0.2 percent in IVQ2012. In IQ2012, GDP changed 0.0 percent and increased 0.6 percent relative to a year earlier. In IIQ2012, GDP fell 0.4 percent relative to IQ2012 and increased 0.1 percent relative to a year earlier. In IIIQ2012, GDP increased 0.8 percent and increased 0.3 percent relative to the same quarter a year earlier. In IVQ2012, GDP fell 0.2 percent and increased 0.2 percent relative to a year earlier. Fiscal consolidation in an environment of weakening economic growth is much more challenging. Growth increased to 0.5 percent in IQ2013 relative to a year earlier and 0.4 percent in IQ2013 relative to IVQ2012. In IIQ2013, GDP increased 0.8 percent and 1.7 percent relative to a year earlier. GDP increased 0.8 percent in IIIQ2013 and 1.8 percent relative to a year earlier. GDP increased 0.7 percent in IVQ2013 and 2.7 percent relative to a year earlier. In IQ2014, GDP increased 0.8 percent and 3.1 percent relative to a year earlier.

Table VH-2, UK, Percentage Change of GDP from Same Quarter a Year Earlier, Chained Value Measures ∆%

	IQ	IIQ	IIIQ	IV
2014	3.1
2013	0.5	1.7	1.8	2.7
2012	0.6	0.1	0.3	0.2
2011	1.7	0.8	1.0	1.1
2010	0.5	2.0	2.4	1.8
2009	-6.8	-6.3	-5.0	-2.5
2008	2.8	0.6	-2.1	-4.3
2007	2.4	3.3	4.3	3.7
2006	4.0	3.0	2.3	1.8
2005	2.0	2.8	3.7	4.4
2004	4.7	3.7	2.5	1.9
2003	3.2	3.8	4.3	4.5
2002	1.8	1.9	2.3	3.2
2001	2.4	2.1	2.2	2.0
2000	4.7	5.7	4.1	3.0
1999	2.8	2.1	3.2	3.6
1998	4.0	3.5	3.4	3.4

Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/gva/gross-domestic-product--preliminary-estimate/q1-2014/index.html

Table VH-3 provides annual percentage changes of gross value added and key components. Production fell 9.5 percent in 2009 and its most important component manufacturing fell 10.2 percent. Services fell 3.9 percent in 2009. Services grew in all years from 2010 to 2013 while manufacturing fell 1.7 percent in 2012 and 0.7 percent in 2013.

Table VH-3, UK, Gross Value Added by Components, ∆% on Prior Year

	TP	MFG	CONST	SERV	GDP at Market Prices	GVA Ex
2010 Weights	152	104	63	778	1000	981
2009	-9.5	-10.2	-13.3	-3.9	-5.2	-5.4
2010	2.8	4.2	8.3	0.8	1.7	1.8
2011	-1.2	1.8	2.3	1.5	1.1	1.6
2012	-2.4	-1.7	-8.1	1.3	0.3	0.6
2013	-0.3	-0.7	1.1	1.8	1.7	1.8

TP: Total Production; MFG: Manufacturing; CONST: Construction; SERV: Total Services; GVA BP: Gross Value Added at Basic prices; GDP MKT PRICES: GDP at Market Prices; GVA EX: Gross Value Added Excluding Oil and Gas

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/gva/gross-domestic-product--preliminary-estimate/q1-2014/index.html

Percentage changes of gross value added and components are in Table VH-4A. Gross value added increased 0.8 percent in IQ2014 with growth of services of 0.9 percent and production of 0.8 percent while manufacturing expanded 1.3 percent.

Table VH-4A, UK, Gross Value Added by Components, ∆% on Previous Quarter

		TP	MFG	CONST	SERV	GDP at Market Prices	GVA EX
2010 Weights		152	104	63	778	1000	981
2010	Q3	0.1	1.2	1.7	0.5	0.4	0.6
	Q4	0.7	0.8	-2.2	-0.3	-0.2	-0.2
2011	Q1	-1.0	0.2	1.6	0.5	0.5	0.5
	Q2	-1.1	0.2	1.0	0.4	0.1	0.4
	Q3	-0.3	-0.4	-1.1	1.0	0.6	0.7
	Q4	-0.6	-0.4	-0.6	-	-0.1	-
2012	Q1	-0.4	-0.1	-4.4	0.3	-	-
	Q2	-1.0	-1.3	-3.6	-0.1	-0.4	-0.3
	Q3	0.2	0.5	-2.1	1.0	0.8	0.8
	Q4	-2.1	-1.8	1.9	-0.1	-0.2	-
2013	Q1	0.4	-0.2	-1.3	0.5	0.4	0.4
	Q2	0.7	0.6	2.3	0.5	0.8	0.7
	Q3	0.6	0.8	2.6	0.7	0.8	0.8
	Q4	0.5	0.6	-0.2	0.8	0.7	0.7
2014	Q1	0.8	1.3	0.3	0.9	0.8	0.8

TP: Total Production; MFG: Manufacturing; CONST: Construction; SERV: Total Services; GVA BP: Gross Value Added at Basic prices; GDP MKT PRICES: GDP at Market Prices; GVA EX: Gross Value Added Excluding Oil and Gas

Source: UK Office for National Statistics http://www.ons.gov.uk/ons/rel/gva/gross-domestic-product--preliminary-estimate/q1-2014/index.html

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