CMP Associates Regulation Blog: Financial Instability, Mediocre Cyclical United States Economic Growth with GDP Two Trillion Dollars Below Trend, Stagnating Real Disposable Income, Financial Repression, World Cyclical Slow Growth and Global Recession Risk: Part IV

Financial Instability, Mediocre Cyclical United States Economic Growth with GDP Two Trillion Dollars Below Trend, Stagnating Real Disposable Income, Financial Repression, World Cyclical Slow Growth and Global Recession Risk

Carlos M. Pelaez

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

II Stagnating Real Disposable Income and Consumption Expenditures

IB1 Stagnating Real Disposable Income and Consumption Expenditures

IB2 Financial Repression

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 IVQ2013 available now for all countries. There are preliminary estimates for all countries for IQ2014. Growth is weak throughout most of the world.

Japan. The GDP of Japan increased 0.9 percent in IQ2012, 3.8 percent at SAAR (seasonally adjusted annual rate) 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 0.6 percent in IIQ2012 at the seasonally adjusted annual rate (SAAR) of minus 2.2 percent, which is much lower than 3.8 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 3.0 percent and decreased 0.2 percent relative to a year earlier. Japan’s GDP increased 0.1 percent in IVQ2012 at the SAAR of 0.2 percent and decreased 0.3 percent relative to a year earlier. Japan grew 1.2 percent in IQ2013 at the SAAR of 4.9 percent and increased 0.1 percent relative to a year earlier. Japan’s GDP increased 0.9 percent in IIQ2013 at the SAAR of 3.5 percent and increased 1.3 percent relative to a year earlier. Japan’s GDP grew 0.3 percent in IIIQ2013 at the SAAR of 1.3 percent and increased 2.4 percent relative to a year earlier. In IVQ2013, Japan’s GDP increased 0.1 percent at the SAAR of 0.3 percent, increasing 2.5 percent relative to a year earlier. Japan’s GDP increased 1.5 percent in IQ2014 at the SAAR of 5.9 percent and increased 3.0 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 1.1 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. In IQ2014, the GDP of the euro area increased 0.2 percent and 0.9 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 changed 0.0 percent relative to a year earlier. In IQ2013, Germany’s GDP changed 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. The GDP of Germany increased 0.8 percent in IQ2014 and 2.5 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/2014/05/financial-volatility-mediocre-cyclical.html) with weak hiring (http://cmpassocregulationblog.blogspot.com/2014/05/rules-discretionary-authorities-and.html). In IVQ2013, US GDP grew 0.7 percent at 2.6 percent SAAR and 2.6 percent relative to a year earlier. In IQ2014, US GDP decreased 0.2 percent, 2.0 percent relative to a year earlier and -1.0 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. In IQ2014, Italy’s GDP decreased 0.1 percent and fell 0.5 percent relative to a year earlier.
France. France’s GDP increased 0.2 percent in IQ2012 and increased 0.6 percent relative to a year earlier. France’s GDP decreased 0.3 percent in IIQ2012 and increased 0.4 percent relative to a year earlier. In IIIQ2012, France’s GDP increased 0.3 percent and increased 0.5 percent relative to a year earlier. France’s GDP fell 0.3 percent in IVQ2012 and changed 0.0 percent relative to a year earlier. In IQ2013, France GDP changed 0.0 percent and declined 0.2 percent relative to a year earlier. The GDP of France increased 0.6 percent in IIQ2013 and 0.7 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 0.2 percent in IVQ2013 and 0.8 percent relative to a year earlier. In IVQ2014, France’s GDP changed 0.0 percent and increased 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: 3.8	3.2
China	1.4	8.1
Euro Area	-0.1	-0.2
Germany	0.7	1.8
France	0.2	0.6
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: -0.6 SAAR: -2.2	3.2
China	2.1	7.6
Euro Area	-0.3	-0.5
Germany	-0.1	0.6 1.1 CA
France	-0.3	0.4
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: –3.0	-0.2
China	2.0	7.4
Euro Area	-0.2	-0.7
Germany	0.2	0.4
France	0.3	0.5
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: 0.1 SAAR: 0.2	-0.3
China	1.9	7.9
Euro Area	-0.5	-1.0
Germany	-0.5	0.0
France	-0.3	0.0
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: 1.2 SAAR: 4.9	0.1
China	1.5	7.7
Euro Area	-0.2	-1.1
Germany	0.0	-1.6
France	0.0	-0.2
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: 0.9 SAAR: 3.5	1.3
China	1.8	7.5
Euro Area	0.3	-0.6
Germany	0.7	0.9
France	0.6	0.7
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: 0.3 SAAR: 1.3	2.4
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: 0.1 SAAR: 0.3	2.5
China	1.7	7.7
Euro Area	0.2	0.5
Germany	0.4	1.3
France	0.2	0.8
Italy	0.1	-0.9
UK	0.7	2.7
	IQ2014/IVQ2013	IQ2014/IQ2013
USA	QOQ -0.2 SAAR -1.0	2.0
Japan	QOQ: 1.5 SAAR: 5.9	3.0
China	1.4	7.4
Euro Area	0.2	0.9
Germany	0.8	2.5
France	0.0	0.8
Italy	-0.1	-0.5
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 (http://cmpassocregulationblog.blogspot.com/2014/05/united-states-commercial-banks-assets.html and earlier http://cmpassocregulationblog.blogspot.com/2014/05/financial-volatility-mediocre-cyclical.html 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 Apr 2014, Japan’s exports grew 5.1 percent in 12 months while imports increased 3.4 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. Net trade deducted 1.1 percentage point from GDP growth of Japan in IQ2014.
China. In Apr 2014, China exports increased 0.9 percent relative to a year earlier and imports increased 0.8 percent.
Germany. Germany’s exports decreased 1.8 percent in the month of Mar 2014 and increased 1.9 percent in the 12 months ending in Mar 2014. Germany’s imports decreased 0.9 percent in the month of Mar and increased 5.6 percent in the 12 months ending in Mar. Net trade contributed 0.8 percentage points to growth of GDP in IQ2012, contributed 0.3 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 0.1 percentage points in IIQ2013. Net traded deducted 0.5 percentage points from Germany’s GDP growth in IIIQ2013 and added 0.4 percentage points to GDP growth in IVQ2013. Net trade added 0.1 percentage points to GDP growth in IQ2014.
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. Net trade contributed 0.0 percentage points to UK value added in IQ2014.
France. France’s exports increased 0.6 percent in Mar 2014 while imports increased 3.4 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 0.5 percentage points in IIIQ2013. Net trade added 0.3 percentage points to France’s GDP in IVQ2013 and deducted 0.2 percentage points in IQ2014.
United States. US exports increased 2.1 percent in Mar 2014 and goods exports increased 2.6 percent in Jan-Mar 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. Net trade deducted 0.95 percentage points from US GDP growth in IQ2014. Industrial production decreased 0.6 percent in Apr 2014 after increasing 0.9 percent in Mar 2014 and increasing 1.1 percent in Feb 2014, with all data seasonally adjusted. The Federal Reserve completed its annual revision of industrial production and capacity utilization on Mar 28, 2014 (http://www.federalreserve.gov/releases/g17/revisions/Current/DefaultRev.htm). The report of the Board of Governors of the Federal Reserve System states (http://www.federalreserve.gov/releases/g17/Current/default.htm):

“Industrial production decreased 0.6 percent in April 2014 after having risen about 1 percent in both February and March. In April, manufacturing output fell 0.4 percent. The index had increased substantially in February and March following a decrease in January; severe weather had restrained production early in the quarter. The output of utilities dropped 5.3 percent in April, as demand for heating returned toward normal levels. The production at mines increased 1.4 percent following a gain of 2.0 percent in March. At 102.7 percent of its 2007 average, total industrial production in April was 3.5 percent above its level of a year earlier. The capacity utilization rate for total industry decreased 0.7 percentage point in April to 78.6 percent, a rate that is 1.5 percentage points below its long-run (1972–2013) average.”

In the six months ending in Apr 2014, United States national industrial production accumulated increase of 2.0 percent at the annual equivalent rate of 4.1 percent, which is higher than growth of 3.5 percent in the 12 months ending in Apr 2014. Excluding growth of 1.1 percent in Feb 2014 (revised from 1.2 percent in the prior estimate), growth in the remaining five months from Nov to Apr 2014 accumulated to 1.0 percent or 2.2 percent annual equivalent. Industrial production fell in two of the past six months. Business equipment accumulated growth of 2.2 percent in the six months from Nov 2013 to Apr 2014 at the annual equivalent rate of 4.4 percent, which is higher than growth of 4.1 percent in the 12 months ending in Apr 2014. The Fed analyzes capacity utilization of total industry in its report (http://www.federalreserve.gov/releases/g17/Current/default.htm): “The capacity utilization rate for total industry decreased 0.7 percentage point in April to 78.6 percent, a rate that is 1.5 percentage points below its long-run (1972–2013) average.” United States industry apparently decelerated to a lower growth rate with possible acceleration in the past few months.

Manufacturing decreased 0.4 percent in Apr 2014 after increasing 0.7 percent in Mar 2014 and increasing 1.5 percent in Feb 2014 seasonally adjusted, increasing 2.5 percent not seasonally adjusted in the 12 months ending in Apr 2014. Manufacturing grew cumulatively 1.4 percent in the six months ending in Apr 2014 or at the annual equivalent rate of 2.8 percent. Excluding the increase of 1.5 percent in Feb 2014 (revised from 1.4 percent in the prior estimate), manufacturing accumulated growth of -0.1 percent from Nov 2013 to Apr 2014 or at the annual equivalent rate of -0.3 percent. Table I-2 provides a longer perspective of manufacturing in the US. There has been evident deceleration of manufacturing growth in the US from 2010 and the first three months of 2011 into more recent months as shown by 12 months rates of growth. Growth rates appeared to be increasing again closer to 5 percent in Apr-Jun 2012 but deteriorated. The rates of decline of manufacturing in 2009 are quite high with a drop of 18.2 percent in the 12 months ending in Apr 2009. Manufacturing recovered from this decline and led the recovery from the recession. Rates of growth appeared to be returning to the levels at 3 percent or higher in the annual rates before the recession but the pace of manufacturing fell steadily in the past six months with some strength at the margin. The Board of Governors of the Federal Reserve System conducted the annual revision of industrial production released on Mar 28, 2014 (http://www.federalreserve.gov/releases/g17/revisions/Current/DefaultRev.htm):

“The Federal Reserve has revised its index of industrial production (IP) and the related measures of capacity and capacity utilization. The annual revision for 2014 was more limited than in recent years because the source data required to extend the annual benchmark indexes of production into 2012 were mostly unavailable. Consequently, the IP indexes published with this revision are very little changed from previous estimates. Measured from fourth quarter to fourth quarter, total IP is now reported to have increased about 3 1/3 percent in each year from 2011 to 2013. Relative to the rates of change for total IP published earlier, the new rates are 1/2 percentage point higher in 2012 and little changed in any other year. Total IP still shows a peak-to-trough decline of about 17 percent for the most recent recession, and it still returned to its pre-recession peak in the fourth quarter of 2013.”

Manufacturing output fell 21.9 from the peak in Jun 2007 to the trough in Apr 2009 and increased 19.9 percent from the trough in Apr 2009 to Dec 2013. Manufacturing grew 22.3 percent from the trough in Apr 2009 to Apr 2014. Manufacturing output in Apr 2014 is 4.5 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	2.1 Mar	2.6 Jan-Mar	1.1 Mar	1.8 Jan-Mar
Japan		Apr 2014 5.1 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		Apr 2013 3.4 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 0.9 Apr -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 0.8 Apr -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	-0.7 12-M Mar	1.0 Jan-Mar	2.5 12-M Mar	-0.1 Jan-Mar
Germany	-1.8 Mar CSA	1.9 Mar	-0.9 Mar CSA	5.6 Mar
France Mar	0.6	0.5	3.4	1.1
Italy Mar	-0.8	1.2	-1.0	-1.3
UK	2.8 Mar	-2.7 Jan-Mar 14 /Jan-Mar 13	1.6 Mar	-2.8 Jan-Mar 14 13/Jan-Mar 13
Net Trade % Points GDP Growth	% Points
USA	IQ2014 -0.95 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 0.5 IIQ2013 -2.0 IIIQ2013 -2.2 IVQ2013 -1.1 IQ2014
Germany	IQ2012 0.8 IIQ2012 0.4 IIIQ2012 0.3 IVQ2012 -0.5 IQ2013 -0.3 IIQ2013 0.1 IIIQ2013 -0.5 IVQ2013 0.4 IQ2014 0.1
France	0.1 IIIQ2012 0.1 IVQ2012 -0.1 IQ2013 0.2 IIQ2013 -0.5 IIIQ2013 0.3 IVQ2013 -0.2 IQ2014
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 0.0 IQ2014

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 Apr 2014. The share of Asia in Japan’s trade is more than one-half for 53.8 percent of exports and 45.2 percent of imports. Within Asia, exports to China are 18.0 percent of total exports and imports from China 22.6 percent of total imports. While exports to China increased 9.8 percent in the 12 months ending in Apr 2014, imports from China increased 7.8 percent. The largest export market for Japan in Apr 2014 is the US with share of 18.5 percent of total exports, which is close to that of China, and share of imports from the US of 8.4 percent in total imports. Japan’s exports to the US grew 1.9 percent in the 12 months ending in Apr 2014 and imports from the US grew 6.9 percent. Western Europe has share of 10.7 percent in Japan’s exports and of 10.3 percent in imports. Rates of growth of exports of Japan in Apr 2014 are 1.9 percent for exports to the US, minus 5.9 percent for exports to Brazil and 17.6 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 Apr 2014 are positive for all trading partners except for declines from Canada and the Middle East. Imports from Asia increased 7.6 percent in the 12 months ending in Apr 2014 while imports from China increased 7.8 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

Apr 2014	Exports Millions Yen	12 months ∆%	Imports Millions Yen	12 months ∆%
Total	6,069,221	5.1	6,878,077	3.4
Asia	3,263,128	3.6	3,109,642	7.6
China	1,095,389	9.8	1,556,390	7.8
USA	1,122,903	1.9	575,427	6.9
Canada	76,087	12.0	92,453	-18.4
Brazil	44,568	-5.9	73,187	5.0
Mexico	98,272	19.7	37,125	9.5
Western Europe	649,304	14.4	710,007	10.1
Germany	169,365	17.6	189,736	7.8
France	54,689	-7.3	96,321	1.0
UK	91,072	10.2	66,436	30.4
Middle East	246,455	25.6	1,249,425	-6.9
Australia	132,306	-10.0	426,071	7.4

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, decreased to 52.8 in Apr from 53.5 in Mar, indicating expansion at slower rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/b77c620676264a6796b9fbf3107eb7c2). This index has remained above the contraction territory of 50.0 during 57 consecutive months. The employment index increased from 51.2 in Mar to 51.3 in Apr with input prices rising at faster rate, new orders increasing at faster rate and output increasing at slower rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/b77c620676264a6796b9fbf3107eb7c2). David Hensley, Director of Global Economics Coordination at JP Morgan finds slower growth in Apr but consistent with trend growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/b77c620676264a6796b9fbf3107eb7c2). The JP Morgan Global Manufacturing PMI^™, produced by JP Morgan and Markit in association with ISM and IFPSM, decreased at 51.9 in Apr from 52.4 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/e33db41bb7a74f99a5745fc9e8a1ccdc). New export orders expanded for the tenth consecutive month (http://www.markiteconomics.com/Survey/PressRelease.mvc/e33db41bb7a74f99a5745fc9e8a1ccdc). 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/e33db41bb7a74f99a5745fc9e8a1ccdc). The HSBC Brazil Composite Output Index, compiled by Markit, decreased from 51.0 in Mar to 49.9 in Apr, indicating unchanged activity of Brazil’s private sector (http://www.markiteconomics.com/Survey/PressRelease.mvc/81ac0bcfe934407bbf9265892dc7f5ab). The HSBC Brazil Services Business Activity index, compiled by Markit, decreased from 51.0 in Mar to 50.4 in Apr, indicating expanding services activity (http://www.markiteconomics.com/Survey/PressRelease.mvc/81ac0bcfe934407bbf9265892dc7f5ab). André Loes, Chief Economist, Brazil, at HSBC, finds weak private sector activity with the lowest reading in services since beginning of the survey in Mar 2007 (http://www.markiteconomics.com/Survey/PressRelease.mvc/81ac0bcfe934407bbf9265892dc7f5ab). The HSBC Brazil Purchasing Managers’ Index^TM (PMI^™) decreased marginally from 50.6 in Mar to 49.3 in Apr, indicating moderate deterioration in manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/132098e6bc0f480091727931998683ec). André Loes, Chief Economist, Brazil at HSBC, finds loss of impulse in the economy in the beginning of IIQ2014 (http://www.markiteconomics.com/Survey/PressRelease.mvc/132098e6bc0f480091727931998683ec).

VA United States. The Markit Flash US Manufacturing Purchasing Managers’ Index^™ (PMI^™) seasonally adjusted increased to 56.2 in May from 55.4 in Apr (http://www.markiteconomics.com/Survey/PressRelease.mvc/1132ab4261d34b5a9194a1c5aed2ddad). New export orders registered 51.5 in May, decreasing from 51.7 in Apr, indicating expansion at a slower rate. Chris Williamson, Chief Economist at Markit, finds that manufacturing hiring is growing with creation of about 15,000 to 20,000 jobs per month and output increasing at the fastest pace in more than three years (http://www.markiteconomics.com/Survey/PressRelease.mvc/1132ab4261d34b5a9194a1c5aed2ddad). The Markit Flash US Services PMI™ Business Activity Index increased from 55.0 in Apr to 58.4 in May (http://www.markiteconomics.com/Survey/PressRelease.mvc/772f9f410a674dc28ef47cfce6cc9ab1). Tim Moore, Senior Economist at Markit, finds that the surveys are consistent with stronger growth in IIQ2014 (http://www.markiteconomics.com/Survey/PressRelease.mvc/772f9f410a674dc28ef47cfce6cc9ab1). The Markit US Composite PMI™ Output Index of Manufacturing and Services decreased to 55.6 in Apr from 55.7 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/eef06d1776ff43e282becdeae7128aee). The Markit US Services PMI™ Business Activity Index decreased from 53.3 in Mar to 55.0 in Apr (http://www.markiteconomics.com/Survey/PressRelease.mvc/eef06d1776ff43e282becdeae7128aee). Chris Williamson, Chief Economist at Markit, finds the indexes consistent with growth of 2.5 percent in the US (http://www.markiteconomics.com/Survey/PressRelease.mvc/eef06d1776ff43e282becdeae7128aee). The Markit US Manufacturing Purchasing Managers’ Index^™ (PMI^™) decreased to 55.4 in Apr from 55.5 in Mar, which indicates expansion at slower rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/d2352a78ab514fb0902b46a4e982e809). The index of new exports orders increased from 51.1 in Mar to 51.7 in Apr while total new orders increased from 58.1 in Mar to 58.9 in Apr. Chris Williamson, Chief Economist at Markit, finds that the index suggests weaker growth with strength in domestic orders and slow growth of new export orders (http://www.markiteconomics.com/Survey/PressRelease.mvc/d2352a78ab514fb0902b46a4e982e809). The purchasing managers’ index (PMI) of the Institute for Supply Management (ISM) Report on Business^® increased 1.2 percentage points from 53.7 in Mar to 54.9 in Apr, which indicates growth at a faster rate (http://www.ism.ws/ISMReport/MfgROB.cfm?navItemNumber=12942). The index of new orders changed 0.0 percentage points from 55.1 in Mar to 55.1 in Apr. The index of exports increased 1.5 percentage point from 55.5 in Mar to 57.0 in

Apr, growing at a faster rate. The Non-Manufacturing ISM Report on Business^® PMI increased 2.1 percentage points from 53.1 in Mar to 55.2 in Apr, indicating growth of business activity/production during 57 consecutive months, while the index of new orders increased 2.1 percentage points from 53.4 in Mar to 58.2 in Apr (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	Apr 12 months NSA ∆%: 2.0; ex food and energy ∆%: 1.8 Apr month SA ∆%: 0.3; ex food and energy ∆%: 0.2 Blog 5/18/14
Producer Price Index	Finished Goods Apr 12-month NSA ∆%: 3.1; ex food and energy ∆% 1.7 Apr month SA ∆% = 0.7; ex food and energy ∆%: 0.3 Final Demand Apr 12-month NSA ∆%: 2.1; ex food and energy ∆% 1.9 Apr month SA ∆% = 0.6; ex food and energy ∆%: 0.5 Blog 5/18/14
PCE Inflation	Apr 12-month NSA ∆%: headline 1.6; ex food and energy ∆% 1.4 Blog 6/1/14
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 Mar 2014 4.134 million lower by 0.593 million than 4.727 million in Mar 2006 Blog 5/11/14
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 2.0 IQ2012 SAAR 3.7 IIQ2012 SAAR 1.2 IIIQ2012 SAAR 2.8 IVQ2012 SAAR 0.1 IQ2013 SAAR 1.1 IIQ2013 SAAR 2.5 IIIQ2013 SAAR 4.1 IVQ2013 SAAR 2.6 IQ2014 SAAR -1.0 Blog 6/1/14
Real Private Fixed Investment	SAAR IQ2014 minus 2.3 ∆% IVQ2007 to IQ2014: minus 3.5% Blog 6/1/14
Corporate Profits	IQ2014 SAAR: Corporate Profits -9.8; Undistributed Profits -19.0 Blog 6/1/14
Personal Income and Consumption	Apr month ∆% SA Real Disposable Personal Income (RDPI) SA ∆% 0.2 Real Personal Consumption Expenditures (RPCE): minus 0.3 12-month Apr NSA ∆%: RDPI: 2.0; RPCE ∆%: 2.7 Blog 6/1/14
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	Apr month SA ∆%: -0.6 Apr 12 months SA ∆%: 3.5 Manufacturing Apr SA ∆% minus 0.4 Apr 12 months SA ∆% 2.9, NSA 2.5 Capacity Utilization: 78.6 Blog 5/18/14
Productivity and Costs	Nonfarm Business Productivity IQ2014∆% SAAE -1.7; IQ2014/IQ2013 ∆% 1.4; Unit Labor Costs SAAE IQ2014 ∆% 4.2; IQ2014/IQ2013 ∆%: 0.9 Blog 5/11/2014
New York Fed Manufacturing Index	General Business Conditions From Apr 1.29 to May 19.01 New Orders: From Apr minus 2.77 to May 10.44 Blog 5/18/14
Philadelphia Fed Business Outlook Index	General Index from Apr 16.6 to May 15.4 New Orders from Apr 14.8 to May 10.5 Blog 5/18/14
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	Apr New Orders SA ∆%: 0.8; ex transport ∆%: 0.1 Jan-Apr 14/Jan-Apr 13 New Orders NSA ∆%: 4.9; ex transport ∆% 3.3 Blog 6/1/14
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-Mar 2014/Jan-Mar 2013 NSA ∆%: Total 4.3; Durable Goods: 3.5; Nondurable Goods: 5.1 Blog 5/11/14
Sales and Inventories of Manufacturers, Retailers and Merchant Wholesalers	Mar 14 12-M NSA ∆%: Sales Total Business 3.9; Manufacturers 2.7 Retailers 2.9; Merchant Wholesalers 6.2 Blog 5/18/14
Sales for Retail and Food Services	Jan-Apr 2014/Jan-Apr 2013 ∆%: Retail and Food Services 3.0; Retail ∆% 1.9 Blog 5/18/14
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	Mar 2014/Mar 2013 ∆% NSA: 10 Cities 12.6; 20 Cities: 12.4 ∆% Mar SA: 10 Cities 1.1 ; 20 Cities: 1.2 Blog 6/1/14
FHFA House Price Index Purchases Only	Mar SA ∆% 0.7; 12 month NSA ∆%: 6.5 Blog 6/1/14
New House Sales	Apr 2014 month SAAR ∆%: 6.4 Jan-Apr 2014/Jan-Apr 2013 NSA ∆%: -2.6 Blog 5/25/14
Housing Starts and Permits	Apr Starts month SA ∆% 13.2; Permits ∆%: 8.0 Jan-Apr 2014/Jan-Apr 2013 NSA ∆% Starts 5.7; Permits ∆% 7.0 Blog 5/25/14
Trade Balance	Balance Mar SA -$40,738 million versus Feb -$41,874 million Exports Mar SA ∆%: 2.1 Imports Mar SA ∆%: 1.1 Goods Exports Jan-Mar 2014/Jan-Mar 2013 NSA ∆%: 2.6 Goods Imports Jan-Mar 2014/Jan-Mar 2012 NSA ∆%: 1.8 Blog 5/11/14
Export and Import Prices	Apr 12-month NSA ∆%: Imports -0.3; Exports 0.1 Blog 5/18/14
Consumer Credit	Mar ∆% annual rate: Total 6.7; Revolving 1.6; Nonrevolving 8.7 Blog 5/11/14
Net Foreign Purchases of Long-term Treasury Securities	Mar Net Foreign Purchases of Long-term US Securities: $4.0 billion Major Holders of Treasury Securities: China $1272 billion; Japan $1200 billion; Total Foreign US Treasury Holdings Mar $5949 billion Blog 5/18/14
Treasury Budget	Fiscal Year 2014/2013 ∆% Apr: Receipts 8.2; Outlays minus 2.4; Individual Income Taxes 3.5 Deficit Fiscal Year 2011 $1,300 billion Deficit Fiscal Year 2012 $1,087 billion Deficit Fiscal Year 2013 $680 billion Blog 5/18/2014
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	Apr 2014 SAAR ∆%: Securities 3.7 Loans 8.3 Cash Assets 2.2 Deposits 9.3 Blog 5/25/14
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:

5/25/14 http://cmpassocregulationblog.blogspot.com/2014/05/united-states-commercial-banks-assets.html

5/18/14 http://cmpassocregulationblog.blogspot.com/2014/05/world-inflation-waves-squeeze-of.html

5/11/14 http://cmpassocregulationblog.blogspot.com/2014/05/rules-discretionary-authorities-and.html

5/4/2014 http://cmpassocregulationblog.blogspot.com/2014/05/financial-volatility-mediocre-cyclical.html

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

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

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

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

Manufacturers’ shipments of durable goods decreased 0.2 percent in Apr 2014, increasing 1.3 percent in Mar 2014 and increasing 1.1 percent in Feb 2014. New orders increased 0.8 percent in Apr 2014 after increasing 3.6 percent in Mar 2014 and increasing 2.6 percent in Feb 2014, as shown in Table VA-1. These data are very volatile. Volatility is illustrated by decrease of 12.9 percent in Nov 2012 after increase of orders for nondefense aircraft of 2642.2 percent in Sep 2012 after decrease of 97.2 percent in Aug and increases of 51.1 percent in Jul 2012 and 32.5 percent in Jun 2012. Nondefense aircraft new orders decreased 4.1 percent in Apr 2014 after increasing 11.3 percent in Mar 2014 and increasing 11.4 percent in Feb 2014. New orders excluding transportation equipment increased 0.1 percent in Apr 2014, increasing 2.9 percent in Mar 2014 and increasing 0.8 percent in Feb 2014. Capital goods new orders, indicating investment, increased 3.0 percent in Apr 2014, increasing 10.5 percent in Mar 2014 and decreasing 0.6 percent in Feb 2014. New orders of nondefense capital goods decreased 1.0 percent in Apr 2014, after increasing 9.7 percent in Mar 2014 and decreasing 1.8 percent in Feb 2014. Capital goods orders excluding volatile aircraft decreased 1.2 percent in Apr 2014, increasing 4.7 percent in Mar 2014 and increasing 0.1 percent in Feb 2014.

Table VA-1, US, Durable Goods Value of Manufacturers’ Shipments and New Orders, SA, Month ∆%

	Apr 2014 ∆%	Mar 2014 ∆%	Feb 2014 ∆%
Total
S	-0.2	1.3	1.1
NO	0.8	3.6	2.6
Excluding Transport
S	0.1	1.4	0.6
NO	0.1	2.9	0.8
Excluding Defense
S	-0.2	1.2	1.3
NO	-0.8	2.9	2.3
Machinery
S	-1.4	3.0	2.3
NO	-2.9	4.4	0.1
Computers & Electronic Products
S	0.8	1.2	-1.2
NO	-1.1	7.3	-0.2
Computers
S	10.5	3.5	-10.2
NO	7.0	4.9	-2.9
Transport Equipment
S	-1.0	1.0	2.3
NO	2.3	5.0	6.9
Motor Vehicles
S	-1.1	0.1	5.2
NO	-1.0	0.3	4.9
Nondefense Aircraft
S	-2.3	3.7	-4.8
NO	-4.1	11.3	11.4
Capital Goods
S	-0.4	2.2	0.3
NO	3.0	10.5	-0.6
Nondefense Capital Goods
S	-0.6	2.5	0.6
NO	-1.0	9.7	-1.8
Capital Goods ex Aircraft
S	-0.4	2.1	0.8
NO	-1.2	4.7	0.1

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

Source: US Census Bureau

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

Chart VA-1 of the US Census Bureau provides new orders of durable goods seasonally adjusted since Jan 1992. New orders fell sharply during the global recession. New orders recovered at faster rates and then flattened together with the rest of the economy after 2012. There are also downward effects of lower inflation because data are nominal without adjustment for inflation.

Chart VA-1, US, Durable Goods New orders, SA

Source: US Census Bureau

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

Chart VA-2 provides monthly changes in durable goods new orders. There is significant volatility in these data, preventing clear identification of trends.

Chart VA-2, US, Manufacturers’ Durable Goods New Orders 2013-2014

Source: US Census Bureau

http://www.census.gov/briefrm/esbr/www/esbr021.html

Additional perspective on manufacturers’ shipments and new orders of durable goods is in Table VA-2. Values are cumulative millions of dollars in Jan-Apr 2014 not seasonally adjusted (NSA) and without adjustment for inflation. Shipments of all manufacturing industries in Jan-Apr 2014 total $921 billion and new orders total $920 billion, growing respectively by 3.8 percent and 4.9 percent relative to the same period in 2013. Excluding transportation equipment, shipments grew 3.8 percent and new orders increased 3.3 percent. Excluding defense, shipments grew 4.2 percent and new orders grew 4.3 percent. Important information not in Table VA-2 is the large share of nondurable goods. Capital goods have relatively high value of $329 billion for shipments, growing 3.8 percent, and new orders $346 billion, increasing 4.6 percent. Excluding aircraft, capital goods shipments reached $263 billion, growing by 3.0 percent, and new orders $279 billion, increasing 3.1 percent. Data weakened in 2013 with effects of lower inflation on nominal values with recovery later in the year.

Table VA-2, US, Value of Manufacturers’ Shipments and New Orders of Durable Goods, NSA, Millions of Dollars

Jan-Apr 2014	Shipments	∆% 2014/ 2013	New Orders	∆% 2014/ 2013
Total	920,837	3.8	919,762	4.9
Excluding Transport	650,119	3.8	642,025	3.3
Excluding Defense	875,694	4.2	874,714	4.3
Machinery	139,806	3.5	149,232	7.0
Computers & Electronic Products	110,770	4.8	84,133	4.3
Computers & Related Products	7,979	-1.5	7,759	-6.9
Transport Equipment	270,718	4.0	277,737	8.6
Motor Vehicles	182,083	3.2	182,444	3.3
Nondefense Aircraft	43,470	14.8	49,485	15.1
Capital Goods	329,012	3.8	345,810	4.6
Nondefense Capital Goods	292,172	4.6	308,441	2.9
Capital Goods ex Aircraft	262,589	3.0	278,897	3.1

Note: Transport: transportation

Source: US Census Bureau

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

Chart VA-3 of the US Census Bureau provides new orders of durable goods not seasonally adjusted since Jan 1992. New orders are oscillating around the highest value before the global recession, which could be lower in real terms because of continuing inflation.

Chart VA-3, US, Durable Goods New orders, NSA

Source: US Census Bureau

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

Chart VA-4 of the Board of Governors of the Federal Reserve System shows that output of durable manufacturing accelerated in the 1980s and 1990s with slower growth in the 2000s perhaps because processes matured. Growth was robust after the major drop during the global recession but appears to vacillate in the final segment.

Chart VA-4, US, Output of Durable Manufacturing, 1972-2014

Source: Board of Governors of the Federal Reserve System

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

Manufacturing jobs increased 12,000 in Apr 2014 relative to Mar 2014, seasonally adjusted. Manufacturing jobs not seasonally adjusted increased 103,000 from Apr 2013 to
Apr 2014 or at the average monthly rate of 8,583. There are effects of the weaker economy and international trade together with the yearly adjustment of labor statistics. Industrial production decreased 0.6 percent in Apr 2014 after increasing 0.9 percent in Mar 2014 and increasing 1.1 percent in Feb 2014, with all data seasonally adjusted. The Federal Reserve completed its annual revision of industrial production and capacity utilization on Mar 28, 2014 (http://www.federalreserve.gov/releases/g17/revisions/Current/DefaultRev.htm). The report of the Board of Governors of the Federal Reserve System states (http://www.federalreserve.gov/releases/g17/Current/default.htm):

Table VA-3 provides national income by industry without capital consumption adjustment (WCCA). “Private industries” or economic activities have share of 86.7 percent in IVQ2013. Most of US national income is in the form of services. In Apr 2014, there were 138.288 million nonfarm jobs NSA in the US, according to estimates of the establishment survey of the Bureau of Labor Statistics (BLS) (http://www.bls.gov/news.release/empsit.nr0.htm Table B-1). Total private jobs of 115.990 million NSA in Apr 2014 accounted for 83.9 percent of total nonfarm jobs of 138.288 million, of which 12.044 million, or 10.4 percent of total private jobs and 8.7 percent of total nonfarm jobs, were in manufacturing. Private service-producing jobs were 97.183 million NSA in Apr 2014, or 70.3 percent of total nonfarm jobs and 83.8 percent of total private-sector jobs. Manufacturing has share of 11.0 percent in US national income in IVQ2013, as shown in Table VA-3. Most income in the US originates in services. Subsidies and similar measures designed to increase manufacturing jobs will not increase economic growth and employment and may actually reduce growth by diverting resources away from currently employment-creating activities because of the drain of taxation.

Table VA-3, US, National Income without Capital Consumption Adjustment by Industry, Seasonally Adjusted Annual Rates, Billions of Dollars, % of Total

	SAAR IV2013	% Total	SAAR IQ2014	% Total
National Income WCCA	14,811.5	100.0	14,927.6	100.0
Domestic Industries	14,527.6	98.1	14,692.8	98.4
Private Industries	12,844.2	86.7	13,003.8	87.1
Agriculture	206.0	1.4
Mining	258.4	1.7
Utilities	208.8	1.4
Construction	650.1	4.4
Manufacturing	1635.5	11.0
Durable Goods	914.2	6.2
Nondurable Goods	721.3	4.9
Wholesale Trade	885.8	6.0
Retail Trade	1000.5	6.8
Transportation & WH	453.5	3.1
Information	519.1	3.5
Finance, Insurance, RE	2531.8	17.1
Professional & Business Services	2033.6	13.7
Education, Health Care	1451.5	9.8
Arts, Entertainment	591.4	4.0
Other Services	418.1	2.8
Government	1683.4	11.4	1689.1	11.3
Rest of the World	284.0	1.9	234.8	1.6

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

Source: US Bureau of Economic Analysis

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

IIB4 United States House Prices. The Federal Housing Finance Agency (FHFA), which regulates Fannie Mae and Freddie Mac, provides the FHFA House Price Index (HPI) that “is calculated using home sales price information from Fannie Mae and Freddie Mac-acquired mortgages” (http://fhfa.gov/webfiles/24216/q22012hpi.pdf 1). Table IIA2-1 provides the FHFA HPI for purchases only, which shows behavior similar to that of the Case-Shiller index but with lower magnitudes. House prices catapulted from 2000 to 2003, 2005 and 2006. From IQ2000 to IQ2006, the index for the US as a whole rose 60.4 percent, with 82.1 percent for New England, 81.1 percent for Middle Atlantic, 74.4 percent for South Atlantic but only by 30.3 percent for East South Central. Prices fell relative to 2013 for the US and all regions from 2006 with exception of increase of 3.0 percent for South Central. Prices for the US increased 6.6 percent in IQ2014 relative to IQ2013 and 14.1 percent from IQ2012 to IQ2014. From IQ2000 to IQ2014, prices rose for the US and the four regions in Table IIA2-1.

Table IIA2-1, US, FHFA House Price Index Purchases Only NSA ∆%

	United States	New England	Middle Atlantic	South Atlantic	East South Central
IQ2000 to IQ2003	22.9	42.5	33.7	24.0	9.7
IQ2000 to IQ2005	47.0	74.8	65.5	54.2	21.0
IQ2000 to IQ2006	60.4	82.1	81.1	74.4	30.3
IQ2005 to IQ2014	2.0	-7.8	3.1	-1.4	10.9
IQ2006 to IQ2014	-6.7	-11.6	-5.8	-12.8	3.0
IQ2007 to IQ2014	-8.6	-9.9	-7.3	-15.6	-2.0
IQ2011 to IQ2014	14.8	4.3	3.2	16.5	9.7
IQ2012 to IQ2014	14.1	5.7	4.2	15.2	8.3
IQ2013 to IQ2014	6.6	3.0	2.4	6.9	3.7
IQ2000 to IQ2014	49.7	61.1	70.6	52.0	34.2

Source: Federal Housing Finance Agency

http://fhfa.gov/Default.aspx?Page=14

Data of the FHFA HPI for the remaining US regions are in Table IIA2-2. Behavior is not very different from that in Table IIA2-1 with the exception of East North Central. House prices in the Pacific region doubled between 2000 and 2006. Although prices of houses declined sharply from 2005 and 2006 to 2014 with exception of West South Central and West North Central, there was still appreciation relative to 2000.

Table IIA2-2, US, FHFA House Price Index Purchases Only NSA ∆%

	West South Central	West North Central	East North Central	Mountain	Pacific
IQ2000 to IQ2003	12.8	18.7	14.6	17.1	39.6
IQ2000 to IQ2005	22.1	31.5	24.8	45.2	99.1
IQ2000 to IQ2006	31.0	38.1	28.3	68.8	128.5
IQ2005 to IQ2014	28.7	5.5	-7.5	6.1	-9.0
IQ2006 to IQ2014	20.0	0.5	-10.1	-8.7	-20.7
IQ2007 to IQ2014	13.3	-1.3	-10.0	-12.7	-19.9
IQ2011 to IQ2014	15.8	11.9	10.1	27.0	28.4
IQ2012 to IQ2014	12.7	9.6	9.9	25.5	30.0
IQ2013 to IQ2014	6.1	5.1	5.3	10.5	13.2
IQ2000 to IQ2014	57.2 219.67	38.8 210.30	15.4 172.33	54.0 254.85	81.2 220.96

Source: Federal Housing Finance Agency

http://fhfa.gov/Default.aspx?Page=14

Monthly and 12-month percentage changes of the FHFA House Price Index are in Table IIA2-3. Percentage monthly increases of the FHFA index were positive from Apr to Jul 2011 with exception of declines in May and Aug 2011 while 12 months percentage changes improved steadily from around minus 6 percent in Mar to May 2011 to minus 4.4 percent in Jun 2011. The FHFA house price index fell 0.5 percent in Oct 2011 and fell 3.0 percent in the 12 months ending in Oct. There was significant recovery in Nov 2012 with increase in the house price index of 0.5 percent and reduction of the 12-month rate of decline to 2.2 percent. The house price index rose 0.4 percent in Dec 2011 and the 12-month percentage change improved to minus 1.3 percent. There was further improvement with revised decline of 0.2 percent in Jan 2012 and decline of the 12-month percentage change to minus 1.0 percent. The index improved to positive change of 0.4 percent in Feb 2012 and increase of 0.3 percent in the 12 months ending in Feb 2012. There was strong improvement in Mar 2012 with gain in prices of 0.9 percent and 2.4 percent in 12 months. The house price index of FHFA increased 0.7 percent in Apr 2012 and 3.0 percent in 12 months and improvement continued with increase of 0.6 percent in May 2012 and 3.8 percent in the 12 months ending in May 2012. Improvement consolidated with increase of 0.4 percent in Jun 2012 and 3.8 percent in 12 months. In Jul 2012, the house price index increased 0.2 percent and 3.8 percent in 12 months. Strong increase of 0.5 percent in Aug 2012 pulled the 12-month change to 4.4 percent. There was another increase of 0.7 percent in Oct and 5.6 percent in 12 months followed by increase of 0.6 percent in Nov 2012 and 5.6 percent in 12 months. The FHFA house price index increased 0.6 percent in Jan 2013 and 6.5 percent in 12 months. Improvement continued with increase of 0.4 percent in Apr 2013 and 7.3 percent in 12 months. In May 2013, the house price indexed increased 1.0 percent and 7.7 percent in 12 months. The FHFA house price index increased 0.7 percent in Jun 2013 and 8.0 percent in 12 months. In Jul 2013, the FHFA house price index increased 0.7 percent and 8.6 percent in 12 months. Improvement continued with increase of 0.4 percent in Aug 2013 and 8.5 percent in 12 months. In Sep 2013, the house price index increased 0.2 percent and 8.3 percent in 12 months. The house price index increased 0.5 percent in Oct 2013 and 8.1 percent in 12 months. In Nov 2013, the house price index decreased 0.1 percent and increased 7.4 percent in 12 months. The house price index rose 0.7 percent in Dec 2013 and 7.6 percent in 12 months. Improved continued with increase of 0.4 percent in Jan 2014 and 7.3 percent in 12 months. In Feb 2014, the house price index increased 0.6 percent and 6.9 percent in 12 months. The house price index increased 0.7 percent in Mar 2014 and 6.5 percent in 12 months.

Table IIA2-3, US, FHFA House Price Index Purchases Only SA. Month and NSA 12-Month ∆%

	Month ∆% SA	12 Month ∆% NSA
Mar 2014	0.7	6.5
Feb	0.6	6.9
Jan	0.4	7.3
Dec 2013	0.7	7.6
Nov	-0.1	7.4
Oct	0.5	8.1
Sep	0.2	8.3
Aug	0.4	8.5
Jul	0.7	8.6
Jun	0.7	8.0
May	1.0	7.7
Apr	0.4	7.3
Mar	1.1	7.6
Feb	1.0	7.1
Jan	0.6	6.5
Dec 2012	0.5	5.8
Nov	0.6	5.6
Oct	0.7	5.6
Sep	0.4	4.3
Aug	0.5	4.4
Jul	0.2	3.8
Jun	0.4	3.8
May	0.6	3.8
Apr	0.7	3.0
Mar	0.9	2.4
Feb	0.4	0.3
Jan	-0.2	-1.0
Dec 2011	0.4	-1.3
Nov	0.5	-2.2
Oct	-0.5	-3.0
Sep	0.5	-2.4
Aug	-0.2	-3.8
Jul	0.2	-3.4
Jun	0.4	-4.4
May	-0.2	-6.0
Apr	0.1	-5.8
Mar	-1.0	-5.9
Feb	-1.0	-5.0
Jan	-0.5	-4.6
Dec 2010		-3.8
Dec 2009		-2.0
Dec 2008		-10.1
Dec 2007		-3.2
Dec 2006		2.6
Dec 2005		9.8
Dec 2004		10.2
Dec 2003		8.0
Dec 2002		7.8
Dec 2001		6.7
Dec 2000		7.2
Dec 1999		6.2
Dec 1998		5.9
Dec 1997		3.4
Dec 1996		2.8
Dec 1995		2.9
Dec 1994		2.6
Dec 1993		3.1
Dec 1992		2.4

Source: Federal Housing Finance Agency

http://www.fhfa.gov/?Page=14

The bottom part of Table IIA2-3 provides 12-month percentage changes of the FHFA house price index since 1992 when data become available for 1991. Table IIA2-4 provides percentage changes and average rates of percent change per year for various periods. Between 1992 and 2013, the FHFA house price index increased 98.3 percent at the yearly average rate of 3.3 percent. In the period 1992-2000, the FHFA house price index increased 39.4 percent at the average yearly rate of 4.2 percent. The average yearly rate of price increase accelerated to 7.5 percent in the period 2000-2003, 8.5 percent in 2000-2005 and 7.5 percent in 2000-2006. At the margin, the average rate jumped to 10.0 percent in 2003-2005 and 7.5 percent in 2003-2006. House prices measured by the FHFA house price index declined 7.8 percent between 2006 and 2013 and 5.4 percent between 2005 and 2013.

Table IIA2-4, US, FHFA House Price Index, Percentage Change and Average Rate of Percentage Change per Year, Selected Dates 1992-2013

Dec	∆%	Average ∆% per Year
1992-2013	98.3	3.3
1992-2000	39.4	4.2
2000-2003	24.2	7.5
2000-2005	50.4	8.5
2003-2005	21.1	10.0
2005-2013	-5.4	NA
2000-2006	54.2	7.5
2003-2006	24.1	7.5
2006-2013	-7.8	NA

Source: Source: Federal Housing Finance Agency

http://www.fhfa.gov/?Page=14

Table I-4 shows the euphoria of prices during the housing boom and the subsequent decline. House prices rose 94.8 percent in the 10-city composite of the Case-Shiller home price index and 77.8 percent in the 20-city composite between Mar 2000 and Mar 2005. Prices rose around 100 percent from Mar 2000 to Mar 2006, increasing 118.8 percent for the 10-city composite and 99.8 percent for the 20-city composite. House prices rose 37.5 percent between Mar 2003 and Mar 2005 for the 10-city composite and 32.1 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 Mar 2003 and Mar 2006, the 10-city index gained 54.5 percent and the 20-city index increased 49.2 percent. House prices have fallen from Mar 2006 to Mar 2014 by 18.9 percent for the 10-city composite and 18.1 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 Mar 2014, house prices increased 12.6 percent in the 10-city composite and increased 12.4 percent in the 20-city composite. Table I-4 also shows that house prices increased 77.5 percent between Mar 2000 and Mar 2014 for the 10-city composite and increased 63.6 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 19.8 percent from the peak in Jun 2006 to Mar 2014 and the 20-city composite fell 19.2 percent from the peak in Jul 2006 to Mar 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
∆% Mar 2000 to Mar 2003	41.7	34.6
∆% Mar 2000 to Mar 2005	94.8	77.8
∆% Mar 2003 to Mar 2005	37.5	32.1
∆% Mar 2000 to Mar 2006	118.8	99.8
∆% Mar 2003 to Mar 2006	54.5	48.4
∆% Mar 2005 to Mar 2014	-8.9	-8.0
∆% Mar 2006 to Mar 2014	-18.9	-18.1
∆% Mar 2009 to Mar 2014	19.8	19.1
∆% Mar 2010 to Mar 2014	16.1	16.4
∆% Mar 2011 to Mar 2014	20.2	21.2
∆% Mar 2012 to Mar 2014	23.9	24.4
∆% Mar 2013 to Mar 2014	12.6	12.4
∆% Mar 2000 to Mar 2014	77.5	63.6
∆% Peak Jun 2006 Mar 2014	-19.8
∆% Peak Jul 2006 Mar 2014		-19.2
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 19 of the 20 cities increased in Mar 2014 (https://www.spice-indices.com/idpfiles/spice-assets/resources/public/documents/93729_cshomeprice-release-0527.pdf?force_download=true) with annual rates of increase. 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 0.9 percent and the 20-city increased 1.0 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. House prices grew at fast rates in Mar 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
Mar 2014	1.1	0.8	1.2	0.9
Feb	0.9	0.0	0.8	0.0
Jan	0.8	-0.1	0.8	-0.1
Dec 2013	0.8	-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	1.7	2.6
Mar	1.7	1.3	1.7	1.3
Feb	1.2	0.3	1.1	0.2
Jan	0.9	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	0.8	-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	-0.1	-0.9	0.0	-0.8
Jan	-0.2	-1.1	-0.1	-1.0
Dec 2011	-0.4	-1.2	-0.3	-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	-0.3	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. The GDP of Japan grew at 1.0 percent per year on average from 1991 to 2002, with the GDP implicit deflator falling at 0.8 percent per year on average. The average growth rate of Japan’s GDP was 4 percent per year on average from the middle of the 1970s to 1992 (Ito 2004). Low growth in Japan in the 1990s is commonly labeled as “the lost decade” (see Pelaez and Pelaez, The Global Recession Risk (2007), 81-115). Table VB-GDP provides yearly growth rates of Japan’s GDP from 1995 to 2013. Growth weakened from 2.7 per cent in 1995 and 1996 to contractions of 1.5 percent in 1999 and 0.4 percent in 2001 and growth rates below 2 percent with exception of 2.3 percent in 2003. Japan’s GDP contracted sharply by 3.7 percent in 2006 and 2.0 percent in 2009. As in most advanced economies, growth was robust at 3.4 percent in 2010 but mediocre at 0.3 percent in 2011 and 0.7 percent in 2013. Japan’s GDP grew 2.3 percent in 2013.

Table VB-GDP, Japan, Yearly Percentage Change of GDP ∆%

Calendar Year	∆%
1995	2.7
1996	2.7
1997	0.1
1998	-1.5
1999	0.5
2000	2.0
2001	-0.4
2002	1.1
2003	2.3
2004	1.5
2005	1.9
2006	1.8
2007	1.8
2008	-3.7
2009	-2.0
2010	3.4
2011	0.3
2012	0.7
2013	2.3

Source: Source: Japan Economic and Social Research Institute, Cabinet Office

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

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

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:

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

The Markit/JMMA Flash Japan Manufacturing PMI Index™ improved with the Flash Japan Manufacturing PMI™ increasing from 49.4 in Apr to 49.9 in May and the Flash Japan Manufacturing Output Index™ increasing from 46.2 in Apr to 49.2 in May (http://www.markiteconomics.com/Survey/PressRelease.mvc/119c7ec318e2469d9afda80921da4f09). New export orders decreased at a faster rate. Chris Williamson, Chief Economist at Markit, finds stabilizing conditions after the stress from the increase originating in the Apr increase in sales tax with weakening demand from overseas (http://www.markiteconomics.com/Survey/PressRelease.mvc/119c7ec318e2469d9afda80921da4f09). Private-sector activity in Japan contracted with the Markit Composite Output PMI Index decreasing from 52.8 in Mar to 46.3 in Apr, indicating contraction (http://www.markiteconomics.com/Survey/PressRelease.mvc/50dfe4858cb94ce69e38e3c456a0fa2d). Amy Bronwbill, Economist at Markit and author of the report, finds contraction of private sector activity with the sharpest decline since Sep 2011 (http://www.markiteconomics.com/Survey/PressRelease.mvc/50dfe4858cb94ce69e38e3c456a0fa2d). The Markit Business Activity Index of Services decreased to 46.4 in Apr from 52.2 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/50dfe4858cb94ce69e38e3c456a0fa2d). 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/50dfe4858cb94ce69e38e3c456a0fa2d). The Markit/JMMA Purchasing Managers’ Index^™ (PMI™), seasonally adjusted, decreased from 53.9 in Mar to 49.4 in Apr (http://www.markiteconomics.com/Survey/PressRelease.mvc/4786eaed9e824f26b646f9286624726e). New orders and output fell because of demand effects caused by the sales tax increase in Apr. Amy Brownbill, Economist at Markit and author of the report, finds deteriorating manufacturing conditions with manufacturers attributing declines of output and new orders to the increase in the value added tax on consumption (http://www.markiteconomics.com/Survey/PressRelease.mvc/4786eaed9e824f26b646f9286624726e).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	Apr ∆% 2.8 12 months ∆% 4.1 Blog 5/18/14
Consumer Price Index	Apr NSA ∆% 2.1; Apr 12 months NSA ∆% 3.4 Blog 6/1/14
Real GDP Growth	IQ2014 ∆%: 1.5 on IVQ2013; IQ2014 SAAR 5.9; ∆% from quarter a year earlier: 3.0 % Blog 6/16/13 8/18/13 9/15/13 11/17/13 12/15/13 2/23/14 3/16/14 5/18/14
Employment Report	Apr Unemployed 2.54 million Change in unemployed since last year: minus 370 thousand Unemployment rate: 3.6 % Blog 6/1/14
All Industry Indices	Mar month SA ∆% 1.5 12-month NSA ∆% 3.6 Blog 5/25/14
Industrial Production	Apr SA month ∆%: -2.5 12-month NSA ∆% 4.1 Blog 6/1/14
Machine Orders	Total Mar ∆% 4.0 Private ∆%: 17.3 Mar ∆% Excluding Volatile Orders 19.1 Blog 5/25/14
Tertiary Index	Mar month SA ∆% 2.4 Mar 12 months NSA ∆% 3.0 Blog 5/18/14
Wholesale and Retail Sales	Apr 12 months: Total ∆%: -3.9 Wholesale ∆%: -3.7 Retail ∆%: -4.4 Blog 6/1/14
Family Income and Expenditure Survey	Apr 12-month ∆% total nominal consumption -0.7, real -4.6 Blog 6/1/14
Trade Balance	Exports Apr 12 months ∆%: 5.1 Imports Apr 12 months ∆% 3.4 Blog 5/25/14

Links to blog comments in Table JPY:

5/25/14 http://cmpassocregulationblog.blogspot.com/2014/05/united-states-commercial-banks-assets.html

5/18/14 http://cmpassocregulationblog.blogspot.com/2014/05/world-inflation-waves-squeeze-of.html

4/27/14

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 Apr 2014, industrial production in Japan decreased 2.5 percent largely because of the increase in the sales tax and increased 4.1 percent in the 12 months ending in Apr 2014, as shown in Table VB-1. Decline of 2.8 percent in Jun 2013 interrupted four consecutive monthly increases from Feb through May 2013. Another interruption occurred in Aug with decrease of 0.5 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 0.5 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, 7.0 percent in Feb 2014 and 7.4 percent in 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
Apr 2014	-2.5	4.1
Mar	0.7	7.4
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 Apr 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 rate of unemployment stabilized at 3.6 percent in Apr 2014. The employment rate stood at 57.2 percent in Apr 2014 and increased 0.2 percentage points from a year earlier.

Table VB-2, Japan, Employment Report Mar 2014

Apr 2014 Unemployed	2.54 million
Change since last year	-370 thousand; ∆% –12.7
Unemployment rate	SA 3.6%, 0.0 from earlier month; NSA 3.9%, -0.5 from earlier year
Population ≥ 15 years	110.79 million
Change since last year	∆% 0.0
Labor Force	65.92 million
Change since last year	∆% -0.2
Employed	63.38 million
Change since last year	∆% 0.4
Labor force participation rate	59.5
Change since last year	-0.1
Employment rate	57.2%
Change since last year	0.2

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. The rate of unemployment stabilized at 3.6 percent in Apr 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 with interruption in Apr because of the increase in the tax on value added of consumption. Table VB-4 shows decrease of nominal consumption of 0.7 percent in the 12 months ending in Apr 2014 and 4.6 percent in real terms. There are likely effects of anticipating consumption before the increase in the value added tax on consumption in Apr 2014 with decline of consumption after the actual increase of the tax. There are few segments of increasing real consumption: housing increasing 11.8 percent in nominal terms and 10.8 percent in real terms. Transportation/communications decreased 3.6 percent in real terms and 0.5 percent in nominal terms. Clothing and footwear decreased 6.0 percent in nominal terms and 3.9 percent in real terms. Education increased 7.4 percent in real terms and 5.0 percent in nominal terms. Fuel, light and water charges increased 6.3 percent in nominal terms and decreased 0.6 percent in real terms. Real household income decreased 7.1 percent; real disposable income decreased 7.0 percent; and real consumption expenditures decreased 6.9 percent.

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

Apr 2014	Nominal	Real
Households of Two or More Persons
Total Consumption	-0.7	-4.6
Excluding Housing, Vehicles & Remittance	-2.8	-6.6
Food	-2.2	-6.9
Housing	11.9	10.8
Fuel, Light & Water Charges	6.3	-0.6
Furniture & Household Utensils	-14.3	-18.7
Clothing & Footwear	-3.9	-6.0
Medical Care	-2.7	-4.5
Transport and Communications	-0.5	-3.6
Education	7.4	5.0
Culture & Recreation	2.6	-1.8
Other Consumption Expenditures	-6.6	-10.3*
Workers’ Households
Income	-3.3	-7.1
Disposable Income	-3.2	-7.0
Consumption Expenditures	-3.1	-6.9

*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. The final segment of Chart VB-2 shows contraction of nominal consumption expenditures of 0.7 percent in Apr 2014 and decline of real consumption of 4.6 percent largely because of the increase in the tax on value added of consumption.

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 fell 4.6 percent in the 12 months ending in Apr 2014 and nominal consumption fell 0.7 percent largely because of the increase in the sales tax in Apr 2014. 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. Real consumption fell 4.6 percent in the 12 months ending in Apr 2014 and nominal consumption fell 0.7 percent. Consumption was an important driver of GDP growth in Japan in IQ2012. Real GDP grew at the seasonally adjusted annual rate (SAAR) of 3.8 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/2014/05/world-inflation-waves-squeeze-of.html). There was deceleration in IIQ2012 with growth of GDP at SAAR of minus 2.2 percent and contribution of 1.0 percentage points of personal consumption. In IIIQ2012, Japan’s GDP contracted at the SAAR of 3.0 percent and personal consumption deducted 1.1 percentage points. Japan’s GDP grew at the SAAR of 0.2 percent in IVQ2012 with personal consumption contributing 1.1 percentage points. Japan’s GDP growth in IQ2013 was at 4.9 percent SAAR with highest contribution of 2.6 percentage points by personal consumption expenditures. In IIQ2013, Japan’s GDP grew at 3.5 percent SAAR with personal consumption expenditures contributing 1.8 percentage points. Japan’s GDP grew at 1.3 percent SAAR in IIIQ2013 with personal consumption expenditures contributing 0.5 percentage points. In IVQ2013, Japan’s GDP grew at 0.3 percent SAAR with personal consumption expenditures contributing 0.9 percentage points. The GDP of Japan grew at 5.9 percent SAAR in IQ2014 with personal consumption expenditures contributing 5.1 percent.

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
Apr 2014	-0.7	-4.6
Mar	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, accelerating in IQ2014. 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 fell 4.4 percent in Apr 2014 after the increase in the sales tax. 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
Apr 2014	-3.9	-3.7	-4.4
Mar	8.5	7.5	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 Jan 2011 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 increased marginally to 54.8 in Apr 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-Apr 2014.

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

	Total Index	New Orders	Interm. Input Prices	Subs Prices	Exp
Apr 2014	54.8	50.8	52.4	49.4	61.5
Mar	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 54.8 in Apr 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 50.4 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 52.5 in Apr 2014.

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

	IPM	PI	NOI	INV	EMP	SDEL
Apr 2014	50.4	52.5	51.2	48.1	48.3	50.1
Mar	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 Jun 2013. The index decreased from 51.4 in Nov 2013 to 51.0 in Dec 2013. The index fell to 50.4 in Apr 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/4c63770d8c2c4bdaacecda6d436d4cbf) is stabilizing. The overall Flash HSBC China Manufacturing PMI^™ increased from 48.1 in Apr to 49.7 in May, while the Flash HSBC China Manufacturing Output Index increased from 47.9 in Apr to 50.3 in May, indicating moderate expansion. Exports orders changed direction to expansion. 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/4c63770d8c2c4bdaacecda6d436d4cbf). The HSBC China Services PMI^™, compiled by Markit, shows marginal stability in business activity in China with the HSBC Composite Output, combining manufacturing and services, increasing from 49.3 in Mar to 49.5 in Apr, indicating standstill (http://www.markiteconomics.com/Survey/PressRelease.mvc/edde378848494848b95e2f9a78838413). 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/edde378848494848b95e2f9a78838413). The HSBC Business Activity index decreased from 51.9 in Mar to 51.4 in Apr (http://www.markiteconomics.com/Survey/PressRelease.mvc/edde378848494848b95e2f9a78838413). Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC, finds that services continue improving with the economy expanding moderately (http://www.markiteconomics.com/Survey/PressRelease.mvc/edde378848494848b95e2f9a78838413). The HSBC Purchasing Managers’ Index^™ (PMI^™), compiled by Markit, increased marginally to 48.1 in Apr from 48.0 in Mar, indicating marginally deteriorating manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/9431bf0b83c04209820fd77c2b2ff856). New export orders decreased moderately with sharp contraction of total new orders. Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds soft demand in China with possible loss of impulse, requiring policy enhancement (http://www.markiteconomics.com/Survey/PressRelease.mvc/9431bf0b83c04209820fd77c2b2ff856). Table CNY provides the country data table for China.

Table CNY, China, Economic Indicators

Price Indexes for Industry	Apr 12-month ∆%: minus 2.0 Apr month ∆%: -0.2 Blog 5/18/14
Consumer Price Index	Apr month ∆%: -0.3 Apr 12 months ∆%: 1.8 Blog 5/18/14
Value Added of Industry	Apr month ∆%: 0.82 Jan-Apr 2014/Jan-Apr 2013 ∆%: 8.7 Blog 5/18/14
GDP Growth Rate	Year IQ2014 ∆%: 7.4 Quarter IQ2014 AE ∆%: 5.7 Blog 4/20/14
Investment in Fixed Assets	Total Jan-Apr 2013 ∆%: 17.3 Real estate development: 16.4 Blog 5/18/14
Retail Sales	Apr month ∆%: 0.83 Apr 12 month ∆%: 11.9 Jan-Apr ∆%: 12.0 Blog 5/18/14
Trade Balance	Apr balance $18.45 billion Exports 12M ∆% 0.9 Imports 12M ∆% 0.8 Cumulative Jan-Apr: $35.19 billion Blog 5/11/14

Links to blog comments in Table CNY:

5/18/14 http://cmpassocregulationblog.blogspot.com/2014/05/world-inflation-waves-squeeze-of.html

5/11/14 http://cmpassocregulationblog.blogspot.com/2014/05/rules-discretionary-authorities-and.html

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

VD Euro Area. Table VD-EUR provides yearly growth rates of the combined GDP of the members of the European Monetary Union (EMU) or euro area since 1996. Growth was very strong at 3.3 percent in 2006 and 3.0 percent in 2007. The global recession had strong impact with growth of only 0.4 percent in 2008 and decline of 4.4 percent in 2009. Recovery was at lower growth rates of 2.0 percent in 2010 and 1.6 percent in 2011. EUROSTAT estimates growth of GDP of the euro area of minus 0.7 percent in 2012 and minus 0.4 percent in 2013 but 1.1 percent in 2014 and 1.7 percent in 2015.

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

Year	HICP ∆%	Unemployment %	GDP ∆%
1999	1.2	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	-4.5
2010	1.6	10.1	1.9
2011	2.7	10.1	1.6
2012	2.5	11.3	-0.7
2013*	1.3	12.0	-0.4
2014*			1.1
2015*			1.7

*EUROSTAT forecast Source: EUROSTAT

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

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

The GDP of the euro area in 2012 in current US dollars in the dataset of the World Economic Outlook (WEO) of the International Monetary Fund (IMF) is $12,199.1 billion or 16.9 percent of world GDP of $72,216.4 billion (http://www.imf.org/external/pubs/ft/weo/2012/02/weodata/index.aspx). The sum of the GDP of France $2613.9 billion with the GDP of Germany of $3429.5 billion, Italy of $2014.1 billion and Spain $1323.5 billion is $9381.0 billion or 76.9 percent of total euro area GDP and 13.0 percent of World GDP. The four largest economies account for slightly more than three quarters of economic activity of the euro area. Table VD-EUR1 is constructed with the dataset of EUROSTAT, providing growth rates of the euro area as a whole and of the largest four economies of Germany, France, Italy and Spain annually from 1996 to 2011 with the estimate of 2012 and forecasts for 2013, 2014 and 2015 by EUROSTAT. The impact of the global recession on the overall euro area economy and on the four largest economies was quite strong. There was sharp contraction in 2009 and growth rates have not rebounded to earlier growth with exception of Germany in 2010 and 2011.

Table VD-EUR1, Euro Area, Real GDP Growth Rate, ∆%

	Euro Area	Germany	France	Italy	Spain
2015*	1.7	1.9	1.7	1.2	1.7
2014*	1.1	1.7	0.9	0.7	0.5
2013*	-0.4	0.4	0.2	-1.9	-1.2
2012	-0.7	0.7	0.0	-2.4	-1.6
2011	1.6	3.3	2.0	0.4	0.1
2010	1.9	4.0	1.7	1.7	-0.2
2009	-4.5	-5.1	-3.1	-5.5	-3.8
2008	0.4	1.1	-0.1	-1.2	0.9
2007	3.0	3.3	2.3	1.7	3.5
2006	3.3	3.7	2.5	2.2	4.1
2005	1.7	0.7	1.8	0.9	3.6
2004	2.2	1.2	2.5	1.7	3.3
2003	0.7	-0.4	0.9	0.0	3.1
2002	0.9	0.0	0.9	0.5	2.7
2001	2.0	1.5	1.8	1.9	3.7
2000	3.8	3.1	3.7	3.7	5.0
1999	2.9	1.9	3.3	1.5	4.7
1998	2.8	1.9	3.4	1.4	4.5
1997	2.6	1.7	2.2	1.9	3.9
1996	1.5	0.8	1.1	1.1	2.5

Source: EUROSTAT

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

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

The Flash Eurozone PMI Composite Output Index of the Markit Flash Eurozone PMI^®, combining activity in manufacturing and services, decreased from 54.0 in Apr to 53.9 in May (http://www.markiteconomics.com/Survey/PressRelease.mvc/b1ef2c10fe5d406ab003ebab100f7e39). 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/b1ef2c10fe5d406ab003ebab100f7e39). The Markit Eurozone PMI^® Composite Output Index, combining services and manufacturing activity with close association with GDP increased from 53.1 in Mar, to 54.0 in Apr, which is the fastest in about three years (http://www.markiteconomics.com/Survey/PressRelease.mvc/bcdeb736b9d34fdaac84bca7fd083726). Chris Williamson, Chief Economist at Markit, finds growth of GDP at 0.5 percent in IIQ2014 (http://www.markiteconomics.com/Survey/PressRelease.mvc/bcdeb736b9d34fdaac84bca7fd083726). The Markit Eurozone Services Business Activity Index increased from 52.2 in Mar to 53.1 in Apr (http://www.markiteconomics.com/Survey/PressRelease.mvc/bcdeb736b9d34fdaac84bca7fd083726). The Markit Eurozone Manufacturing PMI^® increased to 53.4 in Apr from 53.0 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/f4205f8a880548918bad798c1ed295cc). New orders and export orders increased for the tenth 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/f4205f8a880548918bad798c1ed295cc). Table EUR provides the data table for the euro area.

Table EUR, Euro Area Economic Indicators

GDP	IQ2014 ∆% 0.2; IQ2014/IVQ2013 ∆% 0.9 Blog 5/18/14
Unemployment	Mar 2014: 11.8 % unemployment rate; Mar 2014: 18.913 million unemployed Blog 5/4/14
HICP	Apr month ∆%: 0.2 12 months Apr ∆%: 0.7 Blog 5/18/14
Producer Prices	Euro Zone industrial producer prices Mar ∆%: -0.2 Mar 12-month ∆%: -1.6 Blog 5/11/14
Industrial Production	Mar month ∆%: -0.3; Mar 12 months ∆%: -0.1 Blog 5/18/14
Retail Sales	Mar month ∆%: 0.3 Mar 12 months ∆%: 0.9 Blog 5/11/14
Confidence and Economic Sentiment Indicator	Sentiment 102.7 May 2014 Consumer minus 7.1 May 2014 Blog 6/1/14
Trade	Jan-Mar 2014/Jan-Mar 2013 Exports ∆%: 1.0 Imports ∆%: -0.1 Mar 2014 12-month Exports ∆% -0.7 Imports ∆% 2.5 Blog 5/18/14

Links to blog comments in Table EUR:

5/18/14 http://cmpassocregulationblog.blogspot.com/2014/05/world-inflation-waves-squeeze-of.html

5/11/14 http://cmpassocregulationblog.blogspot.com/2014/05/rules-discretionary-authorities-and.html

5/4/2014 http://cmpassocregulationblog.blogspot.com/2014/05/financial-volatility-mediocre-cyclical.html

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 91.7 in Jun 2013 to 102.7 in May 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	-9.1	-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
May 2014	102.7	-3.0	3.8	-7.1	-2.5	-30.0
Apr	102.0	-3.5	3.5	-8.6	-2.5	-30.4
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

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 1971 to 2013, 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 ∆% on Prior 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	1.7
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
1991	5.1	5.2
1990	5.3	5.5
1989	3.9	4.0
1988	3.7	3.4
1987	1.4	1.3
1986	2.3	2.3
1985	2.3	2.3
1984	2.8	2.9
1983	1.6	1.5
1982	-0.4	-0.5
1981	0.5	0.6
1980	1.4	1.3
1979	4.2	4.3
1978	3.0	3.1
1977	3.3	3.5
1976	4.9	4.5
1975	-0.9	-0.9
1974	0.9	1.0
1973	4.8	5.0
1972	4.3	4.3
1971	3.1	3.0
1970	NA	NA

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

https://www.destatis.de/EN/PressServices/Press/pr/2014/05/PE14_167_811.html

The Flash Germany Composite Output Index of the Markit Flash Germany PMI^®, combining manufacturing and services, was unchanged from 56.1 in Apr to 56.1 in May. The index of manufacturing output reached 55.3 in May, decreasing from 58.8 in Apr, while the index of services increased to 56.4 in May from 54.7 in Apr. The overall Flash Germany Manufacturing PMI^® decreased from 54.1 in Apr to 52.9 in May (http://www.markiteconomics.com/Survey/PressRelease.mvc/38439f40599a481591f420a71f97a9d1). New export work volumes increased for a tenth 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 activity (http://www.markiteconomics.com/Survey/PressRelease.mvc/38439f40599a481591f420a71f97a9d1). The Markit Germany Composite Output Index of the Markit Germany Services PMI^®, combining manufacturing and services with close association with Germany’s GDP, increased from 54.3 in Mar to 56.1 in Apr (http://www.markiteconomics.com/Survey/PressRelease.mvc/d6d0009719dd48d9a04d632447b0b192). Oliver Kolodseike, Senior Economist at Markit and author of the report, finds improving activity by the German private sector with output above average in IQ2014 (http://www.markiteconomics.com/Survey/PressRelease.mvc/d6d0009719dd48d9a04d632447b0b192). The Germany Services Business Activity Index decreased from 53.0 in Mar to 54.7 in Apr (http://www.markiteconomics.com/Survey/PressRelease.mvc/d6d0009719dd48d9a04d632447b0b192). The Markit/BME Germany Purchasing Managers’ Index^® (PMI^®), showing close association with Germany’s manufacturing conditions, increased from 53.7 in Mar to 54.1 in Apr (http://www.markiteconomics.com/Survey/PressRelease.mvc/137a190a582340c58029f6ed25d70d42). New export orders increased for the tenth consecutive month with demand from the US, Spain and China. Oliver Kolodseike, Senior Economist at Markit and author of the report, finds manufacturing output growing at the second fastest pace in about three years (http://www.markiteconomics.com/Survey/PressRelease.mvc/137a190a582340c58029f6ed25d70d42).Table DE provides the country data table for Germany.

Table DE, Germany, Economic Indicators

GDP	IQ2014 0.8 ∆%; I/Q2014/IQ2013 ∆% 2.5 2013/2012: 0.4% GDP ∆% 1970-2013 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 5/18/14 5/25/14
Consumer Price Index	Apr month NSA ∆%: -0.2 Apr 12-month NSA ∆%: 1.3 Blog 5/18/14
Producer Price Index	Apr month ∆%: -0.1 CSA, minus 0.1 12-month NSA ∆%: -0.9 Blog 5/25/14
Industrial Production	MFG Mar month CSA ∆%: minus 0.4 12-month NSA: 5.2 Blog 5/11/14
Machine Orders	MFG Mar month ∆%: -2.8 Mar 12-month ∆%: 3.1 Blog 5/11/14
Retail Sales	Apr Month ∆% -0.9 12-Month ∆% 3.4 Blog 6/1/14
Employment Report	Unemployment Rate SA Apr 5.2% Blog 6/1/14
Trade Balance	Exports Mar 12-month NSA ∆%: 1.9 Imports Mar 12 months NSA ∆%: 5.6 Exports Mar month CSA ∆%: minus 1.8; Imports Mar month CSA minus 0.9 Blog 5/11/14

Links to blog comments in Table DE:

5/25/14 http://cmpassocregulationblog.blogspot.com/2014/05/united-states-commercial-banks-assets.html

5/18/14 http://cmpassocregulationblog.blogspot.com/2014/05/world-inflation-waves-squeeze-of.html

5/11/14 http://cmpassocregulationblog.blogspot.com/2014/05/rules-discretionary-authorities-and.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, increased from 2.24 million in Apr 2013 to 2.26 million in Apr 2014, or 0.9 percent, while the unemployment rate stabilized from 5.3 percent in Apr 2013 to 5.3 percent in Apr 2014. The number of persons in employment, not seasonally adjusted, increased from 40.10 million in Apr 2013 to 40.21 million in Apr 2014, or 0.3 percent, while the employment rate increased from 63.7 percent in Apr 2013 to 63.8 percent in Apr 2014. The number unemployed, seasonally adjusted, stabilized from 2.22 million in Mar 2014 to 2.22 million in Apr 2014, while the unemployment rate remained at 5.2 percent in Apr 2014 relative to 5.2 percent in Mar 2014. The number of persons in employment, seasonally adjusted, stabilized from 40.59 million in Mar 2014 to 40.59 million in Apr 2014, or 0.0 percent. The employment rate seasonally adjusted did fell from 64.5 in Mar 2014 to 64.4 in Apr 2014.

Table VE-1, Germany, Unemployment Labor Force Survey

	Apr 2014	Mar 2014	Apr 2013
NSA
Number Unemployed Millions	2.26 ∆% Apr 2014 /Mar 2013: -2.6 ∆% Apr 2014/Apr 2013: 0.9	2.32	2.24
% Rate Unemployed	5.3	5.5	5.3
Persons in Employment Millions	40.21 ∆% Apr 2014/Mar 2014: 0.3 ∆% Apr 2014/Apr 2013: 0.3	40.09	40.10
Employment Rate	63.8	63.7	63.7
SA
Number Unemployed Millions	2.22 ∆% Apr 2014/Mar 2014: 0.0 ∆% Apr 2014/Apr 2013: –2.6	2.22	2.28
% Rate Unemployed	5.2	5.2	5.3
Persons in Employment Millions	40.59 ∆% Apr 2014/Mar 2014: 0.0 ∆% Apr 2014/Apr 2013: 0.7	40.59	40.30
Employment Rate	64.4	64.5	64.0

NSA: not seasonally adjusted; SA: seasonally adjusted

Source: Statistisches Bundesamt Deutschland

https://www.destatis.de/EN/PressServices/Press/pr/2014/05/PE14_184_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 and 6.6 percent in May 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

May 2014	6.6
Apr	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 and 6.6 percent in May 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 Apr 2014, retail sales decreased 0.9 percent and increased 3.4 percent in 12 months. Retail sales increased 0.1 percent in Mar 2014 and 0.1 percent in 12 months.

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

	12-Month ∆% NSA	Month ∆% SA and Calendar Adjusted
Apr 2014	3.4	-0.9
Mar	-1.1	0.1
Feb	1.8	0.7
Jan	0.6	1.9
Dec 2013	-1.1	-1.7
Nov	1.0	1.0
Oct	-0.1	-0.5
Sep	0.4	0.0
Aug	0.3	0.1
Jul	3.3	0.1
Jun	-2.8	-0.9
May	0.3	0.7
Apr	2.6	0.2
Mar	-3.1	-0.1
Feb	-3.1	-0.6
Jan	2.5	1.4
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 2.0 percent in the 1990s and 1.8 percent from 2000 to 2007. The average growth rate from 2000 to 2012, using fourth quarter data, is 1.1 percent because of the sharp impact of the global recession from IVQ2007 to IIQ2009. The growth rate from 2000 to 2012 is 1.1 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	1.1
2000-2012	1.1
2000-2007	1.8
1990-1999	2.0
1980-1989	2.6
1970-1979	3.7
1960-1969	5.7
1950-1959	4.2

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=26&date=20140515

The Markit Flash France Composite Output Index decreased from 50.6 in Apr to 49.3 in May (http://www.markiteconomics.com/Survey/PressRelease.mvc/d349dc59325e4b8393f119abfcfe9764). Jack Kennedy, Senior Economist at Markit and author of the report, finds continuing weak performance in IIQ2014 (http://www.markiteconomics.com/Survey/PressRelease.mvc/d349dc59325e4b8393f119abfcfe9764). The Markit France Composite Output Index, combining services and manufacturing with close association with French GDP, e3creased from 51.8 in Mar to 50.6 in Apr, indicating marginal growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/a8bd96f07d6f42a3bb9776efe2ce974a). Jack Kennedy, Senior Economist at Markit and author of the France Services PMI^®, finds standstill in services activity (http://www.markiteconomics.com/Survey/PressRelease.mvc/a8bd96f07d6f42a3bb9776efe2ce974a). The Markit France Services Activity index decreased from 51.5 in Mar to 50.4 in Apr (http://www.markiteconomics.com/Survey/PressRelease.mvc/a8bd96f07d6f42a3bb9776efe2ce974a). 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	Apr month ∆% 0.0 12 months ∆%: 0.7 5/18/14
PPI	Apr month ∆%: -0.2 Apr 12 months ∆%: -0.9 Blog 6/1/14
GDP Growth	IQ2014/IVQ2013 ∆%:0.0 IQ2014/IQ2013 ∆%: 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 5/18/14
Industrial Production	Mar ∆%: Manufacturing -0.7 12-Month ∆%: Manufacturing 1.5 Blog 5/11/14
Consumer Spending	Manufactured Goods Apr ∆%: 0.0 Apr 12-Month Manufactured Goods ∆%: 1.2 Blog 6/1/14
Employment	Unemployment Rate: IVQ2013 9.8% Blog 3/9/13
Trade Balance	Mar Exports ∆%: month 0.6, 12 months 0.5 Mar Imports ∆%: month 3.4, 12 months 1.1 Blog 5/11/14
Confidence Indicators	Historical average 100 May Mfg Business Climate 99.7 Blog 6/1/14

Links to blog comments in Table FR:

5/18/14 http://cmpassocregulationblog.blogspot.com/2014/05/world-inflation-waves-squeeze-of.html

5/11/14 http://cmpassocregulationblog.blogspot.com/2014/05/rules-discretionary-authorities-and.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 decreased 0.3 percent in Apr 2014 after increasing 0.6 percent in Mar 2014 and decreasing 0.4 percent in Feb 2014. Consumption of manufactured products changed 0.0 percent in Apr 2014 after increasing 0.7 percent in Mar 2014 and decreasing 0.5 percent in Feb 2014. Total consumption decreased 0.5 percent in Apr 2014 relative to Apr 2013 and consumption of manufactured goods increased 1.2 percent in Apr 2014 relative to Apr 2013. Consumption of energy decreased 0.2 percent in Apr 2014 and increased 1.8 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
Apr 2014	-0.3	1.1	-0.2	-3.3	0.0
Apr 2014/Apr 2013	-0.5	2.7	1.8	-11.4	1.2
Mar 2014	0.6	0.5	-0.1	2.8	0.7
Feb	-0.4	-0.5	0.0	-1.3	-0.5
Jan	-1.5	-0.6	-0.8	-5.2	-1.2
Dec 2013	0.1	0.0	0.8	-1.3	0.8
Nov	1.5	-0.4	1.0	7.0	0.4
Oct	-0.4	1.4	0.0	-4.8	0.4
Sep	-0.1	-0.2	0.5	-0.4	0.0
Aug	-0.3	-0.3	0.1	-1.2	-0.2
Jul	0.3	0.5	0.0	0.7	0.5
Jun	-1.0	-0.7	0.9	-5.5	-0.5
May	0.8	1.9	-0.4	1.2	0.8
Apr	-0.8	-3.0	0.8	-0.4	-0.5
Mar	0.8	1.7	-0.9	2.9	0.5
Feb	-0.2	-0.1	-1.2	1.7	-0.7
Jan	0.9	1.1	0.0	2.6	0.3
Dec 2012	-0.5	-0.3	0.5	-3.3	-0.1
Nov	-0.3	-0.4	-0.8	1.4	-0.6
Oct	0.0	-0.6	0.1	0.9	0.1
Sep	0.0	-0.4	0.3	0.2	0.0
Aug	-0.7	0.3	-0.9	-2.2	-0.8
Jul	0.1	-0.4	0.6	-0.2	0.1
Jun	0.5	1.3	-0.3	0.8	0.6
May	0.1	-0.4	1.6	-2.5	0.9
Apr	0.0	0.1	-3.4	9.0	-1.7
Mar	-2.9	-1.8	1.3	-14.3	-0.7
Feb	2.3	1.3	-0.9	12.5	0.5
Jan	1.1	1.2	0.4	3.0	0.9
Dec 2011	-0.9	-1.3	-0.7	-0.6	-1.1
Nov	-0.2	0.4	0.2	-2.4	0.0
Oct	-0.3	-0.9	0.4	-0.8	-0.2
Sep	-0.3	0.7	-0.1	-3.0	-0.2
Aug	0.7	0.1	0.5	2.9	0.9
Jul	-0.3	0.1	-0.7	0.0	-0.4
Jun	0.7	0.0	0.5	2.9	0.7
May	0.0	-0.6	-0.8	3.6	-0.9
Apr	-2.3	0.3	-2.9	-6.5	-1.7
Mar	-0.9	-0.4	-1.2	-1.5	-1.1
Feb	0.6	0.7	1.5	-2.2	1.1
Jan	-0.2	-0.5	1.7	-4.4	0.8
Dec 2010	0.5	0.4	-0.5	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=20140528

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 Apr 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=20140528

Chart VF-2 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-Feb 2014 and rebounded in Mar 2014 with decline in Apr 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=20140528

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
2014
IQ	-0.5
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

http://www.istat.it/it/archivio/122146

The Markit/ADACI Business Activity Index increased from 49.5 in Mar to 51.1 in Apr (http://www.markiteconomics.com/Survey/PressRelease.mvc/41228b605b0c41ea8a1ebace36762642). Phil Smith, Economist at Markit and author of the Italy Services PMI^®, finds limited contribution of services to growth with recovery mostly in production (http://www.markiteconomics.com/Survey/PressRelease.mvc/41228b605b0c41ea8a1ebace36762642). The Markit/ADACI Purchasing Managers’ Index^® (PMI^®), increased from 52.4 in mar to 554.0 in Apr, which is the fastest in three years (http://www.markiteconomics.com/Survey/PressRelease.mvc/09348dd047034ef5aeb2d1ac1248ded0). 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 at the fastest pace in more than three years (http://www.markiteconomics.com/Survey/PressRelease.mvc/09348dd047034ef5aeb2d1ac1248ded0). Table IT provides the country data table for Italy.

Table IT, Italy, Economic Indicators

Consumer Price Index	May month ∆%: -0.1 May 12-month ∆%: 0.5 Blog 6/1/14
Producer Price Index	Apr month ∆%: -0.3 Apr 12-month ∆%: -1.8 Blog 6/1/14
GDP Growth	IQ2014/IVQ2013 SA ∆%: minus 0.1 IQ2014/IQ2013 NSA ∆%: minus 0.5 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 5/18/14
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	Mar month ∆%: -0.5 12 months CA ∆%: -0.4 Blog 5/11/14
Retail Sales	Mar month ∆%: -0.2 Mar 12-month ∆%: -3.5 Blog 5/25/14
Business Confidence	Mfg Apr 99.9, Dec 98.3 Construction Apr 74.8, Dec 81.8 Blog 5/4/14
Trade Balance	Balance Mar SA €3563 million versus Feb €3517 Exports Mar month SA ∆%: minus 0.8; Imports Mar month ∆%: -1.0 Exports 12 months Mar NSA ∆%: 1.2 Imports 12 months NSA ∆%: -1.3 Blog 5/18/14

Links to blog comments in Table IT:

5/25/14 http://cmpassocregulationblog.blogspot.com/2014/05/united-states-commercial-banks-assets.html

5/18/14 http://cmpassocregulationblog.blogspot.com/2014/05/world-inflation-waves-squeeze-of.html

5/11/14 http://cmpassocregulationblog.blogspot.com/2014/05/rules-discretionary-authorities-and.html

5/4/2014 http://cmpassocregulationblog.blogspot.com/2014/05/financial-volatility-mediocre-cyclical.html

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

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

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

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

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

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

6/16/13 http://cmpassocregulationblog.blogspot.com/2013/06/recovery-without-hiring-seven-million.html

3/17/13 http://cmpassocregulationblog.blogspot.com/2013/03/recovery-without-hiring-ten-million.html

Italy’s index of business confidence in manufacturing and construction is provided in Table VG-1. There has been improvement of manufacturing confidence below the historical average of 100 from 97.7 in Jan 2014 to 99.7 in May 2014. Order books improved from minus 27 in Jan 2014 to minus 22 in May 2014. There is deterioration in construction with the index moving from 75.9 in Jan 2013 to 72.9 in May 2014.

Table VG-1, Italy, Index of Business Confidence in Manufacturing and Construction 2005=100

	May 2014	Apr 2014	Mar 2014	Feb 2014	Jan 2014
Mfg Confidence	99.7	99.7	99.1	99.0	97.7
Order Books	-22	-21	-23	-25	-27
Stocks Finished Products	-3	-1	-1	-3	-1
Production Expectation	4	5	5	5	5
Construction Confidence	72.9	74.6	75.4	76.6	75.9
Order Books	-54	-51	-54	-50	-50
Employment	-23	-24	-18	-21	-23

Mfg: manufacturing

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/123365

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*	-1.4
2000-2013	1.5

*Absolute change from 2007 to 2012

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/naa2/second-estimate-of-gdp/q1-2014/index.html

The Business Activity Index of the Markit/CIPS UK Services PMI^® increased from 57.6 in Mar to 58.7 in Apr (http://www.markiteconomics.com/Survey/PressRelease.mvc/b73ab147eb084d98bc3b90513addad13). Chris Williamson, Chief Economist at Markit, finds the combined indices consistent with the UK economy growing at 0.8 percent in IIQ2014 and job increases at 100 thousand per month (http://www.markiteconomics.com/Survey/PressRelease.mvc/b73ab147eb084d98bc3b90513addad13). The Markit/CIPS UK Manufacturing Purchasing Managers’ Index^® (PMI^®) increased to 57.3 in Apr from 55.8 in Nar (http://www.markiteconomics.com/Survey/PressRelease.mvc/f2f50828f3fc4791a78c146bc4da1c18). New export orders increased for the thirteenth consecutive month. New orders increased from North America, Europe, Asia and the Middle East. Rob Dobson, Senior Economist at Markit that compiles the Markit/CIPS Manufacturing PMI^®, finds that manufacturing conditions continue at solid pace with probable growth at 1.5 percent for IIQ2014 (http://www.markiteconomics.com/Survey/PressRelease.mvc/f2f50828f3fc4791a78c146bc4da1c18). Table UK provides the economic indicators for the United Kingdom.

Table UK, UK Economic Indicators

CPI	Apr month ∆%: 0.4 Apr 12-month ∆%: 1.8 Blog 5/25/14
Output/Input Prices	Output Prices: Apr 12-month NSA ∆%: 0.6; excluding food, petroleum ∆%: 1.0 Input Prices: Apr 12-month NSA ∆%: -5.5 Excluding ∆%: -5.0 Blog 5/25/14
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 5/25/14
Industrial Production	Mar 2014/Mar 2013 ∆%: Production Industries 2.3; Manufacturing 3.3 Blog 5/11/14
Retail Sales	Apr month ∆%: 1.3 Apr 12-month ∆%: 6.9 Blog 5/25/14
Labor Market	Jan-Mar Unemployment Rate: 6.8%; Claimant Count 3.3%; Earnings Growth 1.7% Blog 5/18/14 LMGDP 5/18/14
GDP and the Labor Market	IQ2014 Weekly Hours 102.8, GDP 99.3, Employment 103.1 IQ2008 =100 GDP IQ14 99.3 IQ2008=100 Blog 5/25/14
Trade Balance	Balance SA Mar minus ₤1284 million Exports Mar ∆%: 2.8; Jan-Mar ∆%: -2.7 Imports Mar ∆%: 1.6 Jan-Mar ∆%: -2.8 Blog 5/11/14