World Financial Turbulence, Twenty Seven Million Unemployed or Underemployed, Stagnating Real Wages and Real Disposable Income, World Cyclical Slow Growth and Global Recession Risk
Carlos M. Pelaez
© Carlos M. Pelaez, 2009, 2010, 2011, 2012, 2013, 2014
I Twenty Seven Million Unemployed or Underemployed
IA1 Summary of the Employment Situation
IA2 Number of People in Job Stress
IA3 Long-term and Cyclical Comparison of Employment
IA4 Job Creation
IB Stagnating Real Wages
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
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 54.9 in Sep from 55.1 in Aug, indicating expansion at slightly slower rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/f9fa304d4f7948649dec41faf0ffe0e5). This index has remained above the contraction territory of 50.0 during 62 consecutive months. The employment index increased from 51.4 in Aug to 51.8 in Sep with input prices rising at slower rate, new orders increasing at faster rate and output increasing at slower rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/f9fa304d4f7948649dec41faf0ffe0e5). David Hensley, Director of Global Economic Coordination at JP Morgan, finds moderately slower growth of world economic output at the highest pace since IIQ2010 (http://www.markiteconomics.com/Survey/PressRelease.mvc/f9fa304d4f7948649dec41faf0ffe0e5). The JP Morgan Global Manufacturing PMI™, produced by JP Morgan and Markit in association with ISM and IFPSM, decreased to 52.2 in Sep from 52.5 in Aug (http://www.markiteconomics.com/Survey/PressRelease.mvc/fd40c528859a43fb9da53bfb0a8df860). New export orders expanded for the fifteenth consecutive month (http://www.markiteconomics.com/Survey/PressRelease.mvc/fd40c528859a43fb9da53bfb0a8df860). David Hensley, Director of Global Economics Coordination at JP Morgan Chase, finds continuing impulse in global manufacturing. The HSBC Brazil Composite Output Index, compiled by Markit, increased from 49.6 in Aug to 50.6 in Sep, indicating moderate expansion in activity of Brazil’s private sector (http://www.markiteconomics.com/Survey/PressRelease.mvc/1a09dff57d044bb0b23abb59d47ab45a). The HSBC Brazil Services Business Activity index, compiled by Markit, increased from 49.2 in Aug to 50.6 in Sep, indicating marginally expanding services activity (http://www.markiteconomics.com/Survey/PressRelease.mvc/1a09dff57d044bb0b23abb59d47ab45a). André Loes, Chief Economist, Brazil, at HSBC, finds continuing modest growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/1a09dff57d044bb0b23abb59d47ab45a). The HSBC Brazil Purchasing Managers’ IndexTM (PMI™) decreased marginally from 50.2 in Aug to 49.3 in Sep, indicating moderate deterioration in manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/846d98ec34dc4ea3b1745ea5717b3226). André Loes, Chief Economist, Brazil at HSBC, finds deteriorating industrial activity in Brazil (http://www.markiteconomics.com/Survey/PressRelease.mvc/846d98ec34dc4ea3b1745ea5717b3226).
VA United States. The Markit Flash US Manufacturing Purchasing Managers’ Index™ (PMI™) seasonally adjusted stabilized at 57.9 in Sep unchanged from 58.0 in Aug (http://www.markiteconomics.com/Survey/PressRelease.mvc/39f308fe4b504921bd7a6f8e8b0762ca). New export orders increased at a slower rate of expansion. Chris Williamson, Chief Economist at Markit, finds that manufacturing activity is expanding at the highest rate in more than four years (http://www.markiteconomics.com/Survey/PressRelease.mvc/39f308fe4b504921bd7a6f8e8b0762ca). The Markit Flash US Services PMI™ Business Activity Index decreased from 59.5 in Aug to 58.5 in Sep (http://www.markiteconomics.com/Survey/PressRelease.mvc/a9f73e6ab8304506b6d2bd8efc9bd462). Chris Williamson, Chief Economist at Markit, finds that the surveys are consistent with sustained strong growth of GDP in IIIQ2014 at an annual rate around 3.5 percent (http://www.markiteconomics.com/Survey/PressRelease.mvc/a9f73e6ab8304506b6d2bd8efc9bd462). The Markit US Composite PMI™ Output Index of Manufacturing and Services decreased to 59.0 in Sep from 59.7 in Aug (http://www.markiteconomics.com/Survey/PressRelease.mvc/e1666adac16845408a507a50ff53ea4b). The Markit US Services PMI™ Business Activity Index decreased from 59.5 in Aug to 58.9 in Sep (http://www.markiteconomics.com/Survey/PressRelease.mvc/e1666adac16845408a507a50ff53ea4b). Chris Williamson, Chief Economist at Markit, finds the indexes consistent with US growth at around 3 percent in IIIQ2014 (http://www.markiteconomics.com/Survey/PressRelease.mvc/e1666adac16845408a507a50ff53ea4b). The Markit US Manufacturing Purchasing Managers’ Index™ (PMI™) decreased to 57.5 in Sep from 57.9 in Aug, which indicates expansion at marginally slower rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/8f8d0489d39e4d60a8409cabd0e030d4). Growth of export orders continued. Chris Williamson, Chief Economist at Markit, finds that the index suggests output growth of GDP at around 3 percent in IIIQ2014 (http://www.markiteconomics.com/Survey/PressRelease.mvc/8f8d0489d39e4d60a8409cabd0e030d4). The purchasing managers’ index (PMI) of the Institute for Supply Management (ISM) Report on Business® decreased 2.4 percentage points from 59.0 in Aug to 56.6 in Sep, which indicates growth at slower rate (http://www.ism.ws/ISMReport/MfgROB.cfm?navItemNumber=12942). The index of new orders decreased 6.6 percentage points from 66.7 in Aug to 60.0 in Sep. The index of new export orders decreased 1.5 percentage point from 55.0 in Aug to 53.5 in Sep, growing at a slower rate. The Non-Manufacturing ISM Report on Business® PMI increased 0.9 percentage points from 58.7 in Jul to 59.6 in Aug, indicating growth of business activity/production during 61 consecutive months, while the index of new orders decreased 1.1 percentage points from 64.9 in Jul to 63.8 in Aug (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 | Aug 12 months NSA ∆%: 1.7; ex food and energy ∆%: 1.7 Aug month SA ∆%: -0.2; ex food and energy ∆%: 0.0 |
| Producer Price Index | Finished Goods Aug 12-month NSA ∆%: 2.2; ex food and energy ∆% 1.9 Final Demand Aug 12-month NSA ∆%: 1.8; ex food and energy ∆% 1.8 |
| PCE Inflation | Aug 12-month NSA ∆%: headline 1.5; ex food and energy ∆% 1.5 |
| Employment Situation | Household Survey: Sep Unemployment Rate SA 5.9% |
| Nonfarm Hiring | Nonfarm Hiring fell from 63.3 million in 2006 to 54.2 million in 2013 or by 9.1 million |
| GDP Growth | BEA Revised National Income Accounts IIQ2012/IIQ2011 2.3 IIIQ2012/IIIQ2011 2.7 IVQ2012/IVQ2011 1.6 IQ2013/IQ2012 1.7 IIQ2013/IIQ2012 1.8 IIIQ2013/IIIQ2012 2.3 IVQ2013/IVQ2012 3.1 IQ2014/IQ2013 1.9 IIQ2014/IIQ2013 2.6 IQ2012 SAAR 2.3 IIQ2012 SAAR 1.6 IIIQ2012 SAAR 2.5 IVQ2012 SAAR 0.1 IQ2013 SAAR 2.7 IIQ2013 SAAR 1.8 IIIQ2013 SAAR 4.5 IVQ2013 SAAR 3.5 IQ2014 SAAR -2.1 IIQ2014 SAAR 4.6 |
| Real Private Fixed Investment | SAAR IIQ2014 9.5 ∆% IVQ2007 to IIQ2014: 0.0% Blog 9/28/14 |
| Corporate Profits | IIQ2014 SAAR: Corporate Profits 8.4; Undistributed Profits 24.9 Blog 9/28/14 |
| Personal Income and Consumption | Aug month ∆% SA Real Disposable Personal Income (RDPI) SA ∆% 0.3 |
| Quarterly Services Report | IIQ14/IIQ13 NSA ∆%: Financial & Insurance 4.8 |
| Employment Cost Index | Compensation Private IIQ2014 SA ∆%: 0.7 |
| Industrial Production | Aug month SA ∆%: -0.1 Manufacturing Aug SA ∆% -0.4 Aug 12 months SA ∆% 3.6, NSA 3.5 |
| Productivity and Costs | Nonfarm Business Productivity IIQ2014∆% SAAE 2.3; IIQ2014/IIQ2013 ∆% 1.1; Unit Labor Costs SAAE IIQ2014 ∆% -0.1; IIQ2014/IIQ2013 ∆%: 1.7 Blog 9/7/14 |
| New York Fed Manufacturing Index | General Business Conditions From Aug 14.69 to Sep 27.54 |
| Philadelphia Fed Business Outlook Index | General Index from Aug 15.5 to Sep 22.5 |
| Manufacturing Shipments and Orders | New Orders SA Jul ∆% 10.5 Ex Transport -0.8 Jan-Jul NSA New Orders ∆% 4.5 Ex transport 2.5 |
| Durable Goods | Sep New Orders SA ∆%: -10.1; ex transport ∆%: -0.1 |
| Sales of New Motor Vehicles | Jan-Sep 2014 12,431,305; Jan-Sep 2013 11,786,536. Sep 14 SAAR 16.43 million, Aug 14 SAAR 17.53 million, Sep 2013 SAAR 15.42 million Blog 10/5/14 |
| Sales of Merchant Wholesalers | Jan-Jul 2014/Jan-Jul 2013 NSA ∆%: Total 6.0; Durable Goods: 4.9; Nondurable |
| Sales and Inventories of Manufacturers, Retailers and Merchant Wholesalers | Jul 14 12-M NSA ∆%: Sales Total Business 5.6; Manufacturers 4.5 |
| Sales for Retail and Food Services | Jan-Aug 2014/Jan-Aug 2013 ∆%: Retail and Food Services 3.7; Retail ∆% 3.6 |
| Value of Construction Put in Place | Aug SAAR month SA ∆%: -0.8 Aug 12-month NSA: 2.7 |
| Case-Shiller Home Prices | Jul 2014/Jul 2013 ∆% NSA: 10 Cities 6.7; 20 Cities: 6.7 |
| FHFA House Price Index Purchases Only | Jul SA ∆% 0.1; |
| New House Sales | Aug 2014 month SAAR ∆%: 18.0 |
| Housing Starts and Permits | Aug Starts month SA ∆% minus 14.4; Permits ∆%: minus 5.6 |
| Trade Balance | Balance Jul SA -$40,546 million versus Jun -$40,810 million |
| Export and Import Prices | Aug 12-month NSA ∆%: Imports -0.4; Exports 0.4 |
| Consumer Credit | Jul ∆% annual rate: Total 9.7; Revolving 7.4; Nonrevolving 10.6 |
| Net Foreign Purchases of Long-term Treasury Securities | Jul Net Foreign Purchases of Long-term US Securities: minus $18.6 billion |
| Treasury Budget | Fiscal Year 2014/2013 ∆% Aug: Receipts 7.7; Outlays 0.8; Individual Income Taxes 4.9 Deficit Fiscal Year 2012 $1,087 billion Deficit Fiscal Year 2013 $680 billion Blog 9/14/2014 |
| 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 $11,983 B 72.0% GDP 2024 Deficit $960B, 3.6% GDP Debt $20,554B 77.2% GDP 2039: Long-term Debt/GDP 106% Blog 8/26/12 11/18/12 2/10/13 9/22/13 2/16/14 8/24/14 9/14/14 |
| Commercial Banks Assets and Liabilities | Aug 2014 SAAR ∆%: Securities -1.4 Loans 6.8 Cash Assets 16.2 Deposits -0.7 Blog 9/28/14 |
| Flow of Funds | IIQ2014 ∆ since 2007 Assets +$14,244.2 BN Nonfinancial $224.1 BN Real estate -$419.6 BN Financial +14,020.1 BN Net Worth +$14,690.1 BN Blog 9/28/14 |
| Current Account Balance of Payments | IIQ2014 -190,161 MM % GDP 2.3 Blog 9/21/14 |
| Collapse of United States Dynamism of Income Growth and Employment Creation | Blog 8/24/14 |
Links to blog comments in Table USA:
9/28/14 http://cmpassocregulationblog.blogspot.com/2014/09/financial-volatility-mediocre-cyclical.html
9/21/14 http://cmpassocregulationblog.blogspot.com/2014/09/world-inflation-waves-squeeze-of.html
9/14/14 http://cmpassocregulationblog.blogspot.com/2014/09/geopolitics-monetary-policy-and.html
9/7/14 http://cmpassocregulationblog.blogspot.com/2014/09/competitive-monetary-policy-and.html
8/31/14 http://cmpassocregulationblog.blogspot.com/2014/09/geopolitical-and-financial-risks.html
8/24/14 http://cmpassocregulationblog.blogspot.com/2014/08/monetary-policy-world-inflation-waves.html
8/3/14 http://cmpassocregulationblog.blogspot.com/2014/08/fluctuating-financial-valuations.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
Motor vehicle sales and production in the US have been in long-term structural change. Table VA-1 provides the data on new motor vehicle sales and domestic car production in the US from 1990 to 2010. New motor vehicle sales grew from 14,137 thousand in 1990 to the peak of 17,806 thousand in 2000 or 29.5 percent. In that same period, domestic car production fell from 6,231 thousand in 1990 to 5,542 thousand in 2000 or -11.1 percent. New motor vehicle sales fell from 17,445 thousand in 2005 to 11,772 in 2010 or 32.5 percent while domestic car production fell from 4,321 thousand in 2005 to 2,840 thousand in 2010 or 34.3 percent. In Sep 2014, light vehicle sales accumulated to 12,431,305, which is higher by 5.5 percent relative to 11,786,536 a year earlier (http://motorintelligence.com/m_frameset.html). The seasonally adjusted annual rate of light vehicle sales in the US reached 16.43 million in Sep 2014, lower than 17.53 million in Aug 2014 and higher than 15.42 million in Sep 2013 (http://motorintelligence.com/m_frameset.html).
Table VA-1, US, New Motor Vehicle Sales and Car Production, Thousand Units
| New Motor Vehicle Sales | New Car Sales and Leases | New Truck Sales and Leases | Domestic Car Production | |
| 1990 | 14,137 | 9,300 | 4,837 | 6,231 |
| 1991 | 12,725 | 8,589 | 4,136 | 5,454 |
| 1992 | 13,093 | 8,215 | 4,878 | 5,979 |
| 1993 | 14,172 | 8,518 | 5,654 | 5,979 |
| 1994 | 15,397 | 8,990 | 6,407 | 6,614 |
| 1995 | 15,106 | 8,536 | 6,470 | 6,340 |
| 1996 | 15,449 | 8,527 | 6,922 | 6,081 |
| 1997 | 15,490 | 8,273 | 7,218 | 5,934 |
| 1998 | 15,958 | 8,142 | 7,816 | 5,554 |
| 1999 | 17,401 | 8,697 | 8,704 | 5,638 |
| 2000 | 17,806 | 8,852 | 8,954 | 5,542 |
| 2001 | 17,468 | 8,422 | 9,046 | 4,878 |
| 2002 | 17,144 | 8,109 | 9,036 | 5,019 |
| 2003 | 16,968 | 7,611 | 9,357 | 4,510 |
| 2004 | 17,298 | 7,545 | 9,753 | 4,230 |
| 2005 | 17,445 | 7,720 | 9,725 | 4,321 |
| 2006 | 17,049 | 7,821 | 9,228 | 4,367 |
| 2007 | 16,460 | 7,618 | 8,683 | 3,924 |
| 2008 | 13,494 | 6,814 | 6.680 | 3,777 |
| 2009 | 10,601 | 5,456 | 5,154 | 2,247 |
| 2010 | 11,772 | 5,729 | 6,044 | 2,840 |
Source: US Census Bureau
http://www.census.gov/compendia/statab/cats/wholesale_retail_trade/motor_vehicle_sales.html
Chart VA-1 of the Board of Governors of the Federal Reserve provides output of motor vehicles and parts in the United States from 1972 to 2014. Output virtually stagnated since the late 1990s.
Chart VA-1, US, Motor Vehicles and Parts Output, 1972-2014
Source: Board of Governors of the Federal Reserve System
http://www.federalreserve.gov/releases/g17/Current/default.htm
Manufacturers’ shipments decreased 1.0 percent in Aug 2014 and increased 1.4 percent in Jul 2014 after increasing 0.8 percent in Jun 2014. New orders decreased 10.1 percent in Aug 2014, after increasing 10.5 percent in Jul 2014 and increasing 1.5 percent in Jun 2014, as shown in Table VA-2. These data are very volatile. Volatility is illustrated by increase of 2642.2 percent of new orders of nondefense aircraft in Sep 2012 following decline by 97.2 percent in Aug 2012. New orders excluding transportation equipment decreased 0.1 percent in Aug 2014 after decreasing 0.7 percent in Jul 2014 and increasing 1.4 percent in Jun 2014. Capital goods new orders, indicating investment, decreased 34.0 percent in Aug 2014 after increasing 52.5 percent in Jul 2014 and increasing 4.9 percent in Jun 2014. New orders of nondefense capital goods decreased 36.4 percent in Aug 2014 after increasing 60.9 percent in Jul 2014 and increasing 5.1 percent in Jun 2014. Excluding more volatile aircraft, capital goods orders increased 0.4 percent in Aug 2014 after decreasing 0.1 percent in Jul 2014 and increasing 5.4 percent in Jun 2014.
Table VA-2, US, Value of Manufacturers’ Shipments and New Orders, SA, Month ∆%
| Aug 2013 | Jul 2014 | Jun 2014 ∆% | |
| Total | |||
| S | -1.0 | 1.4 | 0.8 |
| NO | -10.1 | 10.5 | 1.5 |
| Excluding | |||
| S | -0.3 | 0.3 | 0.7 |
| NO | -0.1 | -0.7 | 1.4 |
| Excluding | |||
| S | -1.0 | 1.3 | 0.8 |
| NO | -10.3 | 11.3 | 1.5 |
| Durable Goods | |||
| S | -1.6 | 3.7 | 1.2 |
| NO | -18.4 | 22.5 | 2.7 |
| Machinery | |||
| S | -0.1 | 3.3 | -0.4 |
| NO | 0.9 | -1.4 | 5.0 |
| Computers & Electronic Products | |||
| S | -1.0 | 3.1 | 2.2 |
| NO | 1.5 | -0.8 | 3.8 |
| Computers | |||
| S | -8.3 | -7.3 | 4.7 |
| NO | -15.2 | -14.8 | -15.7 |
| Transport | |||
| S | -5.1 | 8.0 | 1.5 |
| NO | -42.2 | 73.3 | 2.2 |
| Automobiles | |||
| S | 0.1 | 2.6 | 1.2 |
| Motor Vehicles | |||
| S | -6.0 | 7.5 | 0.9 |
| NO | -5.4 | 7.3 | 0.9 |
| Nondefense | |||
| S | -1.3 | 4.0 | 14.2 |
| NO | -74.3 | 315.6 | 11.2 |
| Capital Goods | |||
| S | 0.2 | 1.9 | 2.6 |
| NO | -34.0 | 52.5 | 4.9 |
| Nondefense Capital Goods | |||
| S | 0.1 | 1.9 | 3.1 |
| NO | -36.4 | 60.9 | 5.1 |
| Capital Goods ex Aircraft | |||
| S | 0.1 | 2.0 | 1.0 |
| NO | 0.4 | -0.1 | 5.4 |
| Nondurable Goods | |||
| S | -0.4 | -0.8 | 0.4 |
| NO | -0.4 | -0.8 | 0.4 |
Note: Mfg: manufacturing; S: shipments; NO: new orders; Transport: transportation
Source: US Census Bureau
http://www.census.gov/manufacturing/m3/
Chart VA-2 of the US Census Bureau provides new orders of manufacturers from Sep 2013 to Aug 2014. There is significant volatility that prevents discerning clear trends.
Chart VA-2, US, Manufacturers’ New Orders 2013-2014 Seasonally Adjusted, Month ∆%
Source: US Census Bureau
http://www.census.gov/briefrm/esbr/www/esbr022.html
Chart VA-3 of the US Census Bureau provides total value of manufacturers’ new orders, seasonally adjusted, from 1992 to 2014. Seasonal adjustment reduces sharp oscillations. The series dropped nearly vertically during the global recession but rose along a path even steeper than in the high-growth period before the recession. The final segment suggests deceleration but similar segments occurred in earlier periods followed with continuing growth and stability currently.
Chart VA-3, US, Value of Total Manufacturers’ New Orders, Seasonally Adjusted, 1992-2014
Source: US Census Bureau
http://www.census.gov/manufacturing/m3/
Additional perspective on manufacturers’ shipments and new orders is provided by Table VA-3. Values are cumulative millions of dollars in Jan-Aug 2014 not seasonally adjusted (NSA). Shipments of all manufacturing industries in Jan-Aug 2014 total $3980.6 billion and new orders total $4014.8 billion, growing respectively by 2.8 percent and 4.3 percent relative to the same period in 2013. Excluding transportation equipment, shipments grew 2.6 percent and new orders increased 2.5 percent. Excluding defense, shipments grew 3.0 percent and new orders grew 4.2 percent. Durable goods shipments reached $1909.1 billion in Jan-Aug 2014, or 48.0 percent of the total, growing by 4.8 percent, and new orders $1943.3 billion, or 48.4 percent of the total, growing by 8.1 percent. Important information in Table VA-3 is the large share of nondurable goods with shipments of $2071.5 billion or 52.0 percent of the total, growing by 1.0 percent. Capital goods have relatively high value of $682.4 billion for shipments, growing 4.1 percent, and new orders $761.2 billion, increasing 11.2 percent, which could be an indicator of future investment. Excluding aircraft, capital goods shipments reached $543.6 billion, growing 4.4 percent, and new orders $564.2 billion, increasing 4.6 percent. There is no suggestion in these data that the US economy is close to recession but manufacturing accounts for 11.3 percent of US national income in IIQ2014. These data are not adjusted for inflation.
Table VA-3, US, Value of Manufacturers’ Shipments and New Orders, NSA, Millions of Dollars
| Jan-Aug 2014 | Shipments | ∆% 2014/ | New Orders | ∆% 2014/ |
| Total | 3,980,630 | 2.8 | 4,014,809 | 4.3 |
| Excluding Transport | 3,422,476 | 2.6 | 3,388,082 | 2.5 |
| Excluding Defense | 3,889,213 | 3.0 | 3,926,038 | 4.2 |
| Durable Goods | 1,909,100 | 4.8 | 1,943,279 | 8.1 |
| Machinery | 288,018 | 5.2 | 300,207 | 7.7 |
| Computers & Electronic Products | 226,516 | 5.4 | 171,151 | 4.4 |
| Computers | 3,392 | -15.1 | 3,915 | -4.8 |
| Transport Equipment | 558,154 | 4.3 | 626,727 | 15.4 |
| Automobiles | 73,968 | -11.5 | ||
| Motor Vehicles | 168,863 | 8.9 | 169,177 | 9.4 |
| Nondefense Aircraft | 93,893 | 10.2 | 162,612 | 50.1 |
| Capital Goods | 682,423 | 4.1 | 761,230 | 11.2 |
| Nondefense Capital Goods | 607,860 | 5.0 | 689,255 | 11.2 |
| Capital Goods ex Aircraft | 543,618 | 4.4 | 564,210 | 4.6 |
| Nondurable Goods | 2,071,530 | 1.0 | 2,071,530 | 1.0 |
| Food Products | 517,786 | 6.0 | ||
| Petroleum Refineries | 549,571 | -1.4 | ||
| Chemical Products | 508,639 | -1.4 |
Note: Transport: transportation Source: US Census Bureau
Source: US Census Bureau
http://www.census.gov/manufacturing/m3/
Chart VA-4 of the US Census Bureau provides value of manufacturer’s new orders not seasonally adjusted from Jan 1992 to Aug 2014. Fluctuations are evident, which are smoothed by seasonal adjustment in the above Chart VA-3. The series drops nearly vertically during the global contraction and then resumes growth in a steep upward trend, flattening recently.
Chart VA-4, US, Value of Total Manufacturers’ New Orders, Not Seasonally Adjusted, 1992-2014
Source: US Census Bureau
http://www.census.gov/manufacturing/m3/
Construction spending at seasonally adjusted annualized rate (SAAR) reached $960.9 billion in Aug 2014, which was lower by 0.8 percent than in the prior month of Jul 2014, as shown in Table VA-4. Residential investment, with $357.2 billion accounting for 37.2 percent of total value of construction, decreased 0.7 percent in Aug and nonresidential investment, with $603.7 billion accounting for 62.8 percent of the total, decreased 1.2 percent. Public construction decreased 0.9 percent while private construction decreased 0.8 percent. Data in Table VA-4 show that nonresidential construction at $603.7 billion is much higher in value than residential construction at $357.2 billion while total private construction at $685.0 billion is much higher than public construction at $275.9 billion, all in SAAR. Residential and nonresidential construction contributed positively to growth of GDP in the US in all quarters in 2012. Nonresidential investment added 0.20 percentage points to GDP growth in IQ2013 while residential construction added 0.22 percentage points. Nonresidential construction added 0.21 percentage points to GDP growth in IIQ2013 with residential construction adding 0.53 percentage points. Nonresidential construction added 0.67 percentage points to GDP growth in IIIQ2013 while residential construction added 0.34 percentage points. Nonresidential construction added 1.23 percentage points to GDP growth in IVQ2013 while residential construction deducted 0.28 percentage points. In 2012, residential construction added 0.33 percentage points to GDP growth and added 0.01 percentage points in 2011. Residential construction added 0.33 percentage points to GDP growth in 2013. Nonresidential construction added 0.84 percentage points to GDP growth in 2012 and 0.85 percentage points in 2011. Nonresidential construction added 0.37 percentage points to GDP growth in 2013. In IQ2014, residential construction deducted 0.17 percentage points from GDP growth and nonresidential construction added 0.20 percentage points. Nonresidential construction added 1.18 percentage points to GDP growth in IIQ2014 and residential construction added 0.27 percentage points (http://cmpassocregulationblog.blogspot.com/2014/09/financial-volatility-mediocre-cyclical.html).
Table VA-4, Construction Put in Place in the United States Seasonally Adjusted Annual Rate Million Dollars and Month and 12-Month ∆%
| Aug 2014 | Aug 2014 SAAR $ Millions | Month ∆% | 12-Month ∆% |
| Total | 960,958 | -0.8 | 5.0 |
| Residential | 357,234 | -0.1 | 3.3 |
| Nonresidential | 603,724 | -1.2 | 6.0 |
| Total Private | 685,025 | -0.8 | 6.3 |
| Private Residential | 351,698 | -0.1 | 3.7 |
| New Single Family | 188,743 | 0.7 | 8.3 |
| New Multi-Family | 44,231 | 1.4 | 35.9 |
| Private Nonresidential | 333,327 | -1.4 | 9.2 |
| Total Public | 275,933 | -0.9 | 1.9 |
| Public Residential | 5,536 | 3.3 | -14.7 |
| Public Nonresidential | 270,397 | -1.0 | 2.3 |
SAAR: seasonally adjusted annual rate; B: billions
Source: US Census Bureau http://www.census.gov/construction/c30/c30index.html
Further information on construction spending is provided in Table VA-5. The original monthly estimates not-seasonally adjusted (NSA) and their 12-month rates of change are provided in the first two columns while the SAARs and their monthly changes are provided in the final two columns. There has been improvement in construction in the US. There are only eight declines in the monthly rate from Dec 2011 to Aug 2014. Growth in 12 months NSA fell from 8.2 percent in Dec 2012 to 2.7 percent in Aug 2014.
Table VA-5, US, Value and Percentage Change in Value of Construction Put in Place, Dollars Millions and ∆%
| Value NSA | 12-Month ∆% NSA | Value | Month ∆% SA* | |
| Aug | 89,274 | 2.7 | 960,958 | -0.8 |
| Jul | 87,572 | 5.1 | 968,832 | 1.2 |
| Jun | 86,141 | 5.1 | 957,120 | -1.6 |
| May | 82,778 | 7.6 | 972,844 | 1.3 |
| Apr | 76,940 | 8.5 | 960,349 | 1.4 |
| Mar | 70,064 | 8.8 | 947,303 | 0.0 |
| Feb | 63,817 | 7.8 | 947,088 | -0.8 |
| Jan | 66,486 | 11.5 | 954,642 | -0.7 |
| Dec 2013 | 73,893 | 9.6 | 961,158 | 0.9 |
| Nov | 80,373 | 7.5 | 952,531 | 1.3 |
| Oct | 87,163 | 5.8 | 939,933 | 1.7 |
| Sep | 86,101 | 6.4 | 924,153 | 1.0 |
| Aug | 86,909 | 5.8 | 915,286 | 1.0 |
| Jul | 83,299 | 6.2 | 906,644 | 0.7 |
| Jun | 81,961 | 3.4 | 900,334 | 0.4 |
| May | 76,938 | 4.6 | 896,603 | 1.3 |
| Apr | 70,900 | 5.5 | 884,966 | 1.5 |
| Mar | 64,404 | 4.3 | 871,888 | -0.9 |
| Feb | 59,188 | 4.3 | 879,609 | 1.2 |
| Jan | 59,636 | 5.4 | 869,232 | -1.5 |
| Dec 2012 | 67,431 | 8.2 | 882,637 | 0.4 |
| Nov | 74,754 | 8.6 | 879,539 | -0.5 |
| Oct | 82,353 | 10.9 | 883,853 | 0.9 |
| Sep | 80,890 | 7.3 | 876,091 | 0.9 |
| Aug | 82,183 | 6.6 | 868,246 | 0.4 |
| Jul | 78,457 | 8.8 | 864,687 | -1.0 |
| Jun | 79,262 | 8.8 | 873,069 | 1.3 |
| May | 73,571 | 11.8 | 861,913 | 2.3 |
| Apr | 67,234 | 9.4 | 842,898 | 1.0 |
| Mar | 61,772 | 9.2 | 834,810 | 1.1 |
| Feb | 56,761 | 12.2 | 825,774 | 0.3 |
| Jan | 56,578 | 10.9 | 823,583 | 0.8 |
| Dec 2011 | 62,319 | 3.4 | 817,198 | 0.9 |
SAAR: Seasonally Adjusted Annual Rate
Source: US Census Bureau http://www.census.gov/construction/c30/c30index.html
The sharp contraction of the value of construction in the US is revealed by Table VA-6. Construction spending in Jan-Aug 2014, not seasonally adjusted, reached $623.1 billion, which is higher by 6.8 percent than $583.2 billion in the same period in 2013. The depth of the contraction is shown by the decline of construction spending from $779.7 billion in Jan-Aug 2006 to $623.1 billion in the same period in 2014, or decline by minus 20.1 percent. The decline in inflation-adjusted terms is much higher. The all-items not seasonally adjusted CPI (consumer price index) increased from 203.9 in Aug 2006 to 237.852 in Aug 2014 (http://www.bls.gov/cpi/data.htm) or by 16.7 percent. The comparable decline from Jan-Aug 2005 to Jan-Aug 2014 is minus 12.6 percent. Construction spending in Jan-Aug 2014 increased by 8.3 percent relative to the same period in 2003. Construction spending is higher by 2.6 percent in Jan-Aug 2014 relative to the same period in 2009. Construction has been weaker than the economy as a whole.
Table VA-6, US, Value of Construction Put in Place in the United States, Not Seasonally Adjusted, $ Millions and ∆%
| Jan-Aug 2014 $ MM | 623,072 |
| Jan-Aug 2013 | 583,235 |
| ∆% to 2014 | 6.8 |
| Jan-Aug 2012 $ MM | 555,818 |
| ∆% to 2014 | 12.1 |
| Jan-Aug 2011 $ MM | 507,544 |
| ∆% to 2014 | 22.8 |
| Jan-Aug 2010 $MM | 529,193 |
| ∆% to 2014 | 17.7 |
| Jan-Aug 2009 | 607,324 |
| ∆% to 2014 | 2.6 |
| Jan-Aug 2006 $ MM | 779,674 |
| ∆% to 2014 | -20.1 |
| Jan-Aug 2005 $ MM | 712,807 |
| ∆% to 2014 | -12.6 |
| Jan-Aug 2003 $ MM | 575,559 |
| ∆% to 2014 | 8.3 |
Source: US Census Bureau http://www.census.gov/construction/c30/c30index.html
Chart VA-5 of the US Census Bureau provides value of construction spending in the US not seasonally adjusted from 2002 to 2014. There are wide oscillations requiring seasonal adjustment to compare adjacent data. There was sharp decline during the global recession followed in recent periods by a stationary series that may be moving upward again with vacillation in the final segment.
Chart VA-5, Value of Construction Spending not Seasonally Adjusted, Millions of Dollars, 2002-2014
Source: US Census Bureau http://www.census.gov/construction/c30/c30index.html
Chart VA-5 of the US Census Bureau provides value of construction spending in the US not seasonally adjusted from 2002 to 2014. There are wide oscillations requiring seasonal adjustment to compare adjacent data. There was sharp decline during the global recession followed in recent periods by a stationary series that may be moving upward again with vacillation in the final segment.
Table VA-7, US, Value of Construction Spending Not Seasonally Adjusted, Millions of Dollars
| Year | Feb | Mar | Apr | May | Jun | Jul | Aug |
| 2002 | 58,588 | 63,782 | 69,504 | 73,384 | 77,182 | 78,863 | 79,460 |
| 2003 | 58,526 | 64,506 | 69,638 | 74,473 | 80,377 | 82,971 | 85,191 |
| 2004 | 64,138 | 73,238 | 78,354 | 83,736 | 89,932 | 93,614 | 96,164 |
| 2005 | 72,048 | 81,345 | 85,485 | 92,959 | 99,632 | 103,158 | 106,706 |
| 2006 | 81,478 | 92,855 | 95,324 | 102,495 | 107,607 | 108,423 | 110,434 |
| 2007 | 79,177 | 88,905 | 93,375 | 100,534 | 105,399 | 107,090 | 110,430 |
| 2008 | 77,253 | 82,815 | 87,791 | 92,843 | 96,411 | 98,563 | 99,877 |
| 2009 | 66,490 | 71,770 | 75,355 | 76,971 | 81,573 | 83,528 | 84,510 |
| 2010 | 54,112 | 60,363 | 66,575 | 69,059 | 74,200 | 73,233 | 75,977 |
| 2011 | 50,590 | 56,572 | 61,475 | 65,827 | 72,850 | 72,112 | 77,106 |
| 2012 | 56,761 | 61,772 | 67,234 | 73,571 | 79,262 | 78,457 | 82,183 |
| 2013 | 59,188 | 64,404 | 70,900 | 76,938 | 81,961 | 83,299 | 86,909 |
| 2014 | 63,817 | 70,064 | 76,940 | 82,778 | 86,141 | 87,572 | 89,274 |
Source: US Census Bureau http://www.census.gov/construction/c30/c30index.html
Chart VA-6 of the US Census Bureau shows SAARs of construction spending for the US since 1993. Construction spending surged in nearly vertical slope after the stimulus of 2003 combining near zero interest rates together with other housing subsidies and subsequent slow adjustment in 17 doses of increases by 25 basis points between Jun 2004 and Jun 2006. Construction spending collapsed after subprime mortgages defaulted with the fed funds rate increasing from 1.00 percent in Jun 2004 to 5.25 percent in Jun 2006. Subprime mortgages were programmed for refinancing in two years after increases in homeowner equity in the assumption that fed funds rates would remain low forever or increase in small increments (Gorton 2009EFM see http://cmpassocregulationblog.blogspot.com/2011/07/causes-of-2007-creditdollar-crisis.html). Price declines of houses or even uncertainty prevented refinancing of subprime mortgages that defaulted, causing the financial crisis that eventually triggered the global recession. Chart VA-9 shows a trend of increase in the final segment but it is difficult to assess if it is sustainable.
Chart VA-6, US, Construction Expenditures SAAR 1993-2014
Source: US Census Bureau
http://www.census.gov/briefrm/esbr/www/esbr050.html
Construction spending at SAARs in the five months Feb-Jun is shown in Table VA-8 for the years between 2002 and 2014. There is a peak in 2005 to 2007 with subsequent collapse of SAARs and rebound in 2012-2014.
Table VA-8, US, Value of Construction Spending SAAR Millions of Dollars
| Year | Apr | May | Jun | Jul | Aug |
| 2002 | 858,240 | 850,935 | 846,777 | 847,129 | 839,008 |
| 2003 | 859,459 | 866,814 | 880,865 | 891,264 | 901,839 |
| 2004 | 967,761 | 974,158 | 983,072 | 1,006,119 | 1,013,724 |
| 2005 | 1,058,365 | 1,078,586 | 1,089,505 | 1,109,691 | 1,119,782 |
| 2006 | 1,183,485 | 1,180,059 | 1,172,932 | 1,165,093 | 1,158,193 |
| 2007 | 1,159,124 | 1,168,195 | 1,166,892 | 1,154,018 | 1,160,593 |
| 2008 | 1,092,939 | 1,091,569 | 1,075,482 | 1,067,380 | 1,058,675 |
| 2009 | 931,610 | 914,093 | 903,987 | 901,735 | 891,278 |
| 2010 | 825,626 | 817,745 | 817,869 | 790,519 | 793,090 |
| 2011 | 772,469 | 774,148 | 797,272 | 789,632 | 801,183 |
| 2012 | 842,898 | 861,913 | 873,069 | 864,687 | 868,246 |
| 2013 | 884,966 | 896,603 | 900,334 | 906,644 | 915,286 |
| 2014 | 960,349 | 972,844 | 957,120 | 968,832 | 960,958 |
http://www.census.gov/construction/c30/c30index.html
Chart VA-7 of the US Census Bureau provides SAARs of value of construction from 2002 to 2014. There is clear acceleration after 2003 when fed funds rates were fixed at 1.0 percent from Jun 2003 until Jun 2004. Construction peaked in 2005-2006, stabilizing in 2007 at a lower level and then collapsed in a nearly vertical drop until 2011 with increases into 2012 and marginal drop in Jan 2013 followed by increase in Feb 2013 and decline in Mar 2013 followed by continuing increase in Apr-May 2013 and Aug-Nov 2013. The rate of growth slowed in 2014.
Chart VA-7, US, Construction Expenditures SAAR 2002-2014
Source: US Census Bureau
http://www.census.gov/construction/c30/c30index.html
Chart VA-8 of the US Census Bureau provides monthly residential construction in the US not seasonally adjusted from 2002 to 2014. There was steep increase until 2006 followed by sharp contraction. The series stabilized at the bottom and increased in the final segment with subsequent stability.
Chart VA-8, US, Residential Construction, Not Seasonally Adjusted, Millions of Dollars, 2002-2014
Source: US Census Bureau http://www.census.gov/construction/c30/c30index.html
Chart VA-9 of the US Census Bureau provides monthly nonresidential construction in the US not seasonally adjusted. There is similar acceleration until 2006 followed by milder contraction than for residential construction. The final segment appears stationary.
Chart VA-9, US, Nonresidential Construction, Not Seasonally Adjusted, Millions of Dollars, 2002-2014
http://www.census.gov/construction/c30/c30index.html
Annual available data for the value of construction put in place in the US between 1993 and 2013 are provided in Table VA-9. Data from 1993 to 2001 are available for public and private construction with breakdown in residential and nonresidential only for private construction. Data beginning in 2002 provide aggregate residential and nonresidential values. Total construction value put in place in the US increased 87.6 percent between 1993 and 2013 but most of the growth, 65.3 percent, was concentrated in 1993 to 2000 with increase of 13.5 percent between 2000 and 2013. Total value of construction increased 7.4 percent between 2002 and 2013 with value of nonresidential construction increasing 27.5 percent while value of residential construction fell 14.9 percent. Value of total construction fell 17.5 percent between 2005 and 2013, with value of residential construction declining 44.6 percent while value of nonresidential construction rose 16.8 percent. Value of total construction fell 22.0 percent between 2006 and 2013, with value of nonresidential construction increasing 3.9 percent while value of residential construction fell 44.8 percent. In 2002, nonresidential construction had share of 52.6 percent in total construction while the share of residential construction was 47.4 percent. In 2013, the share of nonresidential construction in total value rose to 62.4 percent while that of residential construction fell to 37.6 percent.
Table VA-9, Annual Value of Construction Put in Place 1993-2013, Millions of Dollars and ∆%
| Total | Private Nonresidential | Private Residential | |
| 1993 | 485,548 | 150,006 | 208,180 |
| 1994 | 531,892 | 160,438 | 241,033 |
| 1995 | 548,666 | 180,534 | 228,121 |
| 1996 | 599,693 | 195,523 | 257,495 |
| 1997 | 631,853 | 213,720 | 264,696 |
| 1998 | 688,515 | 237,394 | 296,343 |
| 1999 | 744,551 | 249,167 | 326,302 |
| 2000 | 802,756 | 275,293 | 346,138 |
| 2001 | 840,249 | 273,922 | 364,414 |
| Total | Total Nonresidential | Total Residential | |
| 2002 | 847,874 | 445,914 | 401,960 |
| 2003 | 891,497 | 440,246 | 451,251 |
| 2004 | 991,356 | 452,948 | 538,408 |
| 2005 | 1,104,136 | 486,629 | 617,507 |
| 2006 | 1,167,222 | 547,408 | 619,814 |
| 2007 | 1,152,351 | 651,883 | 500,468 |
| 2008 | 1,068,346 | 710,690 | 357,746 |
| 2009 | 904,929 | 651,001 | 253,928 |
| 2010 | 806,040 | 556,928 | 249,112 |
| 2011 | 788,343 | 535,686 | 252,657 |
| 2012 | 861,245 | 574,399 | 286,847 |
| 2013 | 910,764 | 568,561 | 342,203 |
| ∆% 1993-2013 | 87.6 | ||
| ∆% 1993-2000 | 65.3 | ||
| ∆% 2000-2013 | 13.5 | ||
| ∆% 2002-2013 | 7.4 | 27.5 | -14.9 |
| ∆% 2005-2013 | -17.5 | 16.8 | -44.6 |
| ∆% 2006-2013 | -22.0 | 3.9 | -44.8 |
Source: US Census Bureau http://www.census.gov/construction/c30/c30index.html
The explanation of the sharp contraction of household wealth can probably be found in the origins of the financial crisis and global recession. Let V(T) represent the value of the firm’s equity at time T and B stand for the promised debt of the firm to bondholders and assume that corporate management, elected by equity owners, is acting on the interests of equity owners. Robert C. Merton (1974, 453) states:
“On the maturity date T, the firm must either pay the promised payment of B to the debtholders or else the current equity will be valueless. Clearly, if at time T, V(T) > B, the firm should pay the bondholders because the value of equity will be V(T) – B > 0 whereas if they do not, the value of equity would be zero. If V(T) ≤ B, then the firm will not make the payment and default the firm to the bondholders because otherwise the equity holders would have to pay in additional money and the (formal) value of equity prior to such payments would be (V(T)- B) < 0.”
Pelaez and Pelaez (The Global Recession Risk (2007), 208-9) apply this analysis to the US housing market in 2005-2006 concluding:
“The house market [in 2006] is probably operating with low historical levels of individual equity. There is an application of structural models [Duffie and Singleton 2003] to the individual decisions on whether or not to continue paying a mortgage. The costs of sale would include realtor and legal fees. There could be a point where the expected net sale value of the real estate may be just lower than the value of the mortgage. At that point, there would be an incentive to default. The default vulnerability of securitization is unknown.”
There are multiple important determinants of the interest rate: “aggregate wealth, the distribution of wealth among investors, expected rate of return on physical investment, taxes, government policy and inflation” (Ingersoll 1987, 405). Aggregate wealth is a major driver of interest rates (Ibid, 406). Unconventional monetary policy, with zero fed funds rates and flattening of long-term yields by quantitative easing, causes uncontrollable effects on risk taking that can have profound undesirable effects on financial stability. Excessively aggressive and exotic monetary policy is the main culprit and not the inadequacy of financial management and risk controls.
The net worth of the economy depends on interest rates. In theory, “income is generally defined as the amount a consumer unit could consume (or believe that it could) while maintaining its wealth intact” (Friedman 1957, 10). Income, Y, is a flow that is obtained by applying a rate of return, r, to a stock of wealth, W, or Y = rW (Ibid). According to a subsequent restatement: “The basic idea is simply that individuals live for many years and that therefore the appropriate constraint for consumption decisions is the long-run expected yield from wealth r*W. This yield was named permanent income: Y* = r*W” (Darby 1974, 229), where * denotes permanent. The simplified relation of income and wealth can be restated as:
W = Y/r (1)
Equation (1) shows that as r goes to zero, r →0, W grows without bound, W→∞.
Lowering the interest rate near the zero bound in 2003-2004 caused the illusion of permanent increases in wealth or net worth in the balance sheets of borrowers and also of lending institutions, securitized banking and every financial institution and investor in the world. The discipline of calculating risks and returns was seriously impaired. The objective of monetary policy was to encourage borrowing, consumption and investment but the exaggerated stimulus resulted in a financial crisis of major proportions as the securitization that had worked for a long period was shocked with policy-induced excessive risk, imprudent credit, high leverage and low liquidity by the incentive to finance everything overnight at close to zero interest rates, from adjustable rate mortgages (ARMS) to asset-backed commercial paper of structured investment vehicles (SIV).
The consequences of inflating liquidity and net worth of borrowers were a global hunt for yields to protect own investments and money under management from the zero interest rates and unattractive long-term yields of Treasuries and other securities. Monetary policy distorted the calculations of risks and returns by households, business and government by providing central bank cheap money. Short-term zero interest rates encourage financing of everything with short-dated funds, explaining the SIVs created off-balance sheet to issue short-term commercial paper to purchase default-prone mortgages that were financed in overnight or short-dated sale and repurchase agreements (Pelaez and Pelaez, Financial Regulation after the Global Recession, 50-1, Regulation of Banks and Finance, 59-60, Globalization and the State Vol. I, 89-92, Globalization and the State Vol. II, 198-9, Government Intervention in Globalization, 62-3, International Financial Architecture, 144-9). ARMS were created to lower monthly mortgage payments by benefitting from lower short-dated reference rates. Financial institutions economized in liquidity that was penalized with near zero interest rates. There was no perception of risk because the monetary authority guaranteed a minimum or floor price of all assets by maintaining low interest rates forever or equivalent to writing an illusory put option on wealth. Subprime mortgages were part of the put on wealth by an illusory put on house prices. The housing subsidy of $221 billion per year created the impression of ever increasing house prices. The suspension of auctions of 30-year Treasuries was designed to increase demand for mortgage-backed securities, lowering their yield, which was equivalent to lowering the costs of housing finance and refinancing. Fannie and Freddie purchased or guaranteed $1.6 trillion of nonprime mortgages and worked with leverage of 75:1 under Congress-provided charters and lax oversight. The combination of these policies resulted in high risks because of the put option on wealth by near zero interest rates, excessive leverage because of cheap rates, low liquidity because of the penalty in the form of low interest rates and unsound credit decisions because the put option on wealth by monetary policy created the illusion that nothing could ever go wrong, causing the credit/dollar crisis and global recession (Pelaez and Pelaez, Financial Regulation after the Global Recession, 157-66, Regulation of Banks, and Finance, 217-27, International Financial Architecture, 15-18, The Global Recession Risk, 221-5, Globalization and the State Vol. II, 197-213, Government Intervention in Globalization, 182-4).
There are significant elements of the theory of bank financial fragility of Diamond and Dybvig (1983) and Diamond and Rajan (2000, 2001a, 2001b) that help to explain the financial fragility of banks during the credit/dollar crisis (see also Diamond 2007). The theory of Diamond and Dybvig (1983) as exposed by Diamond (2007) is that banks funding with demand deposits have a mismatch of liquidity (see Pelaez and Pelaez, Regulation of Banks and Finance (2009b), 58-66). A run occurs when too many depositors attempt to withdraw cash at the same time. All that is needed is an expectation of failure of the bank. Three important functions of banks are providing evaluation, monitoring and liquidity transformation. Banks invest in human capital to evaluate projects of borrowers in deciding if they merit credit. The evaluation function reduces adverse selection or financing projects with low present value. Banks also provide important monitoring services of following the implementation of projects, avoiding moral hazard that funds be used for, say, real estate speculation instead of the original project of factory construction. The transformation function of banks involves both assets and liabilities of bank balance sheets. Banks convert an illiquid asset or loan for a project with cash flows in the distant future into a liquid liability in the form of demand deposits that can be withdrawn immediately.
In the theory of banking of Diamond and Rajan (2000, 2001a, 2001b), the bank creates liquidity by tying human assets to capital. The collection skills of the relationship banker convert an illiquid project of an entrepreneur into liquid demand deposits that are immediately available for withdrawal. The deposit/capital structure is fragile because of the threat of bank runs. In these days of online banking, the run on Washington Mutual was through withdrawals online. A bank run can be triggered by the decline of the value of bank assets below the value of demand deposits.
Pelaez and Pelaez (Regulation of Banks and Finance 2009b, 60, 64-5) find immediate application of the theories of banking of Diamond, Dybvig and Rajan to the credit/dollar crisis after 2007. It is a credit crisis because the main issue was the deterioration of the credit portfolios of securitized banks as a result of default of subprime mortgages. It is a dollar crisis because of the weakening dollar resulting from relatively low interest rate policies of the US. It caused systemic effects that converted into a global recession not only because of the huge weight of the US economy in the world economy but also because the credit crisis transferred to the UK and Europe. Management skills or human capital of banks are illustrated by the financial engineering of complex products. The increasing importance of human relative to inanimate capital (Rajan and Zingales 2000) is revolutionizing the theory of the firm (Zingales 2000) and corporate governance (Rajan and Zingales 2001). Finance is one of the most important examples of this transformation. Profits were derived from the charter in the original banking institution. Pricing and structuring financial instruments was revolutionized with option pricing formulas developed by Black and Scholes (1973) and Merton (1973, 1974, 1998) that permitted the development of complex products with fair pricing. The successful financial company must attract and retain finance professionals who have invested in human capital, which is a sunk cost to them and not of the institution where they work.
The complex financial products created for securitized banking with high investments in human capital are based on houses, which are as illiquid as the projects of entrepreneurs in the theory of banking. The liquidity fragility of the securitized bank is equivalent to that of the commercial bank in the theory of banking (Pelaez and Pelaez, Regulation of Banks and Finance (2009b), 65). Banks created off-balance sheet structured investment vehicles (SIV) that issued commercial paper receiving AAA rating because of letters of liquidity guarantee by the banks. The commercial paper was converted into liquidity by its use as collateral in SRPs at the lowest rates and minimal haircuts because of the AAA rating of the guarantor bank. In the theory of banking, default can be triggered when the value of assets is perceived as lower than the value of the deposits. Commercial paper issued by SIVs, securitized mortgages and derivatives all obtained SRP liquidity on the basis of illiquid home mortgage loans at the bottom of the pyramid. The run on the securitized bank had a clear origin (Pelaez and Pelaez, Regulation of Banks and Finance (2009b), 65):
“The increasing default of mortgages resulted in an increase in counterparty risk. Banks were hit by the liquidity demands of their counterparties. The liquidity shock extended to many segments of the financial markets—interbank loans, asset-backed commercial paper (ABCP), high-yield bonds and many others—when counterparties preferred lower returns of highly liquid safe havens, such as Treasury securities, than the risk of having to sell the collateral in SRPs at deep discounts or holding an illiquid asset. The price of an illiquid asset is near zero.”
Gorton and Metrick (2010H, 507) provide a revealing quote to the work in 1908 of Edwin R. A. Seligman, professor of political economy at Columbia University, founding member of the American Economic Association and one of its presidents and successful advocate of progressive income taxation. The intention of the quote is to bring forth the important argument that financial crises are explained in terms of “confidence” but as Professor Seligman states in reference to historical banking crises in the US the important task is to explain what caused the lack of confidence. It is instructive to repeat the more extended quote of Seligman (1908, xi) on the explanations of banking crises:
“The current explanations may be divided into two categories. Of these the first includes what might be termed the superficial theories. Thus it is commonly stated that the outbreak of a crisis is due to lack of confidence,--as if the lack of confidence was not in itself the very thing which needs to be explained. Of still slighter value is the attempt to associate a crisis with some particular governmental policy, or with some action of a country’s executive. Such puerile interpretations have commonly been confined to countries like the United States, where the political passions of democracy have had the fullest way. Thus the crisis of 1893 was ascribed by the Republicans to the impending Democratic tariff of 1894; and the crisis of 1907 has by some been termed the ‘[Theodore] Roosevelt panic,” utterly oblivious of the fact that from the time of President Jackson, who was held responsible for the troubles of 1837, every successive crisis had had its presidential scapegoat, and has been followed by a political revulsion. Opposed to these popular, but wholly unfounded interpretations, is the second class of explanations, which seek to burrow beneath the surface and to discover the more occult and fundamental causes of the periodicity of crises.”
Scholars ignore superficial explanations in the effort to seek good and truth. The problem of economic analysis of the credit/dollar crisis is the lack of a structural model with which to attempt empirical determination of causes (Gorton and Metrick 2010SB). There would still be doubts even with a well-specified structural model because samples of economic events do not typically permit separating causes and effects. There is also confusion is separating the why of the crisis and how it started and propagated, all of which are extremely important.
In true heritage of the principles of Seligman (1908), Gorton (2009EFM) discovers a prime causal driver of the credit/dollar crisis. The objective of subprime and Alt-A mortgages was to facilitate loans to populations with modest means so that they could acquire a home. These borrowers would not receive credit because of (1) lack of funds for down payments; (2) low credit rating and information; (3) lack of information on income; and (4) errors or lack of other information. Subprime mortgage “engineering” was based on the belief that both lender and borrower could benefit from increases in house prices over the short run. The initial mortgage would be refinanced in two or three years depending on the increase of the price of the house. According to Gorton (2009EFM, 13, 16):
“The outstanding amounts of Subprime and Alt-A [mortgages] combined amounted to about one quarter of the $6 trillion mortgage market in 2004-2007Q1. Over the period 2000-2007, the outstanding amount of agency mortgages doubled, but subprime grew 800%! Issuance in 2005 and 2006 of Subprime and Alt-A mortgages was almost 30% of the mortgage market. Since 2000 the Subprime and Alt-A segments of the market grew at the expense of the Agency (i.e., the government sponsored entities of Fannie Mae and Freddie Mac) share, which fell from almost 80% (by outstanding or issuance) to about half by issuance and 67% by outstanding amount. The lender’s option to rollover the mortgage after an initial period is implicit in the subprime mortgage. The key design features of a subprime mortgage are: (1) it is short term, making refinancing important; (2) there is a step-up mortgage rate that applies at the end of the first period, creating a strong incentive to refinance; and (3) there is a prepayment penalty, creating an incentive not to refinance early.”
The prime objective of successive administrations in the US during the past 20 years and actually since the times of Roosevelt in the 1930s has been to provide “affordable” financing for the “American dream” of home ownership. The US housing finance system is mixed with public, public/private and purely private entities. The Federal Home Loan Bank (FHLB) system was established by Congress in 1932 that also created the Federal Housing Administration in 1934 with the objective of insuring homes against default. In 1938, the government created the Federal National Mortgage Association, or Fannie Mae, to foster a market for FHA-insured mortgages. Government-insured mortgages were transferred from Fannie Mae to the Government National Mortgage Association, or Ginnie Mae, to permit Fannie Mae to become a publicly-owned company. Securitization of mortgages began in 1970 with the government charter to the Federal Home Loan Mortgage Corporation, or Freddie Mac, with the objective of bundling mortgages created by thrift institutions that would be marketed as bonds with guarantees by Freddie Mac (see Pelaez and Pelaez, Financial Regulation after the Global Recession (2009a), 42-8). In the third quarter of 2008, total mortgages in the US were $12,057 billion of which 43.5 percent, or $5423 billion, were retained or guaranteed by Fannie Mae and Freddie Mac (Pelaez and Pelaez, Financial Regulation after the Global Recession (2009a), 45). In 1990, Fannie Mae and Freddie Mac had a share of only 25.4 percent of total mortgages in the US. Mortgages in the US increased from $6922 billion in 2002 to $12,088 billion in 2007, or by 74.6 percent, while the retained or guaranteed portfolio of Fannie and Freddie rose from $3180 billion in 2002 to $4934 billion in 2007, or by 55.2 percent.
According to Pinto (2008) in testimony to Congress:
“There are approximately 25 million subprime and Alt-A loans outstanding, with an unpaid principal amount of over $4.5 trillion, about half of them held or guaranteed by Fannie and Freddie. Their high risk activities were allowed to operate at 75:1 leverage ratio. While they may deny it, there can be no doubt that Fannie and Freddie now own or guarantee $1.6 trillion in subprime, Alt-A and other default prone loans and securities. This comprises over 1/3 of their risk portfolios and amounts to 34% of all the subprime loans and 60% of all Alt-A loans outstanding. These 10.5 million unsustainable, nonprime loans are experiencing a default rate 8 times the level of the GSEs’ 20 million traditional quality loans. The GSEs will be responsible for a large percentage of an estimated 8.8 million foreclosures expected over the next 4 years, accounting for the failure of about 1 in 6 home mortgages. Fannie and Freddie have subprimed America.”
In perceptive analysis of growth and macroeconomics in the past six decades, Rajan (2012FA) argues that “the West can’t borrow and spend its way to recovery.” The Keynesian paradigm is not applicable in current conditions. Advanced economies in the West could be divided into those that reformed regulatory structures to encourage productivity and others that retained older structures. In the period from 1950 to 2000, Cobet and Wilson (2002) find that US productivity, measured as output/hour, grew at the average yearly rate of 2.9 percent while Japan grew at 6.3 percent and Germany at 4.7 percent (see Pelaez and Pelaez, The Global Recession Risk (2007), 135-44). In the period from 1995 to 2000, output/hour grew at the average yearly rate of 4.6 percent in the US but at lower rates of 3.9 percent in Japan and 2.6 percent in the US. Rajan (2012FA) argues that the differential in productivity growth was accomplished by deregulation in the US at the end of the 1970s and during the 1980s. In contrast, Europe did not engage in reform with the exception of Germany in the early 2000s that empowered the German economy with significant productivity advantage. At the same time, technology and globalization increased relative remunerations in highly-skilled, educated workers relative to those without skills for the new economy. It was then politically appealing to improve the fortunes of those left behind by the technological revolution by means of increasing cheap credit. As Rajan (2012FA) argues:
“In 1992, Congress passed the Federal Housing Enterprises Financial Safety and Soundness Act, partly to gain more control over Fannie Mae and Freddie Mac, the giant private mortgage agencies, and partly to promote affordable homeownership for low-income groups. Such policies helped money flow to lower-middle-class households and raised their spending—so much so that consumption inequality rose much less than income inequality in the years before the crisis. These policies were also politically popular. Unlike when it came to an expansion in government welfare transfers, few groups opposed expanding credit to the lower-middle class—not the politicians who wanted more growth and happy constituents, not the bankers and brokers who profited from the mortgage fees, not the borrowers who could now buy their dream houses with virtually no money down, and not the laissez-faire bank regulators who thought they could pick up the pieces if the housing market collapsed. The Federal Reserve abetted these shortsighted policies. In 2001, in response to the dot-com bust, the Fed cut short-term interest rates to the bone. Even though the overstretched corporations that were meant to be stimulated were not interested in investing, artificially low interest rates acted as a tremendous subsidy to the parts of the economy that relied on debt, such as housing and finance. This led to an expansion in housing construction (and related services, such as real estate brokerage and mortgage lending), which created jobs, especially for the unskilled. Progressive economists applauded this process, arguing that the housing boom would lift the economy out of the doldrums. But the Fed-supported bubble proved unsustainable. Many construction workers have lost their jobs and are now in deeper trouble than before, having also borrowed to buy unaffordable houses. Bankers obviously deserve a large share of the blame for the crisis. Some of the financial sector’s activities were clearly predatory, if not outright criminal. But the role that the politically induced expansion of credit played cannot be ignored; it is the main reason the usual checks and balances on financial risk taking broke down.”
In fact, Raghuram G. Rajan (2005) anticipated low liquidity in financial markets resulting from low interest rates before the financial crisis that caused distortions of risk/return decisions provoking the credit/dollar crisis and global recession from IVQ2007 to IIQ2009. Near zero interest rates of unconventional monetary policy induced excessive risks and low liquidity in financial decisions that were critical as a cause of the credit/dollar crisis after 2007. Rajan (2012FA) argues that it is not feasible to return to the employment and income levels before the credit/dollar crisis because of the bloated construction sector, financial system and government budgets.
Table IIA-2 shows the euphoria of prices during the housing boom and the subsequent decline. House prices rose 94.1 percent in the 10-city composite of the Case-Shiller home price index and 78.8 percent in the 20-city composite between Jul 2000 and Jul 2005. Prices rose around 100 percent from Jul 2000 to Jul 2006, increasing 107.5 percent for the 10-city composite and 91.6 percent for the 20-city composite. House prices rose 39.6 percent between Jul 2003 and Jul 2005 for the 10-city composite and 34.7 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 Jul 2003 and Jul 2006, the 10-city index gained 49.1 percent and the 20-city index increased 44.4 percent. House prices have fallen from Jul 2006 to Jul 2014 by 16.7 percent for the 10-city composite and 16.1 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 Jul 2014, house prices increased 6.7 percent in the 10-city composite and coincidentally increased 6.7 percent in the 20-city composite. Table IIA-2 also shows that house prices increased 72.7 percent between Jul 2000 and Jul 2014 for the 10-city composite and increased 60.8 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 16.8 percent from the peak in Jun 2006 to Jul 2014 and the 20-city composite fell 16.1 percent from the peak in Jul 2006 to Jul 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 IIA-2, US, Percentage Changes of Standard & Poor’s Case-Shiller Home Price Indices, Not Seasonally Adjusted, ∆%
| 10-City Composite | 20-City Composite | |
| ∆% Jul 2000 to Jul 2003 | 39.1 | 32.7 |
| ∆% Jul 2000 to Jul 2005 | 94.1 | 78.8 |
| ∆% Jul 2003 to Jul 2005 | 39.6 | 34.7 |
| ∆% Jul 2000 to Jul 2006 | 107.5 | 91.6 |
| ∆% Jul 2003 to Jul 2006 | 49.1 | 44.4 |
| ∆% Jul 2005 to Jul 2014 | -11.0 | -10.0 |
| ∆% Jul 2006 to Jul 2014 | -16.7 | -16.1 |
| ∆% Jul 2009 to Jul 2014 | 20.7 | 20.1 |
| ∆% Jul 2010 to Jul 2014 | 16.1 | 16.4 |
| ∆% Jul 2011 to Jul 2014 | 20.5 | 21.3 |
| ∆% Jul 2012 to Jul 2014 | 19.8 | 19.9 |
| ∆% Jul 2013 to Jul 2014 | 6.7 | 6.7 |
| ∆% Jul 2000 to Jul 2014 | 72.7 | 60.8 |
| ∆% Peak Jun 2006 Jul 2014 | -16.8 | |
| ∆% Peak Jul 2006 Jul 2014 | -16.1 | |
| 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 at lower annual rate in Jul 2014 than in Jun 2014 (https://www.spice-indices.com/idpfiles/spice-assets/resources/public/documents/113342_cshomeprice-release-0930.pdf?force_download=true). Monthly house prices increased sharply from Feb 2013 to Jan 2014 for both the 10- and 20-city composites. In Jan 2013, the seasonally adjusted 10-city composite increased 0.9 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 IIA-3. 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. The 10-city NSA index increased 0.6 percent in Jul 2014 and the 20-city 0.6 percent. 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 IIA-3, 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 | |
| Jul 2014 | -0.5 | 0.6 | -0.5 | 0.6 |
| Jun 2014 | -0.2 | 1.0 | -0.3 | 1.0 |
| May | -0.3 | 1.1 | -0.3 | 1.1 |
| Apr | 0.0 | 1.0 | 0.1 | 1.2 |
| Mar | 1.1 | 0.8 | 1.3 | 0.9 |
| Feb | 1.0 | 0.0 | 0.8 | 0.0 |
| Jan | 0.8 | -0.1 | 0.8 | -0.1 |
| Dec 2013 | 0.7 | -0.1 | 0.7 | -0.1 |
| Nov | 0.9 | 0.0 | 0.9 | -0.1 |
| Oct | 1.1 | 0.2 | 1.1 | 0.2 |
| Sep | 1.0 | 0.7 | 1.0 | 0.7 |
| Aug | 1.0 | 1.3 | 1.0 | 1.3 |
| Jul | 0.8 | 1.9 | 0.7 | 1.8 |
| Jun | 1.0 | 2.2 | 0.9 | 2.2 |
| May | 1.1 | 2.5 | 1.0 | 2.5 |
| Apr | 1.6 | 2.6 | 1.5 | 2.6 |
| Mar | 1.6 | 1.3 | 1.8 | 1.3 |
| Feb | 1.3 | 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 | 0.8 | 2.2 | 0.9 | 2.4 |
| Apr | 0.4 | 1.4 | 0.4 | 1.4 |
| Mar | 0.3 | -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 | -0.2 | 1.0 | -0.1 | 1.2 |
| May | -0.3 | 1.0 | -0.3 | 1.0 |
| Apr | -0.2 | 0.6 | -0.3 | 0.6 |
| Mar | -0.5 | -1.0 | -0.5 | -1.0 |
| Feb | -0.3 | -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) with changes on Jul 14, 2014 (https://www.boj.or.jp/en/announcements/release_2014/k140715a.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 3.2 to 3.5 percent in 2014, 1.9 to 2.8 percent in 2015 and 2.0 to 3.0 in 2016 (https://www.boj.or.jp/en/announcements/release_2014/k140715a.pdf). Consumer price inflation in Japan excluding fresh food was 0.4 percent in Apr 2014 and 3.4 percent in 12 months (http://www.stat.go.jp/english/data/cpi/1581.htm), significantly because of the increase of the tax on value added of consumption in Apr 2014. 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 | Real GDP | CPI All Items Less Fresh Food | Excluding Effects of Consumption Tax Hikes |
| 2013 | |||
| Apr 2014 | +2.2 to +2.3 | +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 | |||
| Jul 2014 | +0.6 to +1.3 [+1.0] | +3.2 to +3.5 [+3.3] | +1.2 to +1.5 [+1.3] |
| Apr 2014 | +0.8 to +1.3 | +3.0 to +3.5 | +1.0 to +1.5 |
| 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 | |||
| Jul 2014 | +1.2 to +1.6 [+1.5] | +1.9 to +2.8 [+2.6] | +1.2 to +2.1 [+1.9] |
| Apr 2014 | +1.2 to +1.5 | +1.9 to +2.8 | +1.2 to +2.1 |
| 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 | |||
| Jul 2014 | +1.0 to +1.5 [+1.3] | +2.0 to +3.0 [+2.8] | +1.3 to +2.3 [+2.1] |
| Apr 2014 | +1.0 to +1.5 | +2.0 to +3.0 | +1.3 to +2.3 |
Figures in brackets are the median of forecasts of Policy Board members
Source: Policy Board, Bank of Japan
https://www.boj.or.jp/en/announcements/release_2014/k140715a.pdf
The Markit/JMMA Flash Japan Manufacturing PMI Index™ with the Flash Japan Manufacturing PMI™ decreased from 52.2 in Aug to 51.7 in Sep and the Flash Japan Manufacturing Output Index™ increased from 52.9 in Aug to 53.4 in Sep (http://www.markiteconomics.com/Survey/PressRelease.mvc/66003fb66ac14af29cf0b41d0e261693). New export orders increased at a slower pace. Amy Brownbill, Economist at Markit, finds improving Japan’s manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/66003fb66ac14af29cf0b41d0e261693). Private-sector activity in Japan improved marginally with the Markit Composite Output PMI Index increasing from 50.8 in Aug to 52.8 in Sep, indicating modest improvement (http://www.markiteconomics.com/Survey/PressRelease.mvc/2e1dfffdc45c4e49be57a12b42bfc8d1). The Markit Business Activity Index of Services increased to 52.5 in Sep from 49.9 in Aug (http://www.markiteconomics.com/Survey/PressRelease.mvc/2e1dfffdc45c4e49be57a12b42bfc8d1). Amy Brownbill, Ecoomist at Markit and author of the report, finds the reading consistent with growth in IIIQ2014 (http://www.markiteconomics.com/Survey/PressRelease.mvc/2e1dfffdc45c4e49be57a12b42bfc8d1). The Markit/JMMA Purchasing Managers’ Index™ (PMI™), seasonally adjusted, decreased from 52.5 in Aug to 51.7 in Sep (http://www.markiteconomics.com/Survey/PressRelease.mvc/ace36b2b67724577bcba4aff0291b168). New orders, output and foreign orders increased. Amy Brownbill, Economist at Markit and author of the report, finds higher growth of output (http://www.markiteconomics.com/Survey/PressRelease.mvc/ace36b2b67724577bcba4aff0291b168).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 |
| Corporate Goods Prices | Aug ∆% -0.2 |
| Consumer Price Index | Aug NSA ∆% 0.2; Aug 12 months NSA ∆% 3.3 |
| Real GDP Growth | IIQ2014 ∆%: -1.8 on IQ2014; IIQ2014 SAAR -7.1; |
| Employment Report | Aug Unemployed 2.31 million Change in unemployed since last year: minus 400 thousand |
| All Industry Indices | Jul month SA ∆% -0.2 Blog 9/21/14 |
| Industrial Production | Aug SA month ∆%: -1.5 |
| Machine Orders | Total Jul ∆% -13.5 Private ∆%: 16.4 Jul ∆% Excluding Volatile Orders 3.5 |
| Tertiary Index | Jul month SA ∆% 0.0 |
| Wholesale and Retail Sales | Aug 12 months: |
| Family Income and Expenditure Survey | Aug 12-month ∆% total nominal consumption -0.9, real -4.7 Blog 10/5/14 |
| Trade Balance | Exports Aug 12 months ∆%: minus 1.3 Imports Aug 12 months ∆% -1.5 Blog 9/21/14 |
Links to blog comments in Table JPY:
9/28/14 http://cmpassocregulationblog.blogspot.com/2014/09/financial-volatility-mediocre-cyclical.html
9/21/14 http://cmpassocregulationblog.blogspot.com/2014/09/world-inflation-waves-squeeze-of.html
9/14/14 http://cmpassocregulationblog.blogspot.com/2014/09/geopolitics-monetary-policy-and.html
8/31/14 http://cmpassocregulationblog.blogspot.com/2014/09/geopolitical-and-financial-risks.html
8/17/2014 http://cmpassocregulationblog.blogspot.com/2014/08/weakening-world-economic-growth.html
6/15/2014 http://cmpassocregulationblog.blogspot.com/2014/06/financialgeopolitical-risks-recovery.html
5/18/14 http://cmpassocregulationblog.blogspot.com/2014/05/world-inflation-waves-squeeze-of.html
3/16/2014 http://cmpassocregulationblog.blogspot.com/2014/03/global-financial-risks-recovery-without.html
2/23/14 http://cmpassocregulationblog.blogspot.com/2014/02/squeeze-of-economic-activity-by-carry.html
12/15/13 http://cmpassocregulationblog.blogspot.com/2013/12/theory-and-reality-of-secular.html
11/17/13 http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-unwinding-monetary-policy.html
9/15/13 http://cmpassocregulationblog.blogspot.com/2013/09/recovery-without-hiring-ten-million.html
8/18/13 http://cmpassocregulationblog.blogspot.com/2013/08/duration-dumping-and-peaking-valuations.html
Industrial production in Japan decreased 1.5 percent in Aug 2014 and fell 2.9 percent in 12 months, as shown in Table VB-1. Industrial production increased 0.4 percent in Jul 2014 and fell 0.7 percent in 12 months. Japan’s industrial production fell 3.4 percent in Jun 2014 an increased 3.1 percent in 12 months. In May 2014, industrial production in Japan increased 0.7 percent, rebounding from the increase in the sales tax, and increased 1.0 percent in the 12 months ending in May 2014. Industrial production fell 2.8 percent in Apr 2014, mostly because of the increase in the tax on value added of consumption in Apr 2014, and increased 3.8 percent in 12 months. 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 and rebound of 0.7 percent in May 2014 from the drop of 2.8 percent in Apr caused by the increases in the sales tax. 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. The sales tax of Apr 2014 interrupted improvement but growth in 12 months was positive at 1.0 percent in May 2014 and 3.1 percent in Jun 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 | |
| Aug 2014 | -1.5 | -2.9 |
| Jul | 0.4 | -0.7 |
| Jun | -3.4 | 3.1 |
| May | 0.7 | 1.0 |
| Apr | -2.8 | 3.8 |
| 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 Aug 2014 is in Table VB-2. The number unemployed reached 2.48 million in Aug 2014, declining 400 thousand from a year earlier or 14.8 percent. The rate of unemployment not seasonally adjusted reached 3.5 percent, decreasing 0.6 percentage points from a year earlier. Population decreased 0.1 percent from a year earlier. The labor force increased 0.2 percentage points from a year earlier and the labor participation rate stood at 59.2, increasing 0.1 percentage points from a year earlier. The employment rate increased to 57.4 percent, which is higher by 0.5 percentage points relative to a year earlier.
Table VB-2, Japan, Employment Report Aug 2014
| Aug 2014 Unemployed | 2.31 million |
| Change since last year | -400 thousand; ∆% –14.8 |
| Unemployment rate | SA 3.5%, -0.6 from earlier month; NSA 3.5%, -0.6 from earlier year |
| Population ≥ 15 years | 110.79 million |
| Change since last year | ∆% -0.1 |
| Labor Force | 65.95 million |
| Change since last year | ∆% 0.2 |
| Employed | 63.63 million |
| Change since last year | ∆% 0.8 |
| Labor force participation rate | 59.5 |
| Change since last year | 0.1 |
| Employment rate | 57.4% |
| Change since last year | 0.5 |
Source: Japan, Statistics Bureau, Ministry of Internal Affairs and Communications
http://www.stat.go.jp/english/data/roudou/results/month/index.htm
Table VB-2A provides the rate of unemployment of Japan seasonally adjusted that decreased to 3.5 percent in Aug 2014 from 3.8 percent in Jul 2014. The rate of unemployment SA fell 0.6 percentage points from 4.1 percent in Aug 2013 to 3.5 percent in Aug 2014.
Table VB-2A, Japan, Unemployment Rate, SA
| Unemployment Rate SA | |
| Aug 2014 | 3.5 |
| Jul | 3.8 |
| Jun | 3.7 |
| May | 3.5 |
| Apr | 3.6 |
| Mar | 3.6 |
| Feb | 3.6 |
| Jan | 3.7 |
| Dec 2013 | 3.7 |
| Nov | 3.9 |
| Oct | 4.0 |
| Sep | 4.0 |
| Aug | 4.1 |
| Jul | 3.9 |
| Jun | 3.9 |
| May | 4.1 |
| Apr | 4.1 |
| Mar | 4.1 |
| Feb | 4.3 |
| Jan | 4.2 |
| Dec 2012 | 4.3 |
| Nov | 4.1 |
| Oct | 4.1 |
| Sep | 4.3 |
| Aug | 4.2 |
| Jul | 4.4 |
| Jun | 4.3 |
| May | 4.4 |
Source: 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 2011 to 2014. There is clear trend of decline with multiple oscillations and increase in Jun-Jul 2014. The rate fell in Aug 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 selected years from 1953 to 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 | 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-May 2014 because of the increase in the tax on value added of consumption. Table VB-4 shows decrease of nominal consumption of 0.9 percent in the 12 months ending in Aug 2014 and decrease of 4.7 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 segments of decreasing real consumption in Jul 2014: furniture and household utensils 4.6 percent in nominal terms and 8.8 percent in real terms. Transportation/communications decreased 0.6 percent in nominal terms and 3.3 percent in real terms. Clothing and footwear increased 2.6 percent in real terms and 5.4 percent in nominal terms. Education decreased 6.3 percent in real terms and 4.1 percent in nominal terms. Fuel, light and water charges decreased 0.6 percent in nominal terms and decreased 6.6 percent in real terms. Real household income decreased 5.4 percent; real disposable income decreased 5.2 percent; and real consumption expenditures decreased 6.0 percent.
Table VB-4, Japan, Family Income and Expenditure Survey, 12-month ∆% Relative to a Year Earlier
| Aug 2014 | Nominal | Real |
| Households of Two or More Persons | ||
| Total Consumption | -0.9 | -4.7 |
| Excluding Housing, Vehicles & Remittance | 0.5 | -3.4 |
| Food | 2.5 | -2.3 |
| Housing | -20.2 | -21.2 |
| Fuel, Light & Water Charges | -0.6 | -6.6 |
| Furniture & Household Utensils | -4.6 | -8.8 |
| Clothing & Footwear | 5.4 | 2.6 |
| Medical Care | 0.5 | -0.9 |
| Transport and Communications | -0.6 | -3.3 |
| Education | -4.1 | -6.3 |
| Culture & Recreation | -2.9 | -7.1 |
| Other Consumption Expenditures | 1.8 | -2.1* |
| Workers’ Households | ||
| Income | -1.6 | -5.4 |
| Disposable Income | -1.4 | -5.2 |
| Consumption Expenditures | -2.2 | -6.0 |
*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. Contraction deepened with decline of nominal consumption expenditures by 3.9 percent in May 2014 and decline of real consumption expenditures by 8.0 percent. Recovery occurred in Jun 2014 with increase of nominal consumption by 1.3 percent and milder decline of real consumption by 3.0 percent. There is new deterioration in Jul 2013 with decline of 2.0 percent in nominal terms and 5.9 percent in real terms. Nominal consumption fell 0.9 percent in the 12 months ending in Aug 2014 and real consumption fell 4.7 percent
Chart VB-2, Japan, Real Percentage Change of Consumption Year-on-Year
Source: Ministry of Internal Affairs and Communications, Statistics Bureau, Director General for Policy Planning and Statistical Research and Training Institute
http://www.stat.go.jp/english/data/kakei/156.htm
Percentage changes in 12 months of nominal and real consumption expenditures in Japan are provided in Table VB-5. Real consumption fell 4.7 percent in Aug 2014 while nominal consumption fell 0.9 percent. In Jul 2014, real consumption declined 5.9 percent and nominal consumption fell 2.0 percent. Real consumption fell 3.0 percent in Jun 2014 while nominal consumption increased 1.3 percent. Real consumption fell 8.0 percent in the 12 months ending in May 2014 and nominal consumption fell 3.9 percent largely because of the increase in the sales tax in Apr 2014. Real consumption fell 4.6 percent in the 12 months ending in Apr 2014 and nominal consumption fell 0.7 percent 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 4.1 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/2014/09/geopolitics-monetary-policy-and_44.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 2.7 percent and personal consumption deducted 1.2 percentage points. Japan’s GDP grew at the SAAR of minus 0.5 percent in IVQ2012 with personal consumption contributing 1.1 percentage points. Japan’s GDP growth in IQ2013 was at 5.1 percent SAAR with highest contribution of 2.6 percentage points by personal consumption expenditures. In IIQ2013, Japan’s GDP grew at 3.4 percent SAAR with personal consumption expenditures contributing 1.8 percentage points. Japan’s GDP grew at 1.8 percent SAAR in IIIQ2013 with personal consumption expenditures contributing 0.5 percentage points. In IVQ2013, Japan’s GDP grew at minus 0.5 percent SAAR with personal consumption expenditures contributing 0.9 percentage points. The GDP of Japan grew at 6.0 percent SAAR in IQ2014 with personal consumption expenditures contributing 5.1 percent. Japan’s GDP contracted at SAAR of 7.1 percent in IIQ2014 with personal consumption expenditures deducting 12.6 percent in large part because of the increase of the sales tax in Apr 2014.
Table VB-5, Japan, Family Income and Expenditure Survey 12-months ∆% Relative to a Year Earlier
| Nominal Consumption Expenditures | Real Consumption Expenditures | |
| Aug 2014 | -0.9 | -4.7 |
| Jul | -2.0 | -5.9 |
| Jun | 1.3 | -3.0 |
| May | -3.9 | -8.0 |
| Apr | -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 and in IVQ2012. There was recovery in IQ2013, IIQ2013 and IIIQ2013. Recovery interrupted in IVQ2013, accelerating in IQ2014. There was weakening again in IIQ2014. 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 4.3 percent in Apr 2014 after the increase in the sales tax. Retail sales fell 0.4 percent in the 12 months ending in May 2014 and fell 0.6 percent in the 12 months ending in Jun 2014. Retail sales increased 0.6 percent in the 12 months ending in Jul 2014 and 1.2 percent in the 12 months ending in Aug 2014. 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 | |
| Aug 2014 | -1.6 | -2.8 | 1.2 |
| Jul | 0.1 | -0.1 | 0.6 |
| Jun | -0.6 | -0.5 | -0.6 |
| May | -1.0 | -1.3 | -0.4 |
| Apr | -3.4 | -3.0 | -4.3 |
| 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 index moved to 54.4 in Aug 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 decreased to 50.0 in Aug 2014.
Table CIPMNM, China, Nonmanufacturing Index of Purchasing Managers, %, Seasonally Adjusted
| Total Index | New Orders | Interm. | Subs Prices | Exp | |
| Aug 2014 | 54.4 | 50.0 | 52.2 | 48.3 | 61.2 |
| Jul | 54.2 | 50.7 | 53.4 | 49.5 | 61.5 |
| Jun | 55.0 | 50.7 | 56.0 | 50.8 | 60.4 |
| May | 55.5 | 52.7 | 54.5 | 49.0 | 60.7 |
| Apr | 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, easing to 54.4 in Aug 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 51.1 in Aug 2014. The index of new orders fell from 54.5 in Apr 2012 to 51.2 in Dec 2012. The index of new orders fell from 52.3 in Nov 2013 to 52.0 in Dec 2013. The index fell to 50.9 in Jan 2014 and increased to 52.5 in Aug 2014.
Table CIPMMFG, China, Manufacturing Index of Purchasing Managers, %, Seasonally Adjusted
| IPM | PI | NOI | INV | EMP | SDEL | |
| Aug 2014 | 51.1 | 53.2 | 52.5 | 48.6 | 48.2 | 50.0 |
| Jul | 51.7 | 54.2 | 53.6 | 49.0 | 48.3 | 50.2 |
| Jun | 51.0 | 53.0 | 52.8 | 48.0 | 48.6 | 50.5 |
| May | 50.8 | 52.8 | 52.3 | 48.0 | 48.2 | 50.3 |
| Apr | 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 moved to 51.1 in Aug 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 IIQ2014 relative to the same period in 2013 was 7.4 percent, as shown in Table VC-GDP. Secondary industry accounts for 46.0 percent of cumulative GDP in IIQ2014. In cumulative IIQ2014, industry alone accounts for 39.7 percent of GDP and construction with the remaining 6.3 percent. Tertiary industry accounts for 46.6 percent of cumulative GDP in IIQ2014 and primary industry for 7.4 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 6.6 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 6.1 percent in IQ2014 and increasing to 8.2 percent in IIQ2014.
Table VC-GDP, China, Quarterly Growth of GDP, Current CNY 100 Million and Inflation Adjusted ∆%
| Cumulative GDP IIQ2014 | Value Current CNY Billion | 2014 Year-on-Year Constant Prices ∆% |
| GDP | 26,904.4 | 7.4 |
| Primary Industry | 1981.2 | 3.9 |
| Farming | 1981.2 | 3.9 |
| Secondary Industry | 12,387.1 | 7.4 |
| Industry | 10,681.4 | 7.2 |
| Construction | 1,705.7 | 9.2 |
| Tertiary Industry | 12,536.1 | 8.0 |
| Transport, Storage, Post | 1411.4 | 6.8 |
| Wholesale, Retail Trades | 2,542.2 | 9.8 |
| Hotel & Catering Services | 531.8 | 6.2 |
| Financial Intermediation | 1,846.3 | 9.7 |
| Real Estate | 1,745.3 | 2.5 |
| Other | 4,459.1 | 8.9 |
| Growth in Quarter Relative to Prior Quarter | ∆% on Prior Quarter | ∆% Annual Equivalent |
| 2014 | ||
| IIQ2014 | 2.0 | 8.2 |
| IQ2014 | 1.5 | 6.1 |
| 2013 | ||
| IVQ2013 | 1.7 | 7.0 |
| IIIQ2013 | 2.3 | 9.5 |
| IIQ2013 | 1.8 | 7.4 |
| IQ2013 | 1.6 | 6.6 |
| 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 IIQ2014 relative to the same period in 2013 was 7.5 percent, as shown in Table VC-GDPA. Secondary industry accounts for 46.0 percent of GDP of which industry alone for 39.7 percent in cumulative IIQ2014 and construction with the remaining 6.3 percent. Tertiary industry accounts for 46.6 percent of GDP in cumulative IIQ2014 and primary industry for 7.4 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 7.7 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 1.5 percent in IQ2014 that is equivalent to 6.1 percent per year. GP grew 7.5 percent in IIQ2014 relative to a year earlier and 2.0 percent relative to the prior quarter, which is equivalent 8.2 percent.
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 | IIQ 2014 | |||
| GDP | 7.7 | 7.5 | 7.8 | 7.7 | 7.4 | 7.5 | ||
| Primary Industry | 3.4 | 3.0 | 3.4 | 4.0 | 3.5 | 3.9 | ||
| Secondary Industry | 7.8 | 7.6 | 7.8 | 7.8 | 7.3 | 7.4 | ||
| Tertiary Industry | 8.3 | 8.3 | 8.4 | 8.3 | 7.1 | 8.0 | ||
| GDP ∆% Relative to a Prior Quarter | 1.6 | 1.8 | 2.3 | 1.7 | 1.5 | 2.0 | ||
| 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/475569173cdf44218eece6ff633543e6) is improving. The overall Flash HSBC China Manufacturing PMI™ increased from 50.2 in Aug to 50.5 in Sep, while the Flash HSBC China Manufacturing Output Index was unchanged from 51.8 in Aug to 51.8 in Sep, indicating moderate expansion. Exports orders indicate expansion at faster rate. Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds need for monetary stimulus (http://www.markiteconomics.com/Survey/PressRelease.mvc/475569173cdf44218eece6ff633543e6). The HSBC China Services PMI™, compiled by Markit, shows improvement in business activity in China with the HSBC Composite Output, combining manufacturing and services, increasing from 51.6 in Jul to 52.8 in Aug (http://www.markiteconomics.com/Survey/PressRelease.mvc/e45ad099b00744fbb41b746f47efe4ef). Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds need of easing policies in consolidating growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/e45ad099b00744fbb41b746f47efe4ef). The HSBC China Services Business Activity index increased from 50.0 in Jul to 54.1 in Aug (http://www.markiteconomics.com/Survey/PressRelease.mvc/e45ad099b00744fbb41b746f47efe4ef). Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC, finds that the services PMI rose from 50.0 in Jul, which was the lowest in the history of the index since 2005, to 54.1 in Aug that is the highest in seventeen months (http://www.markiteconomics.com/Survey/PressRelease.mvc/e45ad099b00744fbb41b746f47efe4ef). The HSBC Purchasing Managers’ Index™ (PMI™), compiled by Markit, did not change to 50.2 in Sep from 50.2 in Aug, indicating near neutral manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/d578e13981d44eb69ce706c58ff2e6e5). New export orders strengthened. Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds weakening demand in China with possible need of monetary and fiscal policy enhancement (http://www.markiteconomics.com/Survey/PressRelease.mvc/d578e13981d44eb69ce706c58ff2e6e5). Table CNY provides the country data table for China.
Table CNY, China, Economic Indicators
| Price Indexes for Industry | Aug 12-month ∆%: minus 1.2 Aug month ∆%: -0.2 |
| Consumer Price Index | Aug month ∆%: 0.2 Aug 12 months ∆%: 2.0 |
| Value Added of Industry | Aug month ∆%: 0.20 Jan-Aug 2014/Jan-Aug 2013 ∆%: 8.5 |
| GDP Growth Rate | Year IIQ2014 ∆%: 7.5 First Half 2014 ∆%: 7.4 |
| Investment in Fixed Assets | Total Jan-Aug 2014 ∆%: 16.5 Real estate development: 13.2 |
| Retail Sales | Aug month ∆%: 0.92 Jan-Aug ∆%: 12.1 |
| Trade Balance | Aug balance $49.8 billion Cumulative Jan-Aug: $200.0 billion |
Links to blog comments in Table CNY:
9/21/14 http://cmpassocregulationblog.blogspot.com/2014/09/world-inflation-waves-squeeze-of.html
9/14/14 http://cmpassocregulationblog.blogspot.com/2014/09/geopolitics-monetary-policy-and.html
7/20/14 http://cmpassocregulationblog.blogspot.com/2014/07/financial-irrational-exuberance.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 52.5 in Aug to 52.3 in Sep (http://www.markiteconomics.com/Survey/PressRelease.mvc/524d4c76efc84dafaea3ce99e2662e3f). Chris Williamson, Chief Economist at Markit, finds that the Markit Flash Eurozone PMI index suggests that the index is consistent with growth of GDP about 0.3 percent in IIIQ2014 (http://www.markiteconomics.com/Survey/PressRelease.mvc/524d4c76efc84dafaea3ce99e2662e3f). The Markit Eurozone PMI® Composite Output Index, combining services and manufacturing activity with close association with GDP decreased from 52.5 in Aug to 52.0 in Sep (http://www.markiteconomics.com/Survey/PressRelease.mvc/01d8b102223d449881e2878c1544c892). Chris Williamson, Chief Economist at Markit, finds slowing growth of GDP at 0.2 to 0.3 percent in IIIQ2014 (http://www.markiteconomics.com/Survey/PressRelease.mvc/01d8b102223d449881e2878c1544c892). The Markit Eurozone Services Business Activity Index decreased from 53.1 in Aug to 52.4 in Sep (http://www.markiteconomics.com/Survey/PressRelease.mvc/01d8b102223d449881e2878c1544c892). The Markit Eurozone Manufacturing PMI® decreased to 50.3 in Sep from 50.5 in Aug (http://www.markiteconomics.com/Survey/PressRelease.mvc/81a993f313ab4bdfbbd1bff81aa7dcea). New export orders increased for the fifteenth consecutive month. Chris Williamson, Chief Economist at Markit, finds slowing industrial growth in the euro area (http://www.markiteconomics.com/Survey/PressRelease.mvc/81a993f313ab4bdfbbd1bff81aa7dcea). Table EUR provides the data table for the euro area.
Table EUR, Euro Area Economic Indicators
| GDP | IIQ2014 ∆% 0.0; IIQ2014/IIQ2013 ∆% 0.7 Blog 9/7/14 |
| Unemployment | Aug 2014: 11.5 % unemployment rate; Aug 2014: 18.326 million unemployed Blog 10/5/14 |
| HICP | Aug month ∆%: 0.1 12 months Aug ∆%: 0.4 |
| Producer Prices | Euro Zone industrial producer prices Aug ∆%: -0.1 |
| Industrial Production | Jul month ∆%: 1.0; Jul 12 months ∆%: 2.2 |
| Retail Sales | Jul month ∆%: -0.4 |
| Confidence and Economic Sentiment Indicator | Sentiment 99.9 Sep 2014 Consumer minus 11.4 Sep 2014 Blog 10/5/14 |
| Trade | Jan-Jul 2014/Jan-Jul 2013 Exports ∆%: 1.2 Jul 2014 12-month Exports ∆% 2.6 Imports ∆% 0.8 |
Links to blog comments in Table EUR:
9/21/14 http://cmpassocregulationblog.blogspot.com/2014/09/world-inflation-waves-squeeze-of.html
9/14/14 http://cmpassocregulationblog.blogspot.com/2014/09/geopolitics-monetary-policy-and.html
9/7/14 http://cmpassocregulationblog.blogspot.com/2014/09/competitive-monetary-policy-and.html
EUROSTAT estimates the rate of unemployment in the euro area at 11.5 percent in
Aug 2014, as shown in Table VD-1. The number of unemployed in Aug 2014 was 18.326 million, which was 0.834 million lower than 19.160 million in Aug 2013. The rate of unemployment stabilized from 12.0 percent in Aug 2013 to 11.5 percent in Aug 2014.
Table VD-1, Euro Area, Unemployment Rate and Number of Unemployed, % and Millions, SA
| Unemployment Rate % | Number Unemployed | |
| Aug 2014 | 11.5 | 18.326 |
| Jul | 11.5 | 18.463 |
| Jun | 11.5 | 18.424 |
| May | 11.6 | 18.553 |
| Apr | 11.6 | 18.556 |
| Mar | 11.7 | 18.640 |
| Feb | 11.7 | 18.723 |
| Jan | 11.8 | 18.816 |
| Dec 2013 | 11.8 | 18.846 |
| Nov | 11.9 | 19.038 |
| Oct | 11.9 | 19.071 |
| Sep | 12.0 | 19.203 |
| Aug | 12.0 | 19.160 |
| Jul | 11.9 | 19.118 |
| Jun | 12.0 | 19.212 |
| May | 12.0 | 19.204 |
| Apr | 12.0 | 19.213 |
| Mar | 12.0 | 19.151 |
| Feb | 12.0 | 19.128 |
| Jan | 11.9 | 19.089 |
| Dec 2012 | 11.8 | 18.891 |
| Nov | 11.7 | 18.779 |
| Oct | 11.7 | 18.709 |
| Sep | 11.5 | 18.454 |
| Aug | 11.4 | 18.284 |
| Jul | 11.4 | 18.250 |
| Jun | 11.3 | 18.168 |
| May | 11.2 | 17.926 |
| Apr | 11.1 | 17.783 |
| Mar | 11.0 | 17.490 |
| Feb | 10.8 | 17.243 |
| Jan | 10.7 | 17.026 |
| Dec 2011 | 10.6 | 16.918 |
| Nov | 10.5 | 16.807 |
| Oct | 10.4 | 16.547 |
| Sep | 10.3 | 16.371 |
| Aug | 10.2 | 16.132 |
| Jul | 10.1 | 15.970 |
| Jun | 9.9 | 15.755 |
| May | 9.9 | 15.697 |
| Apr | 9.8 | 15.551 |
| Mar | 9.9 | 15.635 |
| Feb | 9.9 | 15.666 |
| Jan | 9.9 | 15.742 |
| Dec 2010 | 10.0 | 15.849 |
Source: EUROSTAT
http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/
http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database
Table VD-2 shows the disparity in rates of unemployment in the euro area with 11.5 percent for the region as a whole and 18.326 million unemployed but 4.9 percent in Germany and 2.101 million unemployed. At the other extreme is Spain with rate of unemployment of 24.4 percent and 5.581 million unemployed. The rate of unemployment of the European Union in Aug 2014 is 10.1 percent with 24.642 million unemployed.
Table VD-2, Unemployed and Unemployment Rate in Countries and Regions, Millions and %
| Aug 2014 | Unemployment Rate % | Unemployed Millions |
| Euro Zone | 11.5 | 18.326 |
| Germany | 4.9 | 2.101 |
| France | 10.5 | 3.093 |
| Netherlands | 6.6 | 0.585 |
| Finland | 8.6 | 0.229 |
| Portugal | 14.0 | 0.725 |
| Ireland | 11.4 | 0.246 |
| Italy | 12.3 | 3.134 |
| Greece | 27.0* | 1.304* |
| Spain | 24.4 | 5.581 |
| Belgium | 8.5 | 0.423 |
| European Union | 10.1 | 24.642 |
*Jun 2014
Source: EUROSTAT
http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/
Chart VD-1 of EUROSTAT illustrates the wide difference in rates of unemployment in countries and regions.
Chart VD-1, Unemployment Rate in Various Countries and Regions
Source: EUROSTAT
http://epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home/ http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database
The Economic Sentiment Indicator of the European Economic Commission, Economic and Financial Affairs, provides correlation with the economic cycle since 1990, capturing all three recessions in the period and even the threat of recession from 1994 to 1995. The latest chart of this index accessible in the link in parenthesis shows trend of decline in 2011 and 2012 that has punctured the historical average of 100 and resumed downward trend in 2012 followed by recovery moving closer to the average (http://ec.europa.eu/economy_finance/db_indicators/surveys/index_en.htm). Table VD-1 provides the index increasing from 98.1 in Oct 2013 to 99.9 in Sep 2014. The index is above the minimum value of 70.1 reached in Mar 2009, close to 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 | 9.0 | -13.2 | -9.1 | -18.3 |
| Maximum | 118.6 | 7.9 | 35.4 | 2.4 | 5.2 | 6.0 |
| Minimum | 70.1 | -38.1 | -26.1 | -34.3 | -24.9 | -46.0 |
| Sep 2014 | 99.9 | -5.5 | 3.2 | -11.4 | -7.2 | -27.7 |
| Aug | 100.6 | -5.3 | 3.1 | -10.0 | -4.6 | -28.4 |
| Jul | 102.2 | -3.8 | 3.6 | -8.3 | -2.3 | -28.2 |
| Jun | 102.1 | -4.3 | 4.4 | -7.5 | -1.9 | -31.7 |
| May | 102.6 | -3.1 | 3.8 | -7.1 | -2.5 | -30.1 |
| Apr | 102.0 | -3.5 | 3.5 | -8.6 | -2.6 | -30.4 |
| Mar | 102.5 | -3.3 | 4.5 | -9.2 | -2.6 | -28.7 |
| Feb | 101.2 | -3.5 | 3.3 | -12.7 | -3.1 | -28.5 |
| Jan | 101.0 | -3.8 | 2.4 | -11.6 | -3.5 | -29.8 |
| Dec 2013 | 100.4 | -3.4 | 0.4 | -13.5 | -5.1 | -26.4 |
| Nov | 98.8 | -3.9 | -0.8 | -15.3 | -7.6 | -30.4 |
| Oct | 98.1 | -5.0 | -3.6 | -14.4 | -7.7 | -29.1 |
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 5.6 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 4.1 percent in 2010, 3.6 percent in 2011 and 0.4 percent in 2012. Growth decelerated to 0.1 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-4 provides annual growth rates of the German economy from 1970 to 2013, price adjusted chain-linked and price and calendar-adjusted chain-linked. Germany’s GDP fell 5.6 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 4.1 percent in 2010, 3.6 percent in 2011 and 0.4 percent in 2012. Growth in 2013 was 0.1 percent.
Table VE-DE, Germany, GDP ∆% on Prior Year
| Price Adjusted Chain-Linked | Price- and Calendar-Adjusted Chain Linked | |
| Average ∆% 1991-2013 | 1.3 | |
| Average ∆% 1991-1999 | 1.5 | |
| Average ∆% 2000-2007 | 1.4 | |
| Average ∆% 2003-2007 | 2.2 | |
| Average ∆% 2007-2013 | 0.5 | |
| Average ∆% 2009-2013 | 2.0 | |
| 2013 | 0.1 | 0.2 |
| 2012 | 0.4 | 0.6 |
| 2011 | 3.6 | 3.7 |
| 2010 | 4.1 | 3.9 |
| 2009 | -5.6 | -5.6 |
| 2008 | 1.1 | 0.8 |
| 2007 | 3.3 | 3.4 |
| 2006 | 3.7 | 3.9 |
| 2005 | 0.7 | 0.9 |
| 2004 | 1.2 | 0.7 |
| 2003 | -0.7 | -0.7 |
| 2002 | 0.0 | 0.0 |
| 2001 | 1.7 | 1.8 |
| 2000 | 3.0 | 3.2 |
| 1999 | 2.0 | 1.9 |
| 1998 | 2.0 | 1.7 |
| 1997 | 1.8 | 1.9 |
| 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/EN/PressServices/Press/pr/2014/05/PE14_167_811.html
https://www.destatis.de/EN/PressServices/Press/pr/2014/09/PE14_306_811.html
The Flash Germany Composite Output Index of the Markit Flash Germany PMI®, combining manufacturing and services, increased from 53.7 in Aug to 54.0 in Sep. The index of manufacturing output reached 51.1 in Sep, decreasing from 51.5 in Aug, while the index of services increased to 55.4 in Sep from 54.9 in Aug. The overall Flash Germany Manufacturing PMI® decreased from 51.4 in Aug to 50.3 in Sep (http://www.markiteconomics.com/Survey/PressRelease.mvc/5df8b09c92d84d9aad6b99268ffb88a9). New orders in manufacturing contracted. Oliver Kolodseike, Economist at Markit, finds continuing expansion of Germany’s private with weakness in new orders (http://www.markiteconomics.com/Survey/PressRelease.mvc/5df8b09c92d84d9aad6b99268ffb88a9). 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 53.7 in Aug to 54.1 in Sep (http://www.markiteconomics.com/Survey/PressRelease.mvc/b19f96225be143568e50e16a95142f66). Oliver Kolodseike, Senior Economist at Markit and author of the report, finds growth of GDP in IIIQ2014 (http://www.markiteconomics.com/Survey/PressRelease.mvc/b19f96225be143568e50e16a95142f66). The Germany Services Business Activity Index increased from 54.9 in Aug to 55.7 in Sep (http://www.markiteconomics.com/Survey/PressRelease.mvc/b19f96225be143568e50e16a95142f66). The Markit/BME Germany Purchasing Managers’ Index® (PMI®), showing close association with Germany’s manufacturing conditions, decreased from 51.4 in Aug to 49.9 in Sep (http://www.markiteconomics.com/Survey/PressRelease.mvc/500b6b4240084dd085c344857edb3549). New export orders increased for the fourteenth consecutive month. Oliver Kolodseike, Senior Economist at Markit and author of the report, finds slowing output and new orders (http://www.markiteconomics.com/Survey/PressRelease.mvc/500b6b4240084dd085c344857edb3549).Table DE provides the country data table for Germany.
Table DE, Germany, Economic Indicators
| GDP | IIQ2014 -0.2 ∆%; II/Q2014/IIQ2013 ∆% 0.8 2013/2012: 0.1% 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 8/17/14 9/7/14 |
| Consumer Price Index | Aug month NSA ∆%: 0.0 |
| Producer Price Index | Aug month ∆%: -0.1 NSA, minus 0.1 CSA |
| Industrial Production | MFG Jul month CSA ∆%: 2.6 |
| Machine Orders | MFG Jul month ∆%: 4.6 |
| Retail Sales | Aug Month ∆% 0.71 12-Month ∆% 2.5 Blog 10/5/14 |
| Employment Report | Unemployment Rate SA Aug 4.9% |
| Trade Balance | Exports Jul 12-month NSA ∆%: 8.5 Blog 9/14/14 |
Links to blog comments in Table DE:
9/21/14 http://cmpassocregulationblog.blogspot.com/2014/09/world-inflation-waves-squeeze-of.html
9/14/14 http://cmpassocregulationblog.blogspot.com/2014/09/geopolitics-monetary-policy-and.html
9/7/14 http://cmpassocregulationblog.blogspot.com/2014/09/competitive-monetary-policy-and.html
8/17/2014 http://cmpassocregulationblog.blogspot.com/2014/08/weakening-world-economic-growth.html
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
3/2/14 http://cmpassocregulationblog.blogspot.com/2014/03/financial-risks-slow-cyclical-united.html
2/16/14 http://cmpassocregulationblog.blogspot.com/2014/02/theory-and-reality-of-cyclical-slow.html
1/26/14 http://cmpassocregulationblog.blogspot.com/2014/01/capital-flows-exchange-rates-and.html
11/24/13 http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-zero-interest-rates-world.html
11/17/13 http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-unwinding-monetary-policy.html
8/25/13 http://cmpassocregulationblog.blogspot.com/2013/08/interest-rate-risks-duration-dumping.html
8/18/13 http://cmpassocregulationblog.blogspot.com/2013/08/duration-dumping-and-peaking-valuations.html
Germany’s labor market continues to show strength not found in most of the advanced economies, as shown in Table VE-1. The number unemployed, not seasonally adjusted, decreased from 2.17 million in Aug 2013 to 1.98 million in Aug 2014, or 0.9 percent, while the unemployment rate was unchanged from 5.0 percent in Aug 2013 to 5.0 percent in Aug 2014. The number of persons in employment, not seasonally adjusted, increased from 40.83 million in Aug 2013 to 41.0 million in Aug 2014, or 0.4 percent, while the employment rate increased from 64.9 percent in Aug 2013 to 65.3 percent in Aug 2014. The number unemployed, seasonally adjusted, stabilized from 2.11 million in Jul 2014 to 2.10 million in Aug 2014, while the unemployment rate was unchanged at 4.9 percent in Aug 2014 relative to 4.9 percent in Jul 2014. The number of persons in employment, seasonally adjusted, stabilized from 40.59 million in Jul 2014 to 40.61 million in Aug 2014, or change of 0.0 percent. The employment rate seasonally adjusted did not change from 64.6 in Jul 2014 to 64.7 in Aug 2014.
Table VE-1, Germany, Unemployment Labor Force Survey
| Aug 2014 | Jul 2014 | Aug 2013 | |
| NSA | |||
| Number | 2.15 ∆% Aug 2014 /Jul 2014: 8.6 ∆% Aug 2014/Aug 2013: -0.9 | 1.98 | 2.17 |
| % Rate Unemployed | 5.0 | 4.7 | 5.0 |
| Persons in Employment Millions | 41.00 ∆% Aug 2014/Jul 2014: 1.2 ∆% Aug 2014/Aug 2013: 0.4 | 40.50 | 40.83 |
| Employment Rate | 65.3 | 64.4 | 64.9 |
| SA | |||
| Number | 2.10 ∆% Aug 2014/Jul 2014: -0.5 ∆% Aug 2014/Aug 2013: –6.7 | 2.11 | 2.25 |
| % Rate Unemployed | 4.9 | 4.9 | 5.3 |
| Persons in Employment Millions | 40.61 ∆% Aug 2014/Jul 2014: 0.0 ∆% Aug 2014/Aug 2013: 0.5 | 40.59 | 40.41 |
| Employment Rate | 64.7 | 64.6 | 64.2 |
NSA: not seasonally adjusted; SA: seasonally adjusted
Source: Statistisches Bundesamt Deutschland
https://www.destatis.de/EN/PressServices/Press/pr/2014/09/PE14_343_132.htm
he 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 unemployment rate fell to 6.5 percent in Jun 2014, increasing to 6.6 percent in Jun 2014 and 6.7 percent in Aug 2014. The unemployment rate fell to 6.5 percent in Sep 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
| Sep 2014 | 6.5 |
| Aug | 6.7 |
| Jul | 6.6 |
| Jun | 6.5 |
| May | 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, 6.6 percent in May 2014 and 6.5 percent in Jun 2014. The rate increased to 6.6 percent in Jul 2014 and 6.7 percent in Aug 2014, falling to 6.5 percent in Sep 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 are provided in Table VE-3. There have been sharp fluctuations in monthly and 12-month percentage changes. In Aug 2014, retail sales increased 2.5 percent and increased 0.1 percent in 12 months. Retail sales decreased 1.1 percent in Jul 2014 and increased 1.0 percent in 12 months.
Table VE-3, Retail Sales in Germany Adjusted for Inflation
| 12-Month ∆% NSA | Month ∆% SA and Calendar Adjusted | |
| Aug 2014 | 0.1 | 2.5 |
| Jul | 1.0 | -1.1 |
| Jun | 0.1 | 1.1 |
| May | 2.3 | -0.3 |
| Apr | 3.6 | -0.5 |
| Mar | -0.6 | -0.3 |
| Feb | 2.3 | 0.5 |
| Jan | 0.9 | 1.6 |
| Dec 2013 | 0.3 | -1.4 |
| Nov | 1.7 | 1.8 |
| Oct | -0.1 | -0.7 |
| Sep | 0.3 | 0.0 |
| Aug | 0.5 | 0.3 |
| Jul | 3.4 | 0.1 |
| Jun | -2.8 | -1.3 |
| May | 0.3 | 0.8 |
| Apr | 2.6 | 0.5 |
| Mar | -2.9 | -0.1 |
| Feb | -3.2 | -0.9 |
| Jan | 2.3 | 2.0 |
| Dec 2012 | -3.1 | -0.9 |
| Nov | 0.5 | 0.4 |
| Oct | 1.5 | -0.7 |
| Sep | -3.1 | 0.2 |
| Aug | 0.0 | 0.2 |
| Jul | -1.0 | -1.2 |
| Jun | 4.6 | 0.9 |
| May | -0.7 | -0.1 |
| Apr | -4.7 | -0.5 |
| Mar | 4.2 | 0.8 |
| Feb | 2.5 | 1.1 |
| Jan | 2.0 | -2.3 |
| Dec 2011 | 0.8 | 1.4 |
| Nov | 0.9 | -1.2 |
| Oct | -0.4 | 0.6 |
| Sep | 1.2 | 0.2 |
| Aug | 3.4 | -0.8 |
| Jul | -2.4 | 0.7 |
| Jun | -2.0 | 2.6 |
| May | 4.5 | -2.4 |
| Apr | 4.8 | 1.2 |
| Mar | -2.9 | -2.6 |
| Feb | 3.0 | 1.5 |
| Jan | 3.3 | 0.6 |
| Dec 2010 | -0.2 | 0.5 |
| 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.html
Chart VE-4 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, 1949-2013
| Period | Average ∆% |
| 1949-2013 | 3.2 |
| 2007-2013 | 0.3 |
| 2000-2013 | 1.1 |
| 2000-2012 | 1.1 |
| 2000-2007 | 1.8 |
| 1990-1999 | 2.1 |
| 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=28&date=20140923
The Markit Flash France Composite Output Index decreased from 49.5 in Aug to 49.1 in Sep (http://www.markiteconomics.com/Survey/PressRelease.mvc/bb73066c8dc44fbf88660cbecf77b91d). Jack Kennedy, Senior Economist at Markit and author of the report, finds continuing weak performance (http://www.markiteconomics.com/Survey/PressRelease.mvc/bb73066c8dc44fbf88660cbecf77b91d). The Markit France Composite Output Index, combining services and manufacturing with close association with French GDP, decreased from 49.5 in Aug to 48.4 in Sep, indicating marginal contraction (http://www.markiteconomics.com/Survey/PressRelease.mvc/82be3cedbcdc4a839163e81d615900f9). Jack Kennedy, Senior Economist at Markit and author of the France Services PMI®, finds stagnating GDP growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/82be3cedbcdc4a839163e81d615900f9). The Markit France Services Activity index decreased from 50.3 in Aug to 48.4 in Sep (http://www.markiteconomics.com/Survey/PressRelease.mvc/82be3cedbcdc4a839163e81d615900f9). The Markit France Manufacturing Purchasing Managers’ Index® increased to 48.8 in Sep from 46.9 in Aug (http://www.markiteconomics.com/Survey/PressRelease.mvc/8bd5e41300354c52ac62bba016c38fa5). Jack Kennedy, Senior Economist at Markit and author of the France Manufacturing PMI®, finds deteriorating conditions because of weakness in new orders (http://www.markiteconomics.com/Survey/PressRelease.mvc/8bd5e41300354c52ac62bba016c38fa5). Table FR provides the country data table for France.
Table FR, France, Economic Indicators
| CPI | Aug month ∆% 0.4 |
| PPI | Aug month ∆%: -0.3 Blog 10/5/14 |
| GDP Growth | IIQ2014/IQ2014 ∆%:0.0 |
| Industrial Production | Jul ∆%: |
| Consumer Spending | Manufactured Goods |
| Employment | Unemployment Rate: IIQ2014 9.7% |
| Trade Balance | Jul Exports ∆%: month -1.5, 12 months -1.3 Jul Imports ∆%: month -1.3, 12 months 0.0 Blog 9/14/14 |
| Confidence Indicators | Historical average 100 Sep Mfg Business Climate 96.0 Blog 9/28/14 |
Links to blog comments in Table FR:
9/28/14 http://cmpassocregulationblog.blogspot.com/2014/09/financial-volatility-mediocre-cyclical.html
9/14/14 http://cmpassocregulationblog.blogspot.com/2014/09/geopolitics-monetary-policy-and.html
9/7/14 http://cmpassocregulationblog.blogspot.com/2014/09/competitive-monetary-policy-and.html
8/17/2014 http://cmpassocregulationblog.blogspot.com/2014/08/weakening-world-economic-growth.html
6/29/14 http://cmpassocregulationblog.blogspot.com/2014/06/financial-indecision-mediocre-cyclical.html
5/18/14 http://cmpassocregulationblog.blogspot.com/2014/05/world-inflation-waves-squeeze-of.html
4/6/14 http://cmpassocregulationblog.blogspot.com/2014/04/interest-rate-risks-twenty-eight.html
2/16/14 http://cmpassocregulationblog.blogspot.com/2014/02/theory-and-reality-of-cyclical-slow.html
12/29/13 http://cmpassocregulationblog.blogspot.com/2013/12/collapse-of-united-states-dynamism-of.html
11/17/13 http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-unwinding-monetary-policy.html
9/29/13 http://cmpassocregulationblog.blogspot.com/2013/09/mediocre-and-decelerating-united-states.html
6/30/13 http://cmpassocregulationblog.blogspot.com/2013/06/tapering-quantitative-easing-policy-and.html
5/19/13 http://cmpassocregulationblog.blogspot.com/2013/05/word-inflation-waves-squeeze-of.html
The monthly report of household expenditures in consumption goods for France is in Table VF-1. Total consumption increased 0.7 percent in Aug 2014 after decreasing 0.7 percent in Jul 2014 and increasing 0.8 percent in Jun 2014. Consumption of manufactured products increased 0.8 percent in Aug 2014 after decreasing 0.9 percent in Jul 2014 and increasing 1.3 percent in Jun 2014. Total consumption increased 0.7 percent in Aug 2014 relative to Aug 2013 and consumption of manufactured goods increased 1.4 percent in Aug 2014 relative to Aug 2013. Consumption of energy increased 1.1 percent in Aug 2014 and increased 1.0 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 | |
| Aug 2014 | 0.7 | 0.8 | 0.4 | 1.1 | 0.8 |
| Aug 2014/Aug 2013 | 1.4 | 0.7 | 2.3 | 1.0 | 1.4 |
| Jul 2014 | -0.7 | -1.5 | -0.1 | -0.6 | -0.9 |
| Jun | 0.8 | 1.2 | 0.9 | -0.4 | 1.3 |
| May | 0.6 | -1.1 | -0.4 | 6.8 | -0.6 |
| Apr | 0.0 | 1.1 | -0.1 | -2.2 | 0.1 |
| Mar | 0.6 | 0.4 | -0.1 | 2.5 | 0.7 |
| Feb | -0.4 | -0.5 | 0.0 | -1.1 | -0.5 |
| Jan | -1.6 | -0.8 | -0.7 | -5.3 | -1.3 |
| Dec 2013 | 0.2 | 0.3 | 0.8 | -1.2 | 0.9 |
| Nov | 1.4 | -0.4 | 0.8 | 6.9 | 0.3 |
| Oct | -0.4 | 1.4 | 0.0 | -4.7 | 0.4 |
| Sep | 0.3 | -0.2 | 0.8 | 0.0 | 0.2 |
| Aug | -0.6 | -0.4 | -0.3 | -1.8 | -0.6 |
| Jul | 0.8 | 0.8 | 0.3 | 1.7 | 1.0 |
| Jun | -1.6 | -1.1 | 0.3 | -6.6 | -1.1 |
| May | 1.0 | 2.3 | 0.1 | 0.6 | 1.3 |
| Apr | -0.6 | -3.0 | 0.8 | 1.0 | -0.5 |
| Mar | 0.7 | 1.7 | -0.8 | 2.5 | 0.5 |
| Feb | -0.2 | -0.1 | -1.2 | 1.8 | -0.7 |
| Jan | 0.7 | 0.7 | 0.0 | 2.5 | 0.2 |
| Dec 2012 | -0.4 | 0.0 | 0.5 | -3.3 | 0.0 |
| Nov | -0.3 | -0.4 | -0.9 | 1.3 | -0.6 |
| Oct | 0.0 | -0.6 | 0.1 | 0.9 | 0.0 |
| Sep | 0.1 | -0.4 | 0.4 | 0.5 | 0.1 |
| Aug | -0.9 | 0.3 | -1.1 | -2.7 | -1.1 |
| Jul | 0.3 | -0.2 | 0.6 | 0.5 | 0.3 |
| Jun | 0.1 | 1.0 | -0.6 | 0.2 | 0.2 |
| May | 0.3 | -0.1 | 2.0 | -3.0 | 1.2 |
| Apr | 0.2 | 0.1 | -3.5 | 10.1 | -1.7 |
| Mar | -2.9 | -1.8 | 1.3 | -14.6 | -0.7 |
| Feb | 2.3 | 1.3 | -0.9 | 12.6 | 0.6 |
| Jan | 1.0 | 0.9 | 0.4 | 2.9 | 0.8 |
| Dec 2011 | -0.8 | -1.0 | -0.8 | -0.6 | -1.0 |
| Nov | -0.2 | 0.3 | 0.2 | -2.4 | 0.0 |
| Oct | -0.3 | -0.9 | 0.4 | -0.7 | -0.2 |
| Sep | -0.3 | 0.7 | -0.1 | -2.7 | -0.2 |
| Aug | 0.7 | 0.1 | 0.5 | 2.5 | 0.8 |
| Jul | -0.2 | 0.2 | -0.7 | 0.4 | -0.2 |
| Jun | 0.5 | -0.2 | 0.3 | 2.6 | 0.4 |
| May | 0.1 | -0.5 | -0.5 | 3.2 | -0.7 |
| Apr | -2.3 | 0.3 | -3.1 | -5.9 | -1.8 |
| Mar | -0.9 | -0.4 | -1.1 | -1.7 | -1.0 |
| Feb | 0.6 | 0.7 | 1.5 | -2.1 | 1.1 |
| Jan | -0.3 | -0.8 | 1.7 | -4.6 | 0.7 |
| Dec 2010 | 0.6 | 0.7 | -0.6 | 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=20140930
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 Aug 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 Jul 2014
Source: Institut National de la Statistique et des Études Économiques
http://www.insee.fr/en/themes/info-rapide.asp?id=19&date=20140930
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. Consumption grew in May-Jun 2014, falling in Jul 2014 and rebounding in Aug 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=20140930
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 2.9 percent in IVQ2012, minus 2.4 percent in IQ2013, minus 2.2 percent in IIQ2013 and minus 1.9 percent in IIIQ2013. GDP fell 0.9 percent in IVQ2013 relative to a year earlier. GDP fell 0.4 percent in IQ2014 relative to a year earlier and decreased 0.2 percent in IIQ2014 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. Consumption fell 0.3 percent in IQ2014 and GFCF fell 2.1 percent. In IIQ2014, consumption increased 0.2 percent relative to a year earlier and GFCF fell 2.1 percent.
Table VG-IT, Italy, GDP and Expenditure Components, Chained Volume Measures, Quarter ∆% on Same Quarter Year Earlier
| GDP | Imports | Consumption | GFCF | Exports | |
| 2014 | |||||
| IIQ | -0.2 | 2.0 | 0.2 | -2.1 | 1.9 |
| IQ | -0.4 | 0.9 | -0.3 | -1.2 | 2.5 |
| 2013 | |||||
| IVQ | -0.9 | -0.1 | -1.1 | -2.8 | 1.0 |
| IIIQ | -1.9 | -2.0 | -1.7 | -4.6 | -0.4 |
| IIQ | -2.2 | -4.4 | -2.9 | -4.8 | 0.1 |
| IQ | -2.4 | -5.0 | -3.0 | -6.1 | -0.8 |
| 2012 | |||||
| IVQ | -2.9 | -6.5 | -4.0 | -7.3 | 0.9 |
| IIIQ | -2.6 | -7.1 | -4.0 | -8.3 | 2.0 |
| IIQ | -2.4 | -7.0 | -3.4 | -8.5 | 2.3 |
| IQ | -1.7 | -7.9 | -3.2 | -8.1 | 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/130505
The Markit/ADACI Business Activity Index decreased from 49.8 in Aug to 48.8 in Sep (http://www.markiteconomics.com/Survey/PressRelease.mvc/d3dda091545c4391a5fa4b32b0a94302). Phil Smith, Economist at Markit and author of the Italy Services PMI®, finds weakening demand (http://www.markiteconomics.com/Survey/PressRelease.mvc/d3dda091545c4391a5fa4b32b0a94302). The Markit/ADACI Purchasing Managers’ Index® (PMI®), increased from 49.8 in Aug to 50.7 in Sep (http://www.markiteconomics.com/Survey/PressRelease.mvc/02e47b393b13457a98a844fc7f00961e). Growth of new export orders was strong at faster rate. Phil Smith, Economist at Markit and author of the Italian Manufacturing PMI®, finds fragile conditions in manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/02e47b393b13457a98a844fc7f00961e). Table IT provides the country data table for Italy.
Table IT, Italy, Economic Indicators
| Consumer Price Index | Sep month ∆%: -0.3 |
| Producer Price Index | Aug month ∆%: 0.0 Blog 10/5/14 |
| GDP Growth | IIQ2014/IQ2014 SA ∆%: minus 0.2 |
| Labor Report | Aug 2014 Participation rate 63.6% Employment ratio 55.7% Unemployment rate 12.3% Youth Unemployment 44.2% Blog 10/5/14 |
| Industrial Production | Jul month ∆%: -1.0 |
| Retail Sales | Jul month ∆%: -0.1 Jul 12-month ∆%: -1.5 Blog 9/28/14 |
| Business Confidence | Mfg Sep 95.1, May 99.6 Construction Sep 75.4, May 73.5 Blog 9/28/14 |
| Trade Balance | Balance Jul SA €2821 million versus Jun €2596 |
Links to blog comments in Table IT:
9/28/14 http://cmpassocregulationblog.blogspot.com/2014/09/financial-volatility-mediocre-cyclical.html
9/21/14 http://cmpassocregulationblog.blogspot.com/2014/09/world-inflation-waves-squeeze-of.html
9/14/14 http://cmpassocregulationblog.blogspot.com/2014/09/geopolitics-monetary-policy-and.html
8/31/14 http://cmpassocregulationblog.blogspot.com/2014/09/geopolitical-and-financial-risks.html
8/10/14 http://cmpassocregulationblog.blogspot.com/2014/08/volatility-of-valuations-of-risk_10.html
6/15/2014 http://cmpassocregulationblog.blogspot.com/2014/06/financialgeopolitical-risks-recovery.html
5/18/14 http://cmpassocregulationblog.blogspot.com/2014/05/world-inflation-waves-squeeze-of.html
3/16/2014 http://cmpassocregulationblog.blogspot.com/2014/03/global-financial-risks-recovery-without.html
2/16/14 http://cmpassocregulationblog.blogspot.com/2014/02/theory-and-reality-of-cyclical-slow.html
12/15/13 http://cmpassocregulationblog.blogspot.com/2013/12/theory-and-reality-of-secular.html
11/17/13 http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-unwinding-monetary-policy.html
9/15/13 http://cmpassocregulationblog.blogspot.com/2013/09/recovery-without-hiring-ten-million.html
8/11/13 http://cmpassocregulationblog.blogspot.com/2013/08/recovery-without-hiring-loss-of-full.html
6/16/13 http://cmpassocregulationblog.blogspot.com/2013/06/recovery-without-hiring-seven-million.html
3/17/13 http://cmpassocregulationblog.blogspot.com/2013/03/recovery-without-hiring-ten-million.html
Data on Italy’s labor market since 2004 are provided in Table VG-1. The unemployment rate has risen from 6.2 percent in Dec 2006 to 12.3 percent in Aug 2014. The rate of youth unemployment for ages 15 to 24 years increased from 20.2 percent in Dec 2006 to 44.2 percent in Aug 2014. As in other advanced economies, unemployment has reached high levels.
Table VG-1, Italy, Labor Report
| Participation Rate % | Employment Ratio % | Unemployment Rate % | Unemployment | |
| Aug 2014 | 63.6 | 55.7 | 12.3 | 44.2 |
| Jul | 63.7 | 55.6 | 12.6 | 43.2 |
| Jun | 63.7 | 55.7 | 12.3 | 43.7 |
| May | 63.7 | 55.5 | 12.6 | 43.0 |
| Apr | 63.5 | 55.4 | 12.5 | 43.5 |
| Mar | 63.7 | 55.7 | 12.4 | 42.8 |
| Feb | 63.6 | 55.5 | 12.6 | 42.6 |
| Jan | 63.6 | 55.5 | 12.6 | 42.5 |
| Dec 2013 | 63.5 | 55.5 | 12.4 | 41.6 |
| Nov | 63.6 | 55.4 | 12.7 | 41.8 |
| Oct | 63.6 | 55.5 | 12.4 | 41.4 |
| Sep | 63.5 | 55.4 | 12.5 | 40.6 |
| Aug | 63.5 | 55.5 | 12.4 | 40.6 |
| Jul | 63.4 | 55.7 | 12.0 | 40.1 |
| Jun | 63.5 | 55.6 | 12.2 | 39.4 |
| May | 63.4 | 55.6 | 12.2 | 38.7 |
| Apr | 63.5 | 55.7 | 12.1 | 39.5 |
| Mar | 63.5 | 55.8 | 12.0 | 39.3 |
| Feb | 63.7 | 56.0 | 11.8 | 38.6 |
| Jan | 63.7 | 56.0 | 11.8 | 38.3 |
| Dec 2012 | 63.7 | 56.3 | 11.4 | 37.6 |
| Nov | 63.6 | 56.4 | 11.2 | 37.5 |
| Oct | 63.8 | 56.5 | 11.3 | 36.3 |
| Sep | 63.7 | 56.6 | 10.9 | 36.2 |
| Aug | 63.6 | 56.7 | 10.7 | 34.6 |
| Jul | 63.8 | 56.8 | 10.8 | 35.3 |
| Jun | 63.8 | 56.7 | 10.9 | 34.6 |
| May | 63.7 | 57.0 | 10.4 | 35.7 |
| Apr | 63.8 | 56.9 | 10.7 | 34.7 |
| Mar | 63.5 | 56.9 | 10.4 | 35.1 |
| Feb | 63.4 | 57.0 | 10.0 | 33.7 |
| Jan | 63.1 | 57.1 | 9.5 | 32.2 |
| Dec 2011 | 63.0 | 56.9 | 9.5 | 31.7 |
| Nov | 62.7 | 56.8 | 9.3 | 31.9 |
| Oct | 62.6 | 57.0 | 8.8 | 30.6 |
| Sep | 62.4 | 56.8 | 8.9 | 30.4 |
| Aug | 62.4 | 57.0 | 8.5 | 29.3 |
| Jul | 62.2 | 57.0 | 8.3 | 28.7 |
| Jun | 62.0 | 57.0 | 8.0 | 27.8 |
| May | 62.1 | 57.0 | 8.1 | 27.8 |
| Apr | 61.8 | 56.9 | 7.7 | 27.3 |
| Mar | 62.1 | 57.1 | 7.9 | 27.7 |
| Feb | 61.8 | 56.9 | 7.9 | 27.5 |
| Jan | 61.9 | 56.9 | 8.0 | 28.5 |
| Dec 2010 | 62.1 | 56.9 | 8.2 | 28.5 |
| Dec 2009 | 62.4 | 57.1 | 8.3 | 26.6 |
| Dec 2008 | 62.5 | 58.1 | 6.8 | 22.9 |
| Dec 2007 | 63.1 | 58.9 | 6.5 | 21.5 |
| Dec 2006 | 62.5 | 58.5 | 6.2 | 20.2 |
| Dec 2005 | 62.6 | 57.8 | 7.5 | 23.4 |
| Dec 2004 | 62.5 | 57.5 | 7.9 | 23.6 |
Source: Istituto Nazionale di Statistica
http://www.istat.it/it/archivio/132675
Table VG-2 provides more detail on the labor report for Italy in Aug 2014. The level of employment increased 32,000 from Jul 2014 to Aug 2014 and decreased 10,000 from Aug 2013 to Aug 2014. Unemployment decreased 82,000 in Aug 2014 and decreased 28,000 from a year earlier. A dramatic aspect found in most advanced economies is the high rate of unemployment of youth at 44.2 percent in Aug 2014 for ages 15 to 24 years.
Table VG-2, Italy, Labor Report, NSA
| Aug 2014 | 1000s | Change from Prior Month 1000s | ∆% from Prior Month | Change from Prior Year 1000s | ∆% from Prior Year |
| EMP | 22,380 | 32 | 0.1 | -10 | 0.0 |
| UNE | 3,134 | -82 | -2.6 | -28 | -0.9 |
| INA 15-64 | 14,338 | 32 | 0.2 | -77 | -0.5 |
| EMP 15-24 | 895 | -33 | -3.6 | -88 | -9.0 |
| UNE 15-24 | 710 | 2 | 0.3 | 37 | 5.6 |
| INA 15-24 | 4,372 | 28 | 0.7 | 9 | 0.2 |
| EMP % | 55.7 | 0.1 | 0.1 | ||
| UNE % | 12.3 | -0.3 | -0.1 | ||
| Youth UNE % 15-24 | 44.2 | 1.0 | 3.6 | ||
| INA % 15-64 | 36.4 | 0.1 | -0.1 |
Notes: EMP: Employed; UNE: Unemployed; INA 15-64: Inactive aged 15 to 64; EMP %: Employment Rate; UNE %: Unemployment Rate; Youth UNE % 15-24: Youth Unemployment Rate aged 15 to 24; INA % 15-64: Inactive Rate aged 15 to 64.
Source: Istituto Nazionale di Statistica
http://www.istat.it/it/archivio/132675
Chart VG-1 provides the rate of unemployment in Italy decreased from 12.4 percent in Aug 2013 to 12.3 percent in Aug 2014.
Chart VG-1, Italy, Rate of Unemployment, %
Source: Istituto Nazionale di Statistica
Chart VG-2 of the Istituto Nazionale di Statistica provides the total number of employed persons in Italy. The level of employment dropped from 22.390 million in Aug 2013 to 22.380 million in Aug 2014.
Chart VG-2, Italy, Total Number of Employed Persons, Millions, SA
Source: Istituto Nazionale di Statistica
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 4.3 percent in 2009 after dropping 0.3 percent in 2008. Recovery of 1.9 percent in 2010 is relatively low in comparison with annual growth rates in 2007 and earlier years. Growth was only 1.6 percent in 2011 and 0.7 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 2.9 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 higher by 1.2 percent relative to 2007.
Table VH-UK, UK, Gross Domestic Product, ∆%
| ∆% on Prior Year | |
| 1998 | 3.5 |
| 1999 | 3.2 |
| 2000 | 3.8 |
| 2001 | 2.7 |
| 2002 | 2.5 |
| 2003 | 4.3 |
| 2004 | 2.5 |
| 2005 | 2.8 |
| 2006 | 3.0 |
| 2007 | 2.6 |
| 2008 | -0.3 |
| 2009 | -4.3 |
| 2010 | 1.9 |
| 2011 | 1.6 |
| 2012 | 0.7 |
| 2013 | 1.7 |
| Average Growth Rates ∆% per Year | |
| 1948-2013 | 2.6 |
| 1950-1959 | 3.1 |
| 1960-1969 | 3.1 |
| 1970-1979 | 2.6 |
| 1980-1989 | 3.1 |
| 1990-1999 | 2.2 |
| 2000-2007 | 2.9 |
| 2007-2012* | -0.6 |
| 2007-2013* | 1.2 |
| 2000-2013 | 1.6 |
*Absolute change from 2007 to 2012 an from 2007 to 2013
Source: UK Office for National Statistics
http://www.ons.gov.uk/ons/rel/naa2/quarterly-national-accounts/q2-2014/index.html
The Business Activity Index of the Markit/CIPS UK Services PMI® decreased from 60.5 in Aug to 58.7 in Sep (http://www.markiteconomics.com/Survey/PressRelease.mvc/fa89cdb774d24249b9a5888431b53851). Chris Williamson, Chief Economist at Markit, finds the combined indices consistent with the UK economy growing at around 0.8 percent in IIIQ2014 if activity continues at current rates (http://www.markiteconomics.com/Survey/PressRelease.mvc/fa89cdb774d24249b9a5888431b53851). The Markit/CIPS UK Manufacturing Purchasing Managers’ Index® (PMI®) decreased to 51.6 in Sep from 52.2 in Aug (http://www.markiteconomics.com/Survey/PressRelease.mvc/389ebd83e6dc44cdaf5be34cf37da690). New export orders increased for the eighteenth consecutive month from North America, Germany, Scandinavia and the Middle East. Rob Dobson, Senior Economist at Markit that compiles the Markit/CIPS Manufacturing PMI®, finds that manufacturing conditions are slowing (http://www.markiteconomics.com/Survey/PressRelease.mvc/389ebd83e6dc44cdaf5be34cf37da690). Table UK provides the economic indicators for the United Kingdom.
Table UK, UK Economic Indicators
| CPI | Aug month ∆%: 0.4 |
| Output/Input Prices | Output Prices: Aug 12-month NSA ∆%: -0.3; excluding food, petroleum ∆%: 0.9 |
| GDP Growth | IIQ2014 prior quarter ∆% 0.9; year earlier same quarter ∆%: 3.2 |
| Industrial Production | Jul 2014/Jul 2013 ∆%: Production Industries 1.7; Manufacturing 2.2 |
| Retail Sales | Aug month ∆%: 0.4 |
| Labor Market | Apr-Jun Unemployment Rate: 6.4%; Claimant Count 3.0%; Earnings Growth -0.2% |
| GDP and the Labor Market | IIQ2014 Weekly Hours 103.8, GDP 100.2, Employment 103.7 IQ2008 =100 GDP IIQ14 100.2 IQ2008=100 Blog 8/17/14 |
| Trade Balance | Balance SA Jul minus ₤3348 million |
Links to blog comments in Table UK:
9/21/14 http://cmpassocregulationblog.blogspot.com/2014/09/world-inflation-waves-squeeze-of.html
9/14/14 http://cmpassocregulationblog.blogspot.com/2014/09/geopolitics-monetary-policy-and.html
8/17/2014 http://cmpassocregulationblog.blogspot.com/2014/08/weakening-world-economic-growth.html
7/27/14 http://cmpassocregulationblog.blogspot.com/2014/07/world-inflation-waves-united-states.html
6/29/14 http://cmpassocregulationblog.blogspot.com/2014/06/financial-indecision-mediocre-cyclical.html
5/25/14 http://cmpassocregulationblog.blogspot.com/2014/05/united-states-commercial-banks-assets.html
5/4/2014 http://cmpassocregulationblog.blogspot.com/2014/05/financial-volatility-mediocre-cyclical.html
4/6/14 http://cmpassocregulationblog.blogspot.com/2014/04/interest-rate-risks-twenty-eight.html
3/2/14 http://cmpassocregulationblog.blogspot.com/2014/03/financial-risks-slow-cyclical-united.html
2/2/14 http://cmpassocregulationblog.blogspot.com/2014/02/mediocre-cyclical-united-states.html
12/22/13 http://cmpassocregulationblog.blogspot.com/2013/12/tapering-quantitative-easing-mediocre.html
12/1/13 http://cmpassocregulationblog.blogspot.com/2013/12/exit-risks-of-zero-interest-rates-world.html
10/27/13 http://cmpassocregulationblog.blogspot.com/2013/10/twenty-eight-million-unemployed-or.html
9/29/13 http://cmpassocregulationblog.blogspot.com/2013/09/mediocre-and-decelerating-united-states.html
8/25/13 http://cmpassocregulationblog.blogspot.com/2013/08/interest-rate-risks-duration-dumping.html
7/28/13 http://cmpassocregulationblog.blogspot.com/2013/07/duration-dumping-steepening-yield-curve.html
5/26/13 http://cmpassocregulationblog.blogspot.com/2013/05/united-states-commercial-banks-assets.html
4/28/13 http://cmpassocregulationblog.blogspot.com/2013/04/mediocre-and-decelerating-united-states_28.html
03/31/13 http://cmpassocregulationblog.blogspot.com/2013/04/mediocre-and-decelerating-united-states.html
Table VH-1 provides quarter on quarter chained value measures of GDP since 1998 in the third estimate for IIQ2014 (http://www.ons.gov.uk/ons/rel/naa2/quarterly-national-accounts/q2-2014/index.html). The UK Office for National Statistics provides revision of the national accounts in accordance with the European System of Accounts 2010 (ESA 2010) (http://www.ons.gov.uk/ons/rel/naa2/quarterly-national-accounts/q2-2014/index.html). GDP grew 0.9 percent in IIQ2014 relative to IQ2014. Growth of 0.8 percent in IIIQ2012 interrupted three consecutive quarters of weakness in GDP growth. Most advanced economies are underperforming relative to the period before the global recession. The UK Office for National Statistics analyzes that the decline in the impulse of growth in the UK originated in weakness in markets in the UK and worldwide. The UK Office for National Statistics estimates that GDP in IIQ2014 is higher by 2.7 percent relative to the peak in IQ2008 (http://www.ons.gov.uk/ons/rel/naa2/quarterly-national-accounts/q2-2014/index.html). The UK Office for National Statistics estimates the contraction of 6.0 percent from peak to trough (http://www.ons.gov.uk/ons/rel/naa2/quarterly-national-accounts/q2-2014/index.html), which is roughly equal at 6.1 percent to compounding the quarterly rates in Table VH-1 from IIQ2008 to IIQ2009.
Table VH-1, UK, Percentage Change of GDP from Prior Quarter, Chained Value Measures ∆%
| IQ | IIQ | IIIQ | IV | |
| 2014 | 0.7 | 0.9 | ||
| 2013 | 0.5 | 0.7 | 0.9 | 0.6 |
| 2012 | 0.1 | -0.2 | 0.8 | -0.3 |
| 2011 | 0.5 | 0.2 | 0.7 | 0.0 |
| 2010 | 0.5 | 1.0 | 0.6 | 0.0 |
| 2009 | -1.8 | -0.3 | 0.2 | 0.4 |
| 2008 | 0.3 | -0.2 | -1.7 | -2.2 |
| 2007 | 0.8 | 0.6 | 0.8 | 0.5 |
| 2006 | 0.6 | 0.5 | 0.2 | 0.8 |
| 2005 | 0.7 | 1.0 | 1.0 | 1.3 |
| 2004 | 0.3 | 0.3 | 0.1 | 0.4 |
| 2003 | 1.0 | 1.4 | 1.3 | 1.0 |
| 2002 | 0.5 | 0.8 | 0.9 | 0.9 |
| 2001 | 1.1 | 0.8 | 0.5 | 0.3 |
| 2000 | 1.0 | 0.7 | 0.4 | 0.3 |
| 1999 | 0.5 | 0.2 | 1.6 | 1.3 |
| 1998 | 0.6 | 0.8 | 0.7 | 1.0 |
Source: UK Office for National Statistics
http://www.ons.gov.uk/ons/rel/naa2/quarterly-national-accounts/q2-2014/index.html
There are four periods in growth of GDP in a quarter relative to the same quarter a year earlier in the UK in the years from 2000 to the present as shown in Table VH-2. (1) Growth rates were quite high from 2000 to 2007. (2) There were six consecutive quarters of contraction of GDP from IIIQ2008 to IVQ2009. Contractions relative to the quarter a year earlier were quite sharp with the highest of 3.8 percent in IVQ2008, 5.8 percent in IQ2009, 5.8 percent in IIQ2009 and 4.0 percent in IIIQ2009. (3) The economy bounced strongly with 2.1 percent in IIQ2010, 2.5 percent in IIIQ2010 and 2.2 percent in IVQ2010. (4) Recovery in 2011 did not continue at rates comparable to those in 2000 to 2007 and even relative to those in the final three quarters of 2010. Growth relative to the same quarter a year earlier fell from 2.2 percent in IVQ2010 to 1.4 percent in IIQ2011, 1.5 percent in IIIQ2011, 1.5 percent in IVQ2011 and but only 1.0 percent in IQ2012, increase of 0.6 percent in IIQ2012 relative to IIQ2011, increase of 0.7 percent in IIIQ2012 and 0.4 percent in IVQ2012. In IQ2012, GDP increased 0.1 percent and increased 1.0 percent relative to a year earlier. In IIQ2012, GDP fell 0.2 percent relative to IQ2012 and increased 0.6 percent relative to a year earlier. In IIIQ2012, GDP increased 0.8 percent and increased 0.7 percent relative to the same quarter a year earlier. In IVQ2012, GDP fell 0.3 percent and increased 0.4 percent relative to a year earlier. Fiscal consolidation in an environment of weakening economic growth is much more challenging. Growth increased to 0.8 percent in IQ2013 relative to a year earlier and 0.5 percent in IQ2013 relative to IVQ2012. In IIQ2013, GDP increased 0.7 percent and 1.7 percent relative to a year earlier. GDP increased 0.9 percent in IIIQ2013 and 1.7 percent relative to a year earlier. GDP increased 0.6 percent in IVQ2013 and 2.7 percent relative to a year earlier. In IQ2014, GDP increased 0.7 percent and 2.9 percent relative to a year earlier. GDP increased 0.9 percent in IQ2014 and 3.2 percent relative to a year earlier.
Table VH-2, UK, Percentage Change of GDP from Same Quarter a Year Earlier, Chained Value Measures ∆%
| IQ | IIQ | IIIQ | IV | |
| 2014 | 2.9 | 3.2 | ||
| 2013 | 0.8 | 1.7 | 1.7 | 2.7 |
| 2012 | 1.0 | 0.6 | 0.7 | 0.4 |
| 2011 | 2.2 | 1.4 | 1.5 | 1.5 |
| 2010 | 0.8 | 2.1 | 2.5 | 2.2 |
| 2009 | -5.8 | -5.8 | -4.0 | -1.5 |
| 2008 | 2.2 | 1.4 | -1.1 | -3.8 |
| 2007 | 2.2 | 2.3 | 3.0 | 2.7 |
| 2006 | 4.0 | 3.5 | 2.6 | 2.0 |
| 2005 | 1.6 | 2.3 | 3.2 | 4.2 |
| 2004 | 4.0 | 2.9 | 1.8 | 1.2 |
| 2003 | 3.6 | 4.2 | 4.6 | 4.7 |
| 2002 | 2.1 | 2.1 | 2.5 | 3.1 |
| 2001 | 2.5 | 2.6 | 2.8 | 2.8 |
| 2000 | 4.3 | 4.8 | 3.5 | 2.5 |
| 1999 | 3.0 | 2.5 | 3.4 | 3.7 |
| 1998 | 3.9 | 3.5 | 3.5 | 3.2 |
Source: UK Office for National Statistics
http://www.ons.gov.uk/ons/rel/naa2/quarterly-national-accounts/q2-2014/index.html
Table VH-3 provides annual percentage changes of gross value added and key components. Production fell 8.8 percent in 2009 and its most important component manufacturing fell 9.4 percent. Services fell 2.9 percent in 2009. Services grew in all years from 2010 to 2013 while manufacturing fell 1.3 percent in 2012 and 0.1 percent in 2013.
Table VH-3, UK, Gross Value Added by Components, ∆% on Prior Year
| TP | MFG | CONS | SERV | GVA BP | GVA EX | |
| 2011 Weights | 146 | 101 | 64 | 784 | 1000 | 981 |
| 1998 | 1.1 | 0.4 | 1.5 | 4.8 | 3.7 | 3.7 |
| 1999 | 1.1 | 0.5 | 1.3 | 4.1 | 3.3 | 3.1 |
| 2000 | 1.9 | 2.3 | 0.9 | 4.7 | 3.8 | 4.3 |
| 2001 | -1.6 | -1.6 | 1.8 | 3.7 | 2.4 | 2.9 |
| 2002 | -1.7 | -2.6 | 5.7 | 2.8 | 2.2 | 2.3 |
| 2003 | -0.7 | -0.6 | 4.8 | 5.8 | 4.5 | 5.0 |
| 2004 | 0.8 | 1.9 | 5.3 | 2.3 | 2.2 | 2.7 |
| 2005 | -0.7 | -0.1 | -2.4 | 4.3 | 3.1 | 3.6 |
| 2006 | 0.7 | 2.2 | 0.8 | 3.8 | 3.0 | 3.5 |
| 2007 | 0.3 | 0.7 | 2.2 | 3.1 | 2.5 | 2.7 |
| 2008 | -2.7 | -2.9 | -2.6 | 0.6 | -0.1 | - |
| 2009 | -8.8 | -9.4 | -13.2 | -2.9 | -4.5 | -4.4 |
| 2010 | 3.1 | 4.7 | 8.5 | 1.4 | 2.1 | 2.3 |
| 2011 | -0.8 | 1.8 | 2.2 | 2.1 | 1.7 | 2.2 |
| 2012 | -2.7 | -1.3 | -7.5 | 2.0 | 0.7 | 1.0 |
| 2013 | -0.1 | -0.1 | 1.5 | 1.8 | 1.6 | 1.8 |
TP: Total Production; MFG: Manufacturing; CONS: Construction; SERV: Services; GVA BP: Gross Value at Basic Prices Added; GVA EX: GVA Excluding Oil and Gas
Source: UK Office for National Statistics
http://www.ons.gov.uk/ons/rel/naa2/quarterly-national-accounts/q2-2014/index.html
Percentage changes of gross value added and components in a quarter relative to the same quarter a year earlier are in Table VH-4A. Gross value added increased 3.1 percent in IIQ2014 relative to a year earlier while services increased 3.2 percent. Manufacturing increased 3.6 percent in IIQ2014 relative to a year earlier.
Table VH-4A, UK, Gross Value Added by Components, ∆% on Same Quarter of Previous Year
| TP | MFG | CONS | SERV | GVA BP | GAVA EX | |
| 2011 Weights | 146 | 101 | 64 | 784 | 1000 | 981 |
| 1998 Q1 | 1.4 | 1.1 | 4.8 | 4.6 | 3.8 | 4.1 |
| 1998 Q2 | 2.0 | 1.2 | 0.1 | 4.7 | 3.8 | 3.6 |
| 1998 Q3 | 0.9 | 0.3 | 1.2 | 4.9 | 3.7 | 3.8 |
| 1998 Q4 | 0.2 | -1.1 | - | 4.9 | 3.5 | 3.4 |
| 1999 Q1 | -0.5 | -1.5 | -1.5 | 4.7 | 3.2 | 3.0 |
| 1999 Q2 | -0.4 | -1.0 | 1.3 | 3.7 | 2.7 | 2.6 |
| 1999 Q3 | 2.3 | 1.7 | 3.2 | 3.9 | 3.6 | 3.3 |
| 1999 Q4 | 3.0 | 2.9 | 2.1 | 4.0 | 3.7 | 3.7 |
| 2000 Q1 | 2.9 | 3.1 | 3.3 | 4.7 | 4.2 | 4.3 |
| 2000 Q2 | 3.2 | 3.4 | 2.1 | 5.4 | 4.7 | 5.1 |
| 2000 Q3 | 0.8 | 1.1 | -1.9 | 4.9 | 3.6 | 4.3 |
| 2000 Q4 | 0.7 | 1.7 | - | 3.6 | 2.7 | 3.5 |
| 2001 Q1 | - | 0.7 | -1.9 | 4.0 | 2.7 | 3.7 |
| 2001 Q2 | -1.6 | -1.5 | 1.6 | 3.9 | 2.5 | 3.1 |
| 2001 Q3 | -1.5 | -1.5 | 3.8 | 3.4 | 2.3 | 2.7 |
| 2001 Q4 | -3.2 | -4.1 | 3.7 | 3.5 | 2.0 | 2.2 |
| 2002 Q1 | -2.6 | -3.5 | 5.2 | 2.3 | 1.6 | 1.7 |
| 2002 Q2 | -1.8 | -3.0 | 3.5 | 2.3 | 1.6 | 1.6 |
| 2002 Q3 | -1.7 | -2.0 | 7.2 | 2.8 | 2.3 | 2.7 |
| 2002 Q4 | -0.8 | -1.8 | 7.0 | 3.7 | 3.1 | 3.3 |
| 2003 Q1 | -1.5 | -2.2 | 3.5 | 4.9 | 3.5 | 3.7 |
| 2003 Q2 | -1.3 | -0.7 | 5.4 | 5.9 | 4.5 | 5.3 |
| 2003 Q3 | -0.5 | -1.0 | 4.6 | 6.3 | 4.9 | 5.3 |
| 2003 Q4 | 0.5 | 1.4 | 5.7 | 6.0 | 5.0 | 5.8 |
| 2004 Q1 | 1.4 | 2.8 | 11.6 | 4.3 | 4.2 | 5.0 |
| 2004 Q2 | 2.2 | 3.0 | 6.9 | 2.5 | 2.7 | 3.0 |
| 2004 Q3 | -0.3 | 0.8 | 3.4 | 1.6 | 1.3 | 1.8 |
| 2004 Q4 | -0.1 | 1.2 | -0.3 | 1.0 | 0.7 | 1.2 |
| 2005 Q1 | -1.2 | -0.7 | -2.7 | 2.3 | 1.4 | 1.9 |
| 2005 Q2 | -0.7 | -0.1 | -1.8 | 3.6 | 2.6 | 3.1 |
| 2005 Q3 | -0.4 | 0.8 | -2.9 | 5.0 | 3.6 | 4.3 |
| 2005 Q4 | -0.7 | -0.3 | -2.2 | 6.4 | 4.7 | 5.3 |
| 2006 Q1 | 1.0 | 1.6 | -2.0 | 5.6 | 4.3 | 4.7 |
| 2006 Q2 | -0.3 | 1.6 | -0.5 | 4.6 | 3.4 | 4.1 |
| 2006 Q3 | 1.2 | 2.7 | 1.8 | 3.0 | 2.6 | 2.9 |
| 2006 Q4 | 0.9 | 3.1 | 3.9 | 2.0 | 1.9 | 2.2 |
| 2007 Q1 | 0.2 | 1.9 | 4.1 | 2.3 | 2.0 | 2.4 |
| 2007 Q2 | 0.7 | 1.0 | 3.0 | 2.7 | 2.3 | 2.5 |
| 2007 Q3 | - | 0.1 | 1.0 | 3.8 | 3.0 | 3.1 |
| 2007 Q4 | 0.3 | -0.3 | 0.5 | 3.5 | 2.8 | 2.8 |
| 2008 Q1 | -0.3 | 0.1 | 0.3 | 3.1 | 2.4 | 2.6 |
| 2008 Q2 | -1.2 | -1.5 | -0.4 | 2.1 | 1.5 | 1.7 |
| 2008 Q3 | -2.3 | -2.7 | -1.7 | -0.5 | -0.8 | -0.7 |
| 2008 Q4 | -6.9 | -7.3 | -8.6 | -2.4 | -3.4 | -3.3 |
| 2009 Q1 | -10.9 | -12.6 | -16.1 | -3.7 | -5.7 | -5.7 |
| 2009 Q2 | -10.0 | -10.9 | -16.2 | -4.0 | -5.8 | -5.8 |
| 2009 Q3 | -9.5 | -9.7 | -12.2 | -2.7 | -4.4 | -4.2 |
| 2009 Q4 | -4.4 | -3.9 | -7.8 | -1.0 | -2.0 | -1.8 |
| 2010 Q1 | 1.9 | 3.0 | 3.7 | 0.3 | 0.7 | 1.0 |
| 2010 Q2 | 2.6 | 4.5 | 10.1 | 1.4 | 2.1 | 2.4 |
| 2010 Q3 | 3.9 | 6.0 | 11.0 | 2.1 | 2.9 | 3.0 |
| 2010 Q4 | 3.9 | 5.3 | 9.3 | 1.8 | 2.6 | 2.8 |
| 2011 Q1 | 1.5 | 4.3 | 6.8 | 2.0 | 2.3 | 2.7 |
| 2011 Q2 | -0.7 | 2.6 | 2.2 | 1.8 | 1.5 | 2.1 |
| 2011 Q3 | -1.3 | 0.9 | -0.7 | 2.1 | 1.5 | 2.0 |
| 2011 Q4 | -2.8 | -0.4 | 0.7 | 2.4 | 1.5 | 2.0 |
| 2012 Q1 | -2.8 | -0.5 | -4.7 | 2.5 | 1.2 | 1.5 |
| 2012 Q2 | -2.5 | -1.8 | -8.5 | 2.1 | 0.7 | 0.9 |
| 2012 Q3 | -2.0 | -0.9 | -9.2 | 2.0 | 0.7 | 0.9 |
| 2012 Q4 | -3.5 | -2.0 | -7.7 | 1.6 | 0.2 | 0.6 |
| 2013 Q1 | -2.3 | -2.2 | -5.0 | 1.5 | 0.6 | 0.9 |
| 2013 Q2 | -0.6 | -0.3 | 0.9 | 1.9 | 1.5 | 1.7 |
| 2013 Q3 | -0.1 | -0.1 | 5.5 | 1.5 | 1.6 | 1.7 |
| 2013 Q4 | 2.5 | 2.3 | 4.9 | 2.4 | 2.7 | 2.7 |
| 2014 Q1 | 3.0 | 4.0 | 7.6 | 2.6 | 2.9 | 2.9 |
| 2014 Q2 | 2.4 | 3.6 | 5.7 | 3.2 | 3.1 | 3.1 |
TP: Total Production; MFG: Manufacturing; CONS: Construction; SERV: Services; GVA BP: Gross Value at Basic Prices Added; GVA EX: GVA Excluding Oil and Gas
Source: UK Office for National Statistics
http://www.ons.gov.uk/ons/rel/naa2/quarterly-national-accounts/q2-2014/index.html
Percentage changes of gross value added and components in a quarter relative to prior quarter are in Table VH-4B. Gross value added increased 0.9 percent in IIQ2014 relative to IQ2014. Services increased 1.1 percent in IIQ2014. Producction increased 0.2 percent with manufacturing increasing 0.5 percent.
Table VH-4B, UK, Gross Value Added by Components, ∆% on Previous Quarter
| TP | MFG | CONS | SERV | GVA BP | GVA EX | |
| 2011 Weights | 64 | 784 | 1000 | 981 | ||
| 1997 Q2 | -0.6 | -0.5 | 1.7 | 1.3 | 0.9 | 1.3 |
| 1997 Q3 | 0.6 | 0.3 | -1.3 | 1.0 | 0.8 | 0.6 |
| 1997 Q4 | 0.5 | 0.7 | 2.4 | 1.5 | 1.3 | 1.4 |
| 1998 Q1 | 0.9 | 0.5 | 1.9 | 0.6 | 0.8 | 0.8 |
| 1998 Q2 | - | -0.3 | -2.8 | 1.4 | 0.8 | 0.8 |
| 1998 Q3 | -0.5 | -0.6 | -0.2 | 1.2 | 0.7 | 0.8 |
| 1998 Q4 | -0.2 | -0.7 | 1.2 | 1.5 | 1.1 | 1.0 |
| 1999 Q1 | 0.2 | 0.1 | 0.4 | 0.5 | 0.5 | 0.4 |
| 1999 Q2 | 0.2 | 0.2 | - | 0.4 | 0.3 | 0.4 |
| 1999 Q3 | 2.1 | 2.2 | 1.7 | 1.4 | 1.6 | 1.5 |
| 1999 Q4 | 0.5 | 0.4 | 0.1 | 1.6 | 1.2 | 1.3 |
| 2000 Q1 | 0.1 | 0.3 | 1.6 | 1.2 | 1.0 | 1.0 |
| 2000 Q2 | 0.4 | 0.4 | -1.2 | 1.1 | 0.8 | 1.1 |
| 2000 Q3 | -0.2 | -0.1 | -2.2 | 1.0 | 0.5 | 0.7 |
| 2000 Q4 | 0.4 | 1.0 | 2.0 | 0.3 | 0.4 | 0.6 |
| 2001 Q1 | -0.5 | -0.6 | -0.3 | 1.6 | 1.0 | 1.1 |
| 2001 Q2 | -1.3 | -1.7 | 2.3 | 1.0 | 0.6 | 0.5 |
| 2001 Q3 | -0.1 | -0.1 | -0.1 | 0.5 | 0.3 | 0.4 |
| 2001 Q4 | -1.4 | -1.7 | 1.8 | 0.4 | 0.1 | 0.1 |
| 2002 Q1 | 0.1 | - | 1.1 | 0.5 | 0.6 | 0.6 |
| 2002 Q2 | -0.5 | -1.2 | 0.7 | 0.9 | 0.6 | 0.4 |
| 2002 Q3 | - | 1.0 | 3.4 | 1.0 | 0.9 | 1.4 |
| 2002 Q4 | -0.4 | -1.5 | 1.6 | 1.3 | 1.0 | 0.7 |
| 2003 Q1 | -0.6 | -0.4 | -2.2 | 1.6 | 0.9 | 1.1 |
| 2003 Q2 | -0.3 | 0.3 | 2.5 | 1.9 | 1.5 | 2.0 |
| 2003 Q3 | 0.8 | 0.7 | 2.7 | 1.4 | 1.3 | 1.4 |
| 2003 Q4 | 0.6 | 0.9 | 2.7 | 1.0 | 1.0 | 1.2 |
| 2004 Q1 | 0.3 | 0.9 | 3.2 | - | 0.2 | 0.3 |
| 2004 Q2 | 0.5 | 0.5 | -1.7 | 0.1 | 0.1 | 0.1 |
| 2004 Q3 | -1.7 | -1.4 | -0.7 | 0.4 | - | 0.2 |
| 2004 Q4 | 0.7 | 1.2 | -0.9 | 0.5 | 0.4 | 0.5 |
| 2005 Q1 | -0.7 | -0.9 | 0.7 | 1.2 | 0.9 | 1.1 |
| 2005 Q2 | 1.0 | 1.0 | -0.8 | 1.4 | 1.2 | 1.2 |
| 2005 Q3 | -1.3 | -0.5 | -1.9 | 1.7 | 1.0 | 1.4 |
| 2005 Q4 | 0.4 | 0.1 | -0.3 | 1.8 | 1.4 | 1.5 |
| 2006 Q1 | 1.0 | 0.9 | 1.0 | 0.5 | 0.6 | 0.5 |
| 2006 Q2 | -0.4 | 1.0 | 0.6 | 0.5 | 0.3 | 0.6 |
| 2006 Q3 | 0.2 | 0.6 | 0.4 | 0.2 | 0.2 | 0.3 |
| 2006 Q4 | 0.1 | 0.5 | 1.8 | 0.8 | 0.7 | 0.8 |
| 2007 Q1 | 0.3 | -0.2 | 1.2 | 0.8 | 0.7 | 0.7 |
| 2007 Q2 | 0.1 | 0.2 | -0.4 | 0.9 | 0.7 | 0.7 |
| 2007 Q3 | -0.5 | -0.3 | -1.5 | 1.3 | 0.8 | 0.9 |
| 2007 Q4 | 0.5 | 0.1 | 1.2 | 0.5 | 0.5 | 0.5 |
| 2008 Q1 | -0.4 | 0.1 | 1.0 | 0.4 | 0.4 | 0.5 |
| 2008 Q2 | -0.8 | -1.4 | -1.1 | - | -0.2 | -0.2 |
| 2008 Q3 | -1.6 | -1.5 | -2.9 | -1.3 | -1.4 | -1.4 |
| 2008 Q4 | -4.3 | -4.5 | -5.9 | -1.4 | -2.2 | -2.2 |
| 2009 Q1 | -4.7 | -5.6 | -7.2 | -1.0 | -2.0 | -2.0 |
| 2009 Q2 | 0.3 | 0.4 | -1.2 | -0.3 | -0.3 | -0.3 |
| 2009 Q3 | -1.1 | -0.2 | 1.8 | 0.1 | - | 0.3 |
| 2009 Q4 | 1.1 | 1.6 | -1.2 | 0.2 | 0.3 | 0.3 |
| 2010 Q1 | 1.6 | 1.1 | 4.3 | 0.3 | 0.8 | 0.7 |
| 2010 Q2 | 1.0 | 1.9 | 5.0 | 0.7 | 1.0 | 1.1 |
| 2010 Q3 | 0.2 | 1.3 | 2.6 | 0.8 | 0.8 | 0.9 |
| 2010 Q4 | 1.0 | 0.9 | -2.7 | - | - | 0.1 |
| 2011 Q1 | -0.8 | 0.2 | 2.0 | 0.5 | 0.5 | 0.6 |
| 2011 Q2 | -1.2 | 0.2 | 0.4 | 0.5 | 0.3 | 0.5 |
| 2011 Q3 | -0.4 | -0.4 | -0.3 | 1.1 | 0.8 | 0.8 |
| 2011 Q4 | -0.5 | -0.4 | -1.4 | 0.2 | - | - |
| 2012 Q1 | -0.8 | 0.1 | -3.5 | 0.6 | 0.2 | 0.2 |
| 2012 Q2 | -0.9 | -1.2 | -3.5 | 0.1 | -0.2 | -0.2 |
| 2012 Q3 | 0.1 | 0.5 | -1.1 | 1.0 | 0.8 | 0.8 |
| 2012 Q4 | -2.0 | -1.4 | 0.3 | -0.2 | -0.4 | -0.3 |
| 2013 Q1 | 0.4 | -0.1 | -0.7 | 0.6 | 0.5 | 0.5 |
| 2013 Q2 | 0.8 | 0.8 | 2.5 | 0.5 | 0.7 | 0.7 |
| 2013 Q3 | 0.7 | 0.6 | 3.4 | 0.7 | 0.9 | 0.8 |
| 2013 Q4 | 0.6 | 1.0 | -0.3 | 0.7 | 0.6 | 0.7 |
| 2014 Q1 | 0.9 | 1.5 | 1.8 | 0.8 | 0.7 | 0.7 |
| 2014 Q2 | 0.2 | 0.5 | 0.7 | 1.1 | 0.9 | 0.9 |
TP: Total Production; MFG: Manufacturing; CONS: Construction; SERV: Services; GVA BP: Gross Value at Basic Prices Added; GVA EX: GVA Excluding Oil and Gas
Source: UK Office for National Statistics
http://www.ons.gov.uk/ons/rel/naa2/quarterly-national-accounts/q2-2014/index.html
Growth rates of gross value added (GVA) and output components of gross value added in a quarter from the preceding quarter are in Table VH-4. Growth of GVA in IIQ2014 originated in growth of services of 1.1 percent and total production of 0.2 percent while manufacturing grew 0.5 percent and construction increased 0.7 percent.
VH-4, UK, Quarter on Quarter Growth of Value Added by Output Components, ∆% on Prior Quarter
| Component | 2013 Q1 | 2013 Q2 | 2013 Q3 | 2013 Q4 | 2014 Q1 | 2014 Q2 |
| GVA | 0.5 | 0.7 | 0.9 | 0.6 | 0.7 | 0.9 |
| Agriculture | -4.4 | 0.5 | 0.7 | 0.6 | 0.3 | -0.3 |
| Total Production | 0.4 | 0.8 | 0.7 | 0.6 | 0.9 | 0.2 |
| Manufacturing | -0.1 | 0.8 | 0.6 | 1.0 | 1.5 | 0.5 |
| Extraction | 2.3 | 2.4 | 2.0 | -1.4 | 1.1 | -0.3 |
| Electricity, gas and air | 3.4 | -3.5 | -5.3 | 1.4 | -4.1 | 1.5 |
| Water and Sewerage | -1.1 | 2.8 | 4.0 | 0.5 | -0.6 | -2.5 |
| Construction | -0.7 | 2.5 | 3.4 | -0.3 | 1.8 | 0.7 |
| Total Services | 0.6 | 0.5 | 0.7 | 0.7 | 0.8 | 1.1 |
| Distn, hotels and catering | 1.2 | 1.5 | 1.1 | 0.6 | 1.6 | 1.0 |
| Transport, storage and comms | 1.6 | -0.2 | -0.1 | 0.4 | 0.6 | 1.5 |
| Business services and Finance | 0.3 | 0.7 | 0.9 | 0.9 | 0.9 | 1.5 |
| Government and other | 0.2 | -0.1 | 0.4 | 0.5 | 0.3 | 0.3 |
Source: UK Office for National Statistics
http://www.ons.gov.uk/ons/rel/naa2/quarterly-national-accounts/q2-2014/index.html
Services contributed 0.4 percentage points to growth of GVA in IIQ2013, 0.5 percentage points in IIQ2013, 0.5 percentage points in IVQ2013, 0.6 percentage points in IQ2014 and 0.8 percentage points in IIQ2014, as shown in Table VH-5. Business services and finance contributed 0.3 percentage points in IIIQ2013, 0.3 percentage points in IVQ2013, 0.3 percentage points in IQ2014 and 0.5 percentage points in IIQ2014. Manufacturing did not contribute to growth in IQ2013 and manufacturing and production contributed 0.1 percentage points in IIQ2013, 0.1 percentage points in IIIQ2013 and 0.1 percentage points in IVQ2013. Manufacturing contributed 0.2 percentage points in IQ2014 and total production 0.1 percentage points. Manufacturing and total production did not contribute in IIQ2014.
Table VH-5, UK, Contribution to Quarter on Prior Quarter of Growth of Value Added by Output Components, %
| Component | 2013 Q1 | 2013 Q2 | 2013 Q3 | 2013 Q4 | 2014 Q1 | 2014 Q2 |
| Agriculture | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Total Production | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | 0.0 |
| Manufacturing | 0.0 | 0.1 | 0.1 | 0.1 | 0.2 | 0.0 |
| Extraction | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Electricity, gas and air | 0.0 | 0.0 | -0.1 | 0.0 | 0.0 | 0.0 |
| Water and Sewerage | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Construction | 0.0 | 0.1 | 0.2 | 0.0 | 0.1 | 0.0 |
| Total Services | 0.5 | 0.4 | 0.5 | 0.5 | 0.6 | 0.8 |
| Distn, hotels and catering | 0.2 | 0.2 | 0.2 | 0.1 | 0.2 | 0.1 |
| Transport, storage and comms | 0.2 | 0.0 | 0.0 | 0.0 | 0.1 | 0.2 |
| Business services and Finance | 0.1 | 0.2 | 0.3 | 0.3 | 0.3 | 0.5 |
| Government and other | 0.0 | 0.0 | 0.1 | 0.1 | 0.1 | 0.1 |
Components may not add because of rounding
Source: UK Office for National Statistics
http://www.ons.gov.uk/ons/rel/naa2/quarterly-national-accounts/q2-2014/index.html
Table VH-6 provides UK growth of value added by output components in a quarter relative to the same quarter a year earlier for 2013 and 2014. Total production and manufacturing fell in all four quarters of 2012 and in the first three quarters of 2013 relative to the same quarter a year earlier. Total production increased 2.5 percent in IVQ2013 relative to a year earlier and 2.4 percent in IQ2014 while manufacturing increased 1.7 percent in IVQ2013 relative to a year earlier, 3.0 percent in IQ2014 an 2.4 percent in IIQ2014. Total services supported the economy with growth in all quarters relative to a year earlier from IQ2012 to IIQ2014. Construction fell sharply in all four quarters of 2012 and in the first quarter of 2013 relative to a year earlier with growth of 0.9 percent in IIQ2013, 5.5 percent in IIIQ2013, 4.9 percent in IVQ2013, 7.6 percent in IQ2014 and 5.7 percent in IIQ2014.
Table VH-6, UK, Growth of Value Added by Output Components, ∆% on Same Quarter of Prior Year
| Component | 2013 Q1 | 2013 Q2 | 2013 Q3 | 2013 Q4 | 2014 Q1 | 2014 Q2 |
| GVA | 0.6 | 1.5 | 1.6 | 2.7 | 2.9 | 3.1 |
| Agriculture | -6.3 | -4.0 | -3.3 | -2.6 | 2.2 | 1.4 |
| Total Production | -2.3 | -0.6 | -0.1 | 2.5 | 3.0 | 2.4 |
| Manufacturing | -2.2 | -0.3 | -0.1 | 2.3 | 4.0 | 3.6 |
| Extraction | -9.2 | -3.6 | -1.7 | 5.3 | 4.1 | 1.4 |
| Electricity, gas and air | 9.5 | -1.0 | -3.1 | -4.3 | -11.2 | -6.6 |
| Water and Sewerage | -1.2 | 2.1 | 6.4 | 6.3 | 6.8 | 1.3 |
| Construction | -5.0 | 0.9 | 5.5 | 4.9 | 7.6 | 5.7 |
| Total Services | 1.5 | 1.9 | 1.5 | 2.4 | 2.6 | 3.2 |
| Distn, hotels and catering | 2.5 | 4.0 | 3.3 | 4.4 | 4.9 | 4.4 |
| Transport, storage and comms | 0.7 | 1.6 | 1.6 | 1.7 | 0.7 | 2.5 |
| Business services and Finance | 2.0 | 2.1 | 2.2 | 2.8 | 3.4 | 4.2 |
| Government and other | 0.7 | 0.4 | -0.5 | 1.0 | 1.1 | 1.5 |
Source: UK Office for National Statistics
http://www.ons.gov.uk/ons/rel/naa2/quarterly-national-accounts/q2-2014/index.html
Total production subtracted from growth of value added in all quarters of 2012 and the first two quarters of 2013 relative to a year earlier, contributing 0.0 in IIIQ2013, 0.4 percentage points in IVQ2013, 0.4 percentage points in IQ2014 and 0.3 percentage points in IIQ2014, as shown in Table VH-7. Total services added to growth of value added in all four quarters of 2012 and all four quarters of 2013 relative to a year earlier. Total services contributed 2.6 percentage points to growth of value added in IIQ2014. Construction also deducted in all four quarters of 2012 and the first quarter of 2013 relative to a year earlier with contribution of 0.1 percentage points in IIQ2013, adding 0.3 percentage points in IIIQ2013 and 0.3 percentage points IVQ2013. Construction added 0.4 percentage points in IQ2014 and 0.3 percentage points in IVQ2014.
Table VH-7, UK, Contribution to Growth on Same Quarter of Prior Year of Value Added by Output Components, %
| Component | 2013 Q1 | 2013 Q2 | 2013 Q3 | 2013 Q4 | 2014 Q1 | 2014 Q2 |
| Agriculture | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Total Production | -0.3 | -0.1 | 0.0 | 0.4 | 0.4 | 0.3 |
| Manufacturing | -0.2 | 0.0 | 0.0 | 0.2 | 0.4 | 0.4 |
| Extraction | -0.2 | -0.1 | 0.0 | 0.1 | 0.1 | 0.0 |
| Electricity, gas and air | 0.1 | 0.0 | 0.0 | -0.1 | -0.2 | -0.1 |
| Water and Sewerage | 0.0 | 0.0 | 0.1 | 0.1 | 0.1 | 0.0 |
| Construction | -0.3 | 0.1 | 0.3 | 0.3 | 0.4 | 0.3 |
| Total Services | 1.2 | 1.5 | 1.2 | 1.9 | 2.1 | 2.6 |
| Distn, hotels and catering | 0.3 | 0.6 | 0.5 | 0.6 | 0.7 | 0.6 |
| Transport, storage and comms | 0.1 | 0.2 | 0.2 | 0.2 | 0.1 | 0.3 |
| Business services and Finance | 0.6 | 0.7 | 0.7 | 0.9 | 1.1 | 1.3 |
| Government and other | 0.2 | 0.1 | -0.1 | 0.2 | 0.2 | 0.3 |
Components may not add because of rounding
Source: UK Office for National Statistics
http://www.ons.gov.uk/ons/rel/naa2/quarterly-national-accounts/q2-2014/index.html
Quarter-on-quarter growth of value added by expenditure components is in Table VH-8. Household final consumption expenditure grew 0.2 percent in IIQ2013 relative to IQ2013, 0.5 percent in IIIQ2013, 0.3 percent in IVQ2013 and 0.7 percent in IVQ2013. Household final consumption expenditures grew 0.6 percent in IIQ2014. General government consumption increased 1.3 percent in IIQ2013 and increased 0.6 percent in IIIQ2013, minus 0.1 percent in IVQ2013 and minus 0.3 percent in IQ2014. General government consumption increased 1.0 percent in IIQ2014. Gross capital formation increased 15.6 percent in IIIQ2013 and gross fixed capital formation (GFCF) increased 2.8 percent. Gross capital formation decreased 0.2 percent in IVQ2013 and GFCF increased 2.4 percent. Gross capital formation decreased 1.1 percent in IQ2014 and GFCF increased 2.4 percent. Gross fixed capital formation increased 2.2 percent in IIQ2014 and GFC 1.3 percent. Exports grew 5.9 percent in IIQ2013 but fell 4.6 percent in IIIQ2013 while imports increased 3.5 percent in IIQ2013 and increased 1.5 percent in IIIQ2013. In IVQ2013, exports increased 0.2 percent and imports decreased 1.4 percent. In IQ2014, exports decreased 0.4 percent and imports fell 2.0 percent. In IIQ2014, exports fell 0.4 percent and imports fell 0.3 percent.
VH-8, UK, Quarter on Quarter Growth of Value Added by Expenditure Components, ∆% on Prior Quarter
| IIQ2013 | IIIQ2013 | IVQ2013 | IQ2014 | IIQ2014 | |
| HFC | 0.2 | 0.5 | 0.3 | 0.7 | 0.6 |
| NPISH | 3.3 | 0.1 | -1.0 | 0.4 | 1.3 |
| GOVT | 1.3 | 0.6 | -0.1 | -0.3 | 1.0 |
| GCF | -2.6 | 15.6 | -0.2 | -1.1 | 2.2 |
| GFCF | 0.5 | 2.8 | 2.4 | 2.4 | 1.3 |
| BI | -0.7 | 3.7 | 2.7 | 0.9 | 3.3 |
| Exports | 5.9 | -4.6 | 0.2 | -0.4 | –0.4 |
| Less Imports | 3.5 | 1.5 | -1.4 | -2.0 | –0.3 |
HFC: Household Final Consumption; NPISH: NPISH Final Consumption; GOVT: General Government; GCF: Gross Capital Formation; GFCF: Gross Fixed Capital Formation; BINV: Business Investment; EXP: Exports; IMP: Less Imports
Source: UK Office for National Statistics
http://www.ons.gov.uk/ons/rel/naa2/quarterly-national-accounts/q2-2014/index.html
Table VH-9 provides contributions to value added by expenditure components in a quarter relative to the prior quarter. In IIQ2013, household final consumption expenditure contributed 0.1 percentage points to growth, 0.3 percentage points in IIIQ2013, 0.2 percentage points in IVQ2013 and 0.4 percentage points in IQ2014. Household final consumption contributed 0.3 percentage points in IIQ2014. Net trade added 0.7 percentage points in IIQ2013 but deducted 2.0 percentage points in IIIQ2013 and added 0.5 percentage points in IVQ2013. In IQ2014, net trade added 0.6 percentage points, contributing 0.0 percentage points in IIQ2014. Gross fixed capital formation (GFCF) added 0.1 percentage points in IQ2013 and 0.5 percentage points in IIIQ2012, adding 0.4 percentage points in IVQ2013, 0.4 percentage points in IQ2014 and 0.2 percentage points in IIQ2014.
Table VH-9, UK, Contribution to Quarter on Prior Quarter of Growth of Value Added by Expenditure Components, %
| IIQ2013 | IIIQ2013 | IVQ2013 | IQ2014 | IIQ2014 | |
| HFC | 0.1 | 0.3 | 0.2 | 0.4 | 0.3 |
| NPISH | 0.1 | 0.0 | 0.0 | 0.0 | 0.0 |
| GOVT | 0.3 | 0.1 | 0.0 | -0.1 | 0.2 |
| GCF | -0.4 | 2.5 | 0.0 | -0.2 | 0.4 |
| GFCF | 0.1 | 0.5 | 0.4 | 0.4 | 0.2 |
| BI | -0.1 | 0.4 | 0.3 | 0.1 | 0.3 |
| Exports | 1.8 | -1.5 | 0.1 | -0.1 | –0.1 |
| Less Imports | 1.1 | 0.5 | -0.5 | -0.7 | –0.1 |
| Net Trade | 0.7 | -2.0 | 0.5 | 0.6 | 0.0 |
Components may not add because of rounding
HFC: Household Final Consumption; NPISH: NPISH Final Consumption; GOVT: General Government; GCF: Gross Capital Formation; GFCF: Gross Fixed Capital Formation; BINV: Business Investment; EXP: Exports; IMP: Less Imports
Source: UK Office for National Statistics
http://www.ons.gov.uk/ons/rel/naa2/quarterly-national-accounts/q2-2014/index.html
Table VH-10 provides UK growth of value added by expenditure components in a quarter relative to the same quarter a year earlier. Household final consumption expenditure grew 1.5 percent in IIQ2013 relative to a year earlier, 1.8 percent in IIIQ2013, 1.5 percent in IVQ2013 and 1.7 percent in IQ2014. In IIQ2014, household final consumption grew 2.1 percent relative to a year earlier. General government final consumption expenditure increased 1.8 percent in IIQ2013, 1.7 percent in IIIQ2013 and 1.5 percent in IVQ2013. General government consumption expenditure increased 1.5 percent in IQ2014 relative to a year earlier and 1.2 percent in IIQ2014 relative to a year earlier. Gross fixed capital formation (GFCF) increased 1.5 percent in IIQ2013 and increased 5.3 percent in IIIQ2013, increasing 6.6 percent in IVQ2013 and 8.3 percent in IQ2014. GFCF increased 9.1 percent in IIQ2014 relative to a year earlier. Exports increased 5.2 percent in IIQ2013 with imports increasing 1.5 percent but exports decreased 1.7 percent in IIIQ2013 and imports grew 1.5 percent. In IVQ2013, exports increased 0.2 percent and imports increased 0.8 percent. Exports increased 0.8 percent in IQ2014 relative to a year earlier and imports 1.5 percent. Exports decrease 5.2 percent in IIQ2014 relative to a year earlier while imports fell 2.2 percent.
Table VH-10, UK, Growth of Value Added by Expenditure Components, ∆% on Same Quarter of Prior Year
| IIQ2013 | IIIQ2013 | IVQ2013 | IQ2014 | IIQ2014 | |
| HFC | 1.5 | 1.8 | 1.5 | 1.7 | 2.1 |
| NPISH | 1.0 | 2.2 | 5.0 | 2.7 | 0.7 |
| GOVT | 1.8 | 1.7 | 1.5 | 1.5 | 1.2 |
| GCF | -3.2 | 8.5 | 10.9 | 11.2 | 16.6 |
| GFCF | 1.5 | 5.3 | 6.6 | 8.3 | 9.1 |
| BI | 4.0 | 4.7 | 6.5 | 6.7 | 11.0 |
| Exports | 5.2 | -1.7 | 0.2 | 0.8 | -5.2 |
| Less Imports | 1.5 | 1.5 | 0.8 | 1.5 | –2.2 |
HFC: Household Final Consumption; NPISH: NPISH Final Consumption; GOVT: General Government; GCF: Gross Capital Formation; GFCF: Gross Fixed Capital Formation; BINV: Business Investment; EXP: Exports; IMP: Less Imports
Source: UK Office for National Statistics
http://www.ons.gov.uk/ons/rel/naa2/quarterly-national-accounts/q2-2014/index.html
Table VH-11 provides contribution of value added by expenditure components in a quarter relative to the same quarter a year earlier. In IIQ2013, household final consumption added 0.9 percentage points, 1.1 percentage points in IIIQ2013, 0.9 percentage points in IVQ2013 and 1.0 percentage points in IQ2014. Household final consumption added 1.3 percentage points in IIQ2014. General government final consumption expenditure added 0.4 percentage points in IIQ2013, 0.4 percentage points in IIIQ2013, 0.3 percentage points in IVQ2013 and 0.3 percentage points in IQ2014. General government final consumption deducted 0.2 percentage points in IIQ2014. Net trade added 1.1 percentage points in IIQ2013 and deducted 1.0 percentage points in IIIQ2013. In IVQ2013, net trade deducted 0.2 percentage points and deducted 0.2 percentage points in IQ2014. Net trade deducted 0.9 percentage points in growth of IIQ2014 relative to a year earlier.
VH-11, UK, Contribution to Growth on Same Quarter of Prior Year of Value Added by Expenditure Components, %
| IIQ2013 | IIIQ2013 | IVQ2013 | IQ2014 | IIQ2014 | |
| HFC | 0.9 | 1.1 | 0.9 | 1.0 | 1.3 |
| NPISH | 0.0 | 0.1 | 0.1 | 0.1 | 0.0 |
| GOVT | 0.4 | 0.4 | 0.3 | 0.3 | –0.2 |
| GCF | -0.5 | 1.4 | 1.8 | 1.8 | 2.6 |
| GFCF | 0.2 | 0.8 | 1.1 | 1.3 | 1.5 |
| BI | 0.4 | 0.5 | 0.6 | 0.7 | 1.1 |
| Exports | 1.6 | -0.5 | 0.0 | 0.3 | -1.7 |
| Less Imports | 0.5 | 0.5 | 0.3 | 0.5 | –0.7 |
| Net Trade | 1.1 | -1.0 | -0.2 | -0.2 | -0.9 |
Components may not add because of rounding
HFC: Household Final Consumption; NPISH: NPISH Final Consumption; GOVT: General Government; GCF: Gross Capital Formation; GFCF: Gross Fixed Capital Formation; BINV: Business Investment; EXP: Exports; IMP: Less Imports
Source: UK Office for National Statistics
http://www.ons.gov.uk/ons/rel/naa2/quarterly-national-accounts/q2-2014/index.html
Table VH-12 provides growth of value added by expenditure components in a year relative to the prior year. Household final consumption expenditure grew 1.6 percent in 2013. General government final consumption expenditure grew 0.7 percent in 2013. Gross capital formation increased 4.6 percent in 2013. GFCF increased 3.2 percent in 2013. Exports grew 0.5 percent in 2013.
Table VH-12, UK, Growth of Value Added by Expenditure Components, ∆% on Prior Year
| 2013 | |
| HFC | 1.6 |
| NPISH | 1.4 |
| GOVT | 0.7 |
| GCF | 4.6 |
| GFCF | 3.2 |
| BI | 4.8 |
| Exports | 0.5 |
| Less Imports | 0.5 |
HFC: Household Final Consumption; NPISH: NPISH Final Consumption; GOVT: General Government; GCF: Gross Capital Formation; GFCF: Gross Fixed Capital Formation; BINV: Business Investment; EXP: Exports; IMP: Less Imports
Source: UK Office for National Statistics
http://www.ons.gov.uk/ons/rel/naa2/quarterly-national-accounts/q2-2014/index.html
Contributions of value added by expenditure components in a year relative to the prior year are in Table VH-13. Household final consumption added 1.0 percentage points in 2013. Gross capital formation contributed 0.8 percentage points in 2013 and GFCF added 0.5 percentage points in 2013. Net trade contributed 0.0 percentage points in 2013.
VH-13, UK, Contribution to Growth on Prior Year of Value Added by Expenditure Components, %
| 2013 | |
| HFC | 1.0 |
| NPISH | 0.0 |
| GOVT | 0.2 |
| GCF | 0.8 |
| GFCF | 0.5 |
| BINV | 0.5 |
| Exports | 0.2 |
| Less Imports | 0.2 |
| Net Trade | 0.0 |
HFC: Household Final Consumption; NPISH: NPISH Final Consumption; GOVT: General Government; GCF: Gross Capital Formation; GFCF: Gross Fixed Capital Formation; BINV: Business Investment; EXP: Exports; IMP: Less Imports
Source: UK Office for National Statistics
http://www.ons.gov.uk/ons/rel/naa2/quarterly-national-accounts/q2-2014/index.html
© Carlos M. Pelaez, 2009, 2010, 2011, 2012, 2013, 2014.
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