IMF View of the Economy and Finance, United States Commercial Banks Assets and Liabilities, United States Housing, Collapse of United States Dynamism of Income Growth and Employment Creation, World Cyclical Slow Growth and Global Recession Risk: Part V

 

IMF View of the Economy and Finance, United States Commercial Banks Assets and Liabilities, United States Housing, Collapse of United States Dynamism of Income Growth and Employment Creation, World Cyclical Slow Growth and Global Recession Risk

Carlos M. Pelaez

© Carlos M. Pelaez, 2009, 2010, 2011, 2012, 2013, 2014, 2015

I IMF View

IIA United States Commercial Banks Assets and Liabilities

IIB United States Housing Collapse

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

III World Financial Turbulence

IIIA Financial Risks

IIIE Appendix Euro Zone Survival Risk

IIIF Appendix on Sovereign Bond Valuation

IV Global Inflation

V World Economic Slowdown

VA United States

VB Japan

VC China

VD Euro Area

VE Germany

VF France

VG Italy

VH United Kingdom

VI Valuation of Risk Financial Assets

VII Economic Indicators

VIII Interest Rates

IX Conclusion

References

Appendixes

Appendix I The Great Inflation

IIIB Appendix on Safe Haven Currencies

IIIC Appendix on Fiscal Compact

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

IIIG Appendix on Deficit Financing of Growth and the Debt Crisis

IIIGA Monetary Policy with Deficit Financing of Economic Growth

IIIGB Adjustment during the Debt Crisis of the 1980s

V World Economic Slowdown. Table V-1 is constructed with the database of the IMF (http://www.imf.org/external/ns/cs.aspx?id=29) to show GDP in dollars in 2013 and the growth rate of real GDP of the world and selected regional countries from 2013 to 2017. The data illustrate the concept often repeated of “two-speed recovery” of the world economy from the recession of 2007 to 2009. The IMF has changed its forecast of the world economy to 3.4 percent in 2014 but accelerating to 3.5 percent in 2015, 3.8 percent in 2016 and 3.8 percent in 2016. Slow-speed recovery occurs in the “major advanced economies” of the G7 that account for $34,883 billion of world output of $75,471 billion, or 46.2 percent, but are projected to grow at much lower rates than world output, 2.1 percent on average from 2014 to 2017 in contrast with 3.6 percent for the world as a whole. While the world would grow 15.3 percent in the four years from 2014 to 2017, the G7 as a whole would grow 8.6 percent. The difference in dollars of 2013 is high: growing by 15.2 percent would add around $11.5 trillion of output to the world economy, or roughly, two times the output of the economy of Japan of $4,920 billion but growing by 8.6 percent would add $6.5 trillion of output to the world, or about the output of Japan in 2013. The “two speed” concept is in reference to the growth of the 150 countries labeled as emerging and developing economies (EMDE) with joint output in 2013 of $29,358 billion, or 38.9 percent of world output. The EMDEs would grow cumulatively 19.9 percent or at the average yearly rate of 4.7 percent, contributing $5.8 trillion from 2014 to 2017 or the equivalent of somewhat less than the GDP of $9,469 billion of China in 2013. The final four countries in Table V-1 often referred as BRIC (Brazil, Russia, India, China), are large, rapidly growing emerging economies. Their combined output in 2013 adds to $15,814 billion, or 21.0 percent of world output, which is equivalent to 45.3 percent of the combined output of the major advanced economies of the G7.

Table V-1, IMF World Economic Outlook Database Projections of Real GDP Growth

	GDP USD 2013	Real GDP ∆% 2014	Real GDP ∆% 2015	Real GDP ∆% 2016	Real GDP ∆% 2017
World	75,471	3.4	3.5	3.8	3.8
G7	34,883	1.7	2.3	2.3	2.0
Canada	1,839	2.5	2.2	2.0	2.0
France	2,807	0.4	1.2	1.5	1.7
DE	3,731	1.6	1.6	1.7	1.5
Italy	2,138	-0.4	0.5	1.1	1.1
Japan	4,920	-0.1	1.0	1.2	0.4
UK	2,680	2.6	2.7	2.3	2.2
US	16,768	2.4	3.1	3.1	2.7
Euro Area	13,143	0.9	1.5	1.7	1.6
DE	3,731	1.6	1.6	1.7	1.5
France	2,807	0.4	1.2	1.5	1.7
Italy	2,138	-0.4	0.5	1.1	1.1
POT	225	0.9	1.6	1.5	1.4
Ireland	232	4.8	3.9	3.3	2.8
Greece	242	0.7	2.5	3.7	3.2
Spain	1,393	1.4	2.5	2.0	1.8
EMDE	29,358	4.6	4.3	4.7	5.0
Brazil	2,391	0.1	-1.0	1.0	2.3
Russia	2,079	0.6	-3.8	-1.1	1.0
India	1,875	7.2	7.5	7.5	7.6
China	9,469	7.4	6.8	6.3	6.0

Notes; DE: Germany; EMDE: Emerging and Developing Economies (150 countries); POT: Portugal

Source: IMF World Economic Outlook databank

http://www.imf.org/external/pubs/ft/weo/2015/01/weodata/index.aspx

Continuing high rates of unemployment in advanced economies constitute another characteristic of the database of the WEO (http://www.imf.org/external/pubs/ft/weo/2015/01/weodata/index.aspx ). Table V-2 is constructed with the WEO database to provide rates of unemployment from 2013 to 2017 for major countries and regions. In fact, unemployment rates for 2014 in Table I-2 are high for all countries: unusually high for countries with high rates most of the time and unusually high for countries with low rates most of the time. The rates of unemployment are particularly high in 2014 for the countries with sovereign debt difficulties in Europe: 13.9 percent for Portugal (POT), 11.3 percent for Ireland, 26.5 percent for Greece, 24.5 percent for Spain and 12.8 percent for Italy, which is lower but still high. The G7 rate of unemployment is 7.1 percent. Unemployment rates are not likely to decrease substantially if slow growth persists in advanced economies.

Table I-2, IMF World Economic Outlook Database Projections of Unemployment Rate as Percent of Labor Force

	% Labor Force 2013	% Labor Force 2014	% Labor Force 2015	% Labor Force 2016	% Labor Force 2017
World	NA	NA	NA	NA	NA
G7	7.1	6.4	6.0	5.8	5.8
Canada	7.1	6.9	7.0	6.9	6.8
France	10.3	10.2	10.1	9.9	9.7
DE	5.2	5.0	4.9	4.8	4.8
Italy	12.2	12.8	12.6	12.3	12.0
Japan	4.0	3.6	3.7	3.7	3.8
UK	7.6	6.2	5.4	5.4	5.4
US	7.4	6.2	5.5	5.2	5.0
Euro Area	12.0	11.6	11.1	10.6	10.3
DE	5.2	5.0	4.9	4.8	4.8
France	10.3	10.2	10.1	9.9	9.7
Italy	12.2	12.8	12.6	12.3	12.0
POT	16.2	13.9	13.1	12.6	12.1
Ireland	13.0	11.3	9.8	8.8	8.3
Greece	27.5	26.5	24.8	22.1	20.0
Spain	26.1	24.5	22.6	21.1	19.9
EMDE	NA	NA	NA	NA	NA
Brazil	5.4	4.8	5.9	6.3	5.9
Russia	5.5	5.1	6.5	6.5	6.0
India	NA	NA	NA	NA	NA
China	4.1	4.1	4.1	4.1	4.1

Notes; DE: Germany; EMDE: Emerging and Developing Economies (150 countries)

Source: IMF World Economic Outlook

http://www.imf.org/external/pubs/ft/weo/2015/01/weodata/index.aspx

Table V-3 provides the latest available estimates of GDP for the regions and countries followed in this blog from IQ2012 to IIIQ2014 available now for all countries. There are preliminary estimates for most countries for IVQ2014. Growth is weak throughout most of the world.

• Japan. The GDP of Japan increased 1.1 percent in IQ2012, 4.3 percent at SAAR (seasonally adjusted annual rate) and 3.5 percent relative to a year earlier but part of the jump could be the low level a year earlier because of the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Japan is experiencing difficulties with the overvalued yen because of worldwide capital flight originating in zero interest rates with risk aversion in an environment of softer growth of world trade. Japan’s GDP fell 0.4 percent in IIQ2012 at the seasonally adjusted annual rate (SAAR) of minus 1.4 percent, which is much lower than 4.3 percent in IQ2012. Growth of 3.5 percent in IIQ2012 in Japan relative to IIQ2011 has effects of the low level of output because of Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Japan’s GDP contracted 0.5 percent in IIIQ2012 at the SAAR of minus 2.2 percent and increased 0.2 percent relative to a year earlier. Japan’s GDP decreased 0.2 percent in IVQ2012 at the SAAR of minus 0.6 percent and changed 0.0 percent relative to a year earlier. Japan grew 1.4 percent in IQ2013 at the SAAR of 5.6 percent and increased 0.5 percent relative to a year earlier. Japan’s GDP increased 0.8 percent in IIQ2013 at the SAAR of 3.3 percent and increased 1.4 percent relative to a year earlier. Japan’s GDP grew 0.4 percent in IIIQ2013 at the SAAR of 1.4 percent and increased 2.2 percent relative to a year earlier. In IVQ2013, Japan’s GDP decreased 0.3 percent at the SAAR of minus 1.2 percent, increasing 2.3 percent relative to a year earlier. Japan’s GDP increased 1.3 percent in IQ2014 at the SAAR of 5.1 percent and increased 2.4 percent relative to a year earlier. In IIQ2014, Japan’s GDP fell 1.6 percent at the SAAR of minus 6.4 percent and fell 0.3 percent relative to a year earlier. Japan’s GDP contracted 0.7 percent in IIIQ2014 at the SAAR of minus 2.6 percent and fell 1.4 percent relative to a year earlier. In IVQ2014, Japan’s GDP grew 0.4 percent, at the SAAR of 1.5 percent, decreasing 0.8 percent relative to a year earlier.
• China. China’s GDP grew 1.4 percent in IQ2012, annualizing to 5.7 percent, and 8.1 percent relative to a year earlier. The GDP of China grew at 2.1 percent in IIQ2012, which annualizes to 8.7 percent and 7.6 percent relative to a year earlier. China grew at 2.0 percent in IIIQ2012, which annualizes at 8.2 percent and 7.4 percent relative to a year earlier. In IVQ2012, China grew at 1.9 percent, which annualizes at 7.8 percent, and 7.9 percent in IVQ2012 relative to IVQ2011. In IQ2013, China grew at 1.7 percent, which annualizes at 7.0 percent and 7.8 percent relative to a year earlier. In IIQ2013, China grew at 1.8 percent, which annualizes at 7.4 percent and 7.5 percent relative to a year earlier. China grew at 2.3 percent in IIIQ2013, which annualizes at 9.5 percent and 7.9 percent relative to a year earlier. China grew at 1.8 percent in IVQ2013, which annualized to 7.4 percent and 7.6 percent relative to a year earlier. China’s GDP grew 1.6 percent in IQ2014, which annualizes to 6.6 percent, and 7.4 percent relative to a year earlier. China’s GDP grew 2.0 percent in IIQ2014, which annualizes at 8.2 percent, and 7.5 percent relative to a year earlier. China’s GDP grew 1.9 percent in IIIQ2014, which is equivalent to 7.8 percent in a year, and 7.3 percent relative to a year earlier. The GDP of China grew 1.5 percent in IVQ2014, which annualizes at 6.1 percent, and 7.3 percent relative to a year earlier. The GDP of China grew at 1.3 percent in IQ2015, which annualizes at 5.3 percent, and 7.0 percent relative to a year earlier. There is decennial change in leadership in China (http://www.xinhuanet.com/english/special/18cpcnc/index.htm). Growth rates of GDP of China in a quarter relative to the same quarter a year earlier have been declining from 2011 to 2015.
• Euro Area. GDP fell 0.1 percent in the euro area in IQ2012 and decreased 0.4 in IQ2012 relative to a year earlier. Euro area GDP contracted 0.3 percent IIQ2012 and fell 0.8 percent relative to a year earlier. In IIIQ2012, euro area GDP fell 0.1 percent and declined 0.8 percent relative to a year earlier. In IVQ2012, euro area GDP fell 0.4 percent relative to the prior quarter and fell 0.9 percent relative to a year earlier. In IQ2013, the GDP of the euro area fell 0.4 percent and decreased 1.2 percent relative to a year earlier. The GDP of the euro area increased 0.3 percent in IIQ2013 and fell 0.6 percent relative to a year earlier. In IIIQ2013, euro area GDP increased 0.2 percent and fell 0.3 percent relative to a year earlier. The GDP of the euro area increased 0.3 percent in IVQ2013 and increased 0.4 percent relative to a year earlier. In IQ2014, the GDP of the euro area increased 0.3 percent and 1.1 percent relative to a year earlier. The GDP of the euro area increased 0.1 percent in IIQ2014 and increased 0.8 percent relative to a year earlier. The euro area’s GDP increased 0.2 percent in IIIQ2014 and increased 0.8 percent relative to a year earlier. The GDP of the euro area increased 0.3 percent in IVQ2014 and increased 0.9 percent relative to a year earlier.
• Germany. The GDP of Germany increased 0.3 percent in IQ2012 and 1.5 percent relative to a year earlier. In IIQ2012, Germany’s GDP increased 0.1 percent and increased 0.3 percent relative to a year earlier but 0.8 percent relative to a year earlier when adjusted for calendar (CA) effects. In IIIQ2012, Germany’s GDP increased 0.1 percent and 0.1 percent relative to a year earlier. Germany’s GDP contracted 0.4 percent in IVQ2012 and decreased 0.3 percent relative to a year earlier. In IQ2013, Germany’s GDP decreased 0.4 percent and fell 1.8 percent relative to a year earlier. In IIQ2013, Germany’s GDP increased 0.8 percent and 0.5 percent relative to a year earlier. The GDP of Germany increased 0.3 percent in IIIQ2013 and 0.8 percent relative to a year earlier. In IVQ2013, Germany’s GDP increased 0.4 percent and 1.0 percent relative to a year earlier. The GDP of Germany increased 0.8 percent in IQ2014 and 2.6 percent relative to a year earlier. In IIQ2014, Germany’s GDP contracted 0.1 percent and increased 1.0 percent relative to a year earlier. The GDP of Germany increased 0.1 percent in IIIQ2014 and increased 1.2 percent relative to a year earlier. Germany’s GDP increased 0.7 percent in IVQ2014 and increased 1.6 percent relative to a year earlier.
• United States. Growth of US GDP in IQ2012 was 0.6 percent, at SAAR of 2.3 percent and higher by 2.6 percent relative to IQ2011. US GDP increased 0.4 percent in IIQ2012, 1.6 percent at SAAR and 2.3 percent relative to a year earlier. In IIIQ2012, US GDP grew 0.6 percent, 2.5 percent at SAAR and 2.7 percent relative to IIIQ2011. In IVQ2012, US GDP grew 0.0 percent, 0.1 percent at SAAR and 1.6 percent relative to IVQ2011. In IQ2013, US GDP grew at 2.7 percent SAAR, 0.7 percent relative to the prior quarter and 1.7 percent relative to the same quarter in 2013. In IIQ2013, US GDP grew at 1.8 percent in SAAR, 0.4 percent relative to the prior quarter and 1.8 percent relative to IIQ2012. US GDP grew at 4.5 percent in SAAR in IIIQ2013, 1.1 percent relative to the prior quarter and 2.3 percent relative to the same quarter a year earlier (http://cmpassocregulationblog.blogspot.com/2015/03/dollar-revaluation-and-financial-risk.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/irrational-exuberance-mediocre-cyclical.html). In IVQ2013, US GDP grew 0.9 percent at 3.5 percent SAAR and 3.1 percent relative to a year earlier. In IQ2014, US GDP decreased 0.5 percent, increased 1.9 percent relative to a year earlier and fell 2.1 percent at SAAR. In IIQ2014, US GDP increased 1.1 percent at 4.6 percent SAAR and increased 2.6 percent relative to a year earlier. US GDP increased 1.2 percent in IIIQ2014 at 5.0 percent SAAR and increased 2.7 percent relative to a year earlier. In IVQ2014, US GDP increased 0.5 percent at SAAR of 2.2 percent and increased 2.4 percent relative to a year earlier.
• United Kingdom. In IQ2012, UK GDP increased 0.1 percent, increasing 1.0 percent relative to a year earlier. UK GDP fell 0.2 percent in IIQ2012 and increased 0.6 percent relative to a year earlier. UK GDP increased 0.8 percent in IIIQ2012 and increased 0.7 percent relative to a year earlier. UK GDP fell 0.3 percent in IVQ2012 relative to IIIQ2012 and increased 0.4 percent relative to a year earlier. UK GDP increased 0.6 percent in IQ2013 and 0.9 percent relative to a year earlier. UK GDP increased 0.6 percent in IIQ2013 and 1.7 percent relative to a year earlier. In IIIQ2013, UK GDP increased 0.7 percent and 1.6 percent relative to a year earlier. UK GDP increased 0.4 percent in IVQ2013 and 2.4 percent relative to a year earlier. In IQ2014, UK GDP increased 0.9 percent and 2.7 percent relative to a year earlier. UK GDP increased 0.8 percent in IIQ2014 and 2.9 percent relative to a year earlier. In IIIQ2014, UK GDP increased 0.6 percent and increased 2.8 percent relative to a year earlier. UK GDP increased 0.6 percent in IVQ2014 and increased 3.0 percent relative to a year earlier.
• Italy. Italy has experienced decline of GDP in nine consecutive quarters from IIIQ2011 to IIIQ2013 and in IIQ2014 and IIIQ2014. Italy’s GDP fell 0.9 percent in IQ2012 and declined 2.3 percent relative to IQ2011. Italy’s GDP fell 0.6 percent in IIQ2012 and declined 3.1 percent relative to a year earlier. In IIIQ2012, Italy’s GDP fell 0.6 percent and declined 3.1 percent relative to a year earlier. The GDP of Italy contracted 0.6 percent in IVQ2012 and fell 2.7 percent relative to a year earlier. In IQ2013, Italy’s GDP contracted 0.8 percent and fell 2.6 percent relative to a year earlier. Italy’s GDP fell 0.1 percent in IIQ2013 and 2.0 percent relative to a year earlier. The GDP of Italy increased 0.1 percent in IIIQ2013 and declined 1.4 percent relative to a year earlier. Italy’s GDP changed 0.0 percent in IVQ2013 and decreased 0.8 percent relative to a year earlier. In IQ2014, Italy’s GDP decreased 0.1 percent and fell 0.1 percent relative to a year earlier. The GDP of Italy fell 0.2 percent in IIQ2014 and declined 0.3 percent relative to a year earlier. In IIIQ2014, Italy’s GDP contracted 0.1 percent and fell 0.5 percent relative to a year earlier. The GDP of Italy changed 0.0 percent in IVQ20214 and declined 0.5 percent relative to a year earlier

France. France’s GDP increased 0.2 percent in IQ2012 and increased 0.6 percent relative to a year earlier. France’s GDP decreased 0.3 percent in IIQ2012 and increased 0.4 percent relative to a year earlier. In IIIQ2012, France’s GDP increased 0.2 percent and increased 0.4 percent relative to a year earlier. France’s GDP fell 0.2 percent in IVQ2012 and changed 0.0 percent relative to a year earlier. In IQ2013, France’s GDP decreased 0.1 percent and declined 0.3 percent relative to a year earlier. The GDP of France increased 0.7 percent in IIQ2013 and 0.7 percent relative to a year earlier. France’s GDP decreased 0.1 percent in IIIQ2013 and increased 0.3 percent relative to a year earlier. The GDP of France increased 0.3 percent in IVQ2013 and 0.8 percent relative to a year earlier. In IQ2014, France’s GDP decreased 0.1 percent and increased 0.8 percent relative to a year earlier. In IIQ2014, France’s GDP contracted 0.1 percent and changed 0.0 percent relative to a year earlier. France’s GDP increased 0.3 percent in IIIQ2014 and increased 0.4 percent relative to a year earlier. The GDP of France increased 0.1 percent in IVQ2014 and increased 0.2 percent relative to a year earlier

Table V-3, Percentage Changes of GDP Quarter on Prior Quarter and on Same Quarter Year Earlier, ∆%

	IQ2012/IVQ2011	IQ2012/IQ2011
United States	QOQ: 0.6        SAAR: 2.3	2.6
Japan	QOQ: 1.1 SAAR: 4.3	3.5
China	1.4	8.1
Euro Area	-0.1	-0.4
Germany	0.3	1.5
France	0.2	0.6
Italy	-0.9	-2.3
United Kingdom	0.1	1.0
	IIQ2012/IQ2012	IIQ2012/IIQ2011
United States	QOQ: 0.4         SAAR: 1.6	2.3
Japan	QOQ: -0.4 SAAR: -1.4	3.5
China	2.1	7.6
Euro Area	-0.3	-0.8
Germany	0.1	0.3 0.8 CA
France	-0.3	0.4
Italy	-0.6	-3.1
United Kingdom	-0.2	0.6
	IIIQ2012/ IIQ2012	IIIQ2012/ IIIQ2011
United States	QOQ: 0.6  SAAR: 2.5	2.7
Japan	QOQ: –0.5 SAAR: –2.2	0.2
China	2.0	7.4
Euro Area	-0.1	-0.8
Germany	0.1	0.1
France	0.2	0.4
Italy	-0.6	-3.1
United Kingdom	0.8	0.7
	IVQ2012/IIIQ2012	IVQ2012/IVQ2011
United States	QOQ: 0.0 SAAR: 0.1	1.6
Japan	QOQ: -0.2 SAAR: -0.6	0.0
China	1.9	7.9
Euro Area	-0.4	-0.9
Germany	-0.4	-0.3
France	-0.2	0.0
Italy	-0.6	-2.7
United Kingdom	-0.3	0.4
	IQ2013/IVQ2012	IQ2013/IQ2012
United States	QOQ: 0.7 SAAR: 2.7	1.7
Japan	QOQ: 1.4 SAAR: 5.6	0.5
China	1.7	7.8
Euro Area	-0.4	-1.2
Germany	-0.4	-1.8
France	-0.1	-0.3
Italy	-0.8	-2.6
UK	0.6	0.9
	IIQ2013/IQ2013	IIQ2013/IIQ2012
United States	QOQ: 0.4 SAAR: 1.8	1.8
Japan	QOQ: 0.8 SAAR: 3.3	1.4
China	1.8	7.5
Euro Area	0.3	-0.6
Germany	0.8	0.5
France	0.7	0.7
Italy	-0.1	-2.0
UK	0.6	1.7
	IIIQ2013/IIQ2013	III/Q2013/  IIIQ2012
USA	QOQ: 1.1 SAAR: 4.5	2.3
Japan	QOQ: 0.4 SAAR: 1.4	2.2
China	2.3	7.9
Euro Area	0.2	-0.3
Germany	0.3	0.8
France	-0.1	0.3
Italy	0.1	-1.4
UK	0.7	1.6
	IVQ2013/IIIQ2013	IVQ2013/IVQ2012
USA	QOQ: 0.9 SAAR: 3.5	3.1
Japan	QOQ: -0.3 SAAR: -1.2	2.3
China	1.8	7.6
Euro Area	0.3	0.4
Germany	0.4	1.0
France	0.3	0.8
Italy	0.0	-0.8
UK	0.4	2.4
	IQ2014/IVQ2013	IQ2014/IQ2013
USA	QOQ -0.5 SAAR -2.1	1.9
Japan	QOQ: 1.3 SAAR: 5.1	2.4
China	1.6	7.4
Euro Area	0.3	1.1
Germany	0.8	2.6
France	-0.1	0.8
Italy	-0.1	-0.1
UK	0.9	2.7
	IIQ2014/IQ2014	IIQ2014/IIQ2013
USA	QOQ 1.1 SAAR 4.6	2.6
Japan	QOQ: -1.6 SAAR: -6.4	-0.3
China	2.0	7.5
Euro Area	0.1	0.8
Germany	-0.1	1.0
France	-0.1	0.0
Italy	-0.2	-0.3
UK	0.8	2.9
	IIIQ2014/IIQ2014	IIIQ2014/IIIQ2013
USA	QOQ: 1.2 SAAR: 5.0	2.7
Japan	QOQ: -0.7 SAAR: -2.6	-1.4
China	1.9	7.3
Euro Area	0.2	0.8
Germany	0.1	1.2
France	0.3	0.4
Italy	-0.1	-0.5
UK	0.6	2.8
	IVQ2014/IIIQ2014	IVQ2014/IVQ2013
USA	QOQ: 0.5 SAAR: 2.2	2.4
Japan	QOQ: 0.4 SAAR: 1.5	-0.8
China	1.5	7.3
Euro Area	0.3	0.9
Germany	0.7	1.6
France	0.1	0.2
Italy	0.0	-0.5
UK	0.6	3.0
	IQ2015/IVQ2014	IQ2015/IQ2014
China	1.3	7.0

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

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

Table V-4 provides two types of data: growth of exports and imports in the latest available months and in the past 12 months; and contributions of net trade (exports less imports) to growth of real GDP.

• Japan. Japan provides the most worrisome data (Section VC and earlier http://cmpassocregulationblog.blogspot.com/2015/03/impatience-with-monetary-policy-of.html and earlier http://cmpassocregulationblog.blogspot.com/2015/02/world-financial-turbulence-squeeze-of.html and earlier (http://cmpassocregulationblog.blogspot.com/2015/02/financial-and-international.html and earlier http://cmpassocregulationblog.blogspot.com/2014/12/patience-on-interest-rate-increases.html and earlier (http://cmpassocregulationblog.blogspot.com/2014/11/squeeze-of-economic-activity-by-carry.html and earlier http://cmpassocregulationblog.blogspot.com/2014/09/world-inflation-waves-squeeze-of.html and earlier http://cmpassocregulationblog.blogspot.com/2014/08/monetary-policy-world-inflation-waves.html and earlier http://cmpassocregulationblog.blogspot.com/2014/07/world-inflation-waves-united-states.html and earlier (http://cmpassocregulationblog.blogspot.com/2014/06/valuation-risks-world-inflation-waves.html and earlier http://cmpassocregulationblog.blogspot.com/2014/05/united-states-commercial-banks-assets.html and earlier http://cmpassocregulationblog.blogspot.com/2014/05/financial-volatility-mediocre-cyclical.html and earlier http://cmpassocregulationblog.blogspot.com/2014/03/interest-rate-risks-world-inflation.html and earlier http://cmpassocregulationblog.blogspot.com/2014/03/financial-risks-slow-cyclical-united.html and earlier http://cmpassocregulationblog.blogspot.com/2014/02/mediocre-cyclical-united-states.html and earlier http://cmpassocregulationblog.blogspot.com/2013/12/tapering-quantitative-easing-mediocre.html and earlier http://cmpassocregulationblog.blogspot.com/2013/11/risks-of-zero-interest-rates-world.html http://cmpassocregulationblog.blogspot.com/2013/11/global-financial-risk-world-inflation.html http://cmpassocregulationblog.blogspot.com/2013/09/duration-dumping-and-peaking-valuations_8763.html http://cmpass ocregulationblog.blogspot.com/2013/08/interest-rate-risks-duration-dumping.html and earlier http://cmpassocregulationblog.blogspot.com/2013/07/duration-dumping-steepening-yield-curve.html and earlier http://cmpassocregulationblog.blogspot.com/2013/06/paring-quantitative-easing-policy-and_4699.html and earlier at http://cmpassocregulationblog.blogspot.com/2013/05/united-states-commercial-banks-assets.html and earlier http://cmpassocregulationblog.blogspot.com/2013/04/world-inflation-waves-squeeze-of.html and earlier http://cmpassocregulationblog.blogspot.com/2013/03/united-states-commercial-banks-assets.html and earlier at http://cmpassocregulationblog.blogspot.com/2013/02/world-inflation-waves-united-states.html and earlier at http://cmpassocregulationblog.blogspot.com/2013/02/thirty-one-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2012/12/mediocre-and-decelerating-united-states_24.html and earlier http://cmpassocregulationblog.blogspot.com/2012/11/contraction-of-united-states-real_25.html and for GDP http://cmpassocregulationblog.blogspot.com/2013/09/recovery-without-hiring-ten-million.html and earlier http://cmpassocregulationblog.blogspot.com/2013/08/duration-dumping-and-peaking-valuations.html and earlier http://cmpassocreulationblog.blogspot.com/2013/02/recovery-without-hiring-united-states.html). In Mar 2015, Japan’s exports increased 8.5 percent in 12 months while imports decreased 14.5 percent. The second part of Table V-4 shows that net trade deducted 1.4 percentage points from Japan’s growth of GDP in IIQ2012, deducted 1.9 percentage points from GDP growth in IIIQ2012 and deducted 0.4 percentage points from GDP growth in IVQ2012. Net trade added 0.3 percentage points to GDP growth in IQ2012, 1.6 percentage points in IQ2013 and 0.2 percentage points in IIQ2013. In IIIQ2013, net trade deducted 1.5 percentage points from GDP growth in Japan. Net trade ducted 2.1 percentage points from GDP growth in Japan in IVQ2013. Net trade deducted 1.2 percentage point from GDP growth of Japan in IQ2014. Net trade added 4.2 percentage points to GDP growth in IIQ2014. Net trade added 0.2 percentage points to GDP growth in IIIQ2014 and added 0.9 percentage points in IVQ2014.

• China. In Mar 2015, China exports decreased 48.3 percent relative to a year earlier and imports decreased 12.7 percent.
• Germany. Germany’s exports increased 1.5 percent in the month of Feb 2015 and increased 3.9 percent in the 12 months ending in Feb 2015. Germany’s imports increased 1.8 percent in the month of Feb 2015 and increased 0.8 percent in the 12 months ending in Feb. Net trade contributed 0.8 percentage points to growth of GDP in IQ2012, contributed 0.4 percentage points in IIQ2012, contributed 0.3 percentage points in IIIQ2012, deducted 0.5 percentage points in IVQ2012, deducted 0.3 percentage points in IQ2013 and added 0.1 percentage points in IIQ2013. Net traded deducted 0.5 percentage points from Germany’s GDP growth in IIIQ2013 and added 0.5 percentage points to GDP growth in IVQ2013. Net trade deducted 0.1 percentage points from GDP growth in IQ2014. Net trade added 0.0 percentage points to GDP growth in IIQ2014 and added 0.4 percentage points in IIIQ2014. Net trade added 0.2 percentage points to GDP growth in IVQ2014.
• United Kingdom. Net trade contributed 0.7 percentage points in IIQ2013. In IIIQ2013, net trade deducted 1.7 percentage points from UK growth. Net trade contributed 0.1 percentage points to UK value added in IVQ2013. Net trade contributed 0.1 percentage points to UK value added in IQ2014 and 0.2 percentage points in IIQ2014. Net trade deducted 0.5 percentage points to GDP growth in IIIQ2014 and added 0.8 percentage points in IVQ2014.
• France. France’s exports increased 1.4 percent in Feb 2015 while imports increased 0.6 percent. France’s exports increased 3.0 percent in the 12 months ending in Feb 2015 and imports decreased 1.5 percent relative to a year earlier. Net traded added 0.1 percentage points to France’s GDP in IIIQ2012 and 0.1 percentage points in IVQ2012. Net trade deducted 0.1 percentage points from France’s GDP growth in IQ2013 and added 0.3 percentage points in IIQ2013, deducting 1.7 percentage points in IIIQ2013. Net trade added 0.1 percentage points to France’s GDP in IVQ2013 and deducted 0.1 percentage points in IQ2014. Net trade deducted 0.2 percentage points from France’s GDP growth in IIQ2014 and deducted 0.2 percentage points in IIIQ2014. Net trade added 0.2 percentage points to France’s GDP growth in IVQ2014.
• United States. US exports decreased 1.6 percent in Feb 2015 and goods exports decreased 4.6 percent in Jan-Feb 2015 relative to a year earlier. Imports decreased 4.4 percent in Feb 2015 and goods imports decreased 3.5 percent in Jan-Feb 2015 relative to a year earlier. Net trade deducted 0.04 percentage points from GDP growth in IIQ2012 and added 0.39 percentage points in IIIQ2012 and 0.79 percentage points in IVQ2012. Net trade deducted 0.08 percentage points from US GDP growth in IQ2013 and deducted 0.54 percentage points in IIQ2013. Net traded added 0.59 percentage points to US GDP growth in IIIQ2013. Net trade added 1.08 percentage points to US GDP growth in IVQ2013. Net trade deducted 1.66 percentage points from US GDP growth in IQ2014 and deducted 0.34 percentage points in IIQ2014. Net trade added 0.78 percentage points to IIIQ2014. Net trade deducted 1.15 percentage points from GDP growth in IVQ2014. Industrial production increased 0.1 percent in Feb 2015 and decreased 0.3 percent in Jan 2015 after decreasing 0.2 percent in Dec 2014, with all data seasonally adjusted. The Federal Reserve completed its annual revision of industrial production and capacity utilization on Mar 28, 2014 (http://www.federalreserve.gov/releases/g17/revisions/Current/DefaultRev.htm). The report of the Board of Governors of the Federal Reserve System states (http://www.federalreserve.gov/releases/g17/Current/default.htm):

Industrial production decreased 0.6 percent in Mar 2015 and increased 0.1 percent in Feb 2015 after decreasing 0.4 percent in Jan 2015, with all data seasonally adjusted. The Federal Reserve completed its annual revision of industrial production and capacity utilization on Mar 28, 2014 (http://www.federalreserve.gov/releases/g17/revisions/Current/DefaultRev.htm). The report of the Board of Governors of the Federal Reserve System states (http://www.federalreserve.gov/releases/g17/Current/default.htm):

“Industrial production decreased 0.6 percent in March after increasing 0.1 percent in February. For the first quarter of 2015 as a whole, industrial production declined at an annual rate of 1.0 percent, the first quarterly decrease since the second quarter of 2009. The decline last quarter resulted from a drop in oil and gas well drilling and servicing of more than 60 percent at an annual rate and from a decrease in manufacturing production of 1.2 percent. In March, manufacturing output moved up 0.1 percent for its first monthly gain since November; however, factory output in January is now estimated to have fallen 0.6 percent, about twice the size of the previously reported decline. The index for mining decreased 0.7 percent in March. The output of utilities fell 5.9 percent to largely reverse a similarly sized increase in February, which was related to unseasonably cold temperatures. At 105.2 percent of its 2007 average, total industrial production in March was 2.0 percent above its level of a year earlier. Capacity utilization for the industrial sector decreased 0.6 percentage point in March to 78.4 percent, a rate that is 1.7 percentage points below its long-run (1972–2014) average.” In the six months ending in Mar 2015, United States national industrial production accumulated increase of 0.1 percent at the annual equivalent rate of 0.2 percent, which is lower than growth of 2.0 percent in the 12 months ending in Mar 2015. Excluding growth of 1.1 percent in Nov 2014, growth in the remaining five months from Oct 2014 to Mar 2015 accumulated to minus 1.0 percent or minus 2.4 percent annual equivalent. Industrial production declined in three of the past six months. Industrial production contracted at annual equivalent 3.5 percent in the most recent quarter from Jan 2015 to Mar 2015 and expanded at 4.1 percent in the prior quarter Oct to Dec 2014. Business equipment accumulated growth of 1.5 percent in the six months from Oct 2014 to Mar 2015 at the annual equivalent rate of 3.0 percent, which is lower than growth of 3.2 percent in the 12 months ending in Mar 2015. The Fed analyzes capacity utilization of total industry in its report (http://www.federalreserve.gov/releases/g17/Current/default.htm): “Capacity utilization for the industrial sector decreased 0.6 percentage point in March to 78.4 percent, a rate that is 1.7 percentage points below its long-run (1972–2014) average.” United States industry apparently decelerated to a lower growth rate followed by possible acceleration and oscillating growth in past months.

Manufacturing fell 21.9 from the peak in Jun 2007 to the trough in Apr 2009 and increased by 25.1 percent from the trough in Apr 2009 to Dec 2014. Manufacturing grew 26.5 percent from the trough in Apr 2009 to Mar 2015. Manufacturing output in Mar 2015 is 1.2 percent below the peak in Jun 2007. The US maintained growth at 3.0 percent on average over entire cycles with expansions at higher rates compensating for contractions. Growth at trend in the entire cycle from IVQ2007 to IVQ2014 would have accumulated to 23.0 percent. GDP in IVQ2014 would be $18,438.0 billion (in constant dollars of 2009) if the US had grown at trend, which is higher by $2,143.3 billion than actual $16,294.7 billion. There are about two trillion dollars of GDP less than at trend, explaining the 26.7 million unemployed or underemployed equivalent to actual unemployment/underemployment of 16.1 percent of the effective labor force (http://cmpassocregulationblog.blogspot.com/2015/04/volatility-of-valuations-of-financial.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/global-competitive-devaluation-rules.html). US GDP in IVQ2014 is 11.6 percent lower than at trend. US GDP grew from $14,991.8 billion in IVQ2007 in constant dollars to $16,294.7 billion in IVQ2014 or 8.7 percent at the average annual equivalent rate of 1.2 percent. Cochrane (2014Jul2) estimates US GDP at more than 10 percent below trend. The US missed the opportunity to grow at higher rates during the expansion and it is difficult to catch up because growth rates in the final periods of expansions tend to decline. The US missed the opportunity for recovery of output and employment always afforded in the first four quarters of expansion from recessions. Zero interest rates and quantitative easing were not required or present in successful cyclical expansions and in secular economic growth at 3.0 percent per year and 2.0 percent per capita as measured by Lucas (2011May). There is cyclical uncommonly slow growth in the US instead of allegations of secular stagnation. There is similar behavior in manufacturing. There is classic research on analyzing deviations of output from trend (see for example Schumpeter 1939, Hicks 1950, Lucas 1975, Sargent and Sims 1977). The long-term trend is growth at average 3.3 percent per year from Mar 1919 to Mar 2015. Growth at 3.3 percent per year would raise the NSA index of manufacturing output from 99.2392 in Dec 2007 to 125.5771 in Mar 2015. The actual index NSA in Mar 2015 is 101.8045, which is 18.9 percent below trend. Manufacturing output grew at average 2.4 percent between Dec 1986 and Dec 2014, raising the index at trend to 117.2305 in Mar 2015. The output of manufacturing at 101.8045 in Mar 2015 is 13.2 percent below trend under this alternative calculation.

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

	Exports M ∆%	Exports 12 M ∆%	Imports M ∆%	Imports 12 M ∆%
USA	-1.6 Jan	-4.6 Jan-Feb	-4.4 Jan	-3.5 Jan-Feb
Japan		Mar 2015 8.5 Feb 2.4 Jan 17.0 Dec 12.9 Nov 4.9 Oct 9.6 Sep 6.9 Aug -1.3 Jul 3.9 Jun -2.0 May 2014 -2.7 Apr 2014 5.1 Mar 2014 1.8 Feb 2014 9.5 Jan 2014 9.5 Dec 2013 15.3 Nov 2013 18.4 Oct 2013 18.6 Sep 2013 11.5 Aug 2013 14.7 Jul 2013 12.2 Jun 2013 7.4 May 2013 10.1 Apr 2013 3.8 Mar 2013 1.1 Feb 2013 -2.9 Jan 2013 6.4 Dec -5.8 Nov -4.1 Oct -6.5 Sep -10.3 Aug -5.8 Jul -8.1		Mar 2015 -14.5 Feb -3.6 Jan -9.0 Dec 1.9 Nov -1.7 Oct 2.7 Sep 6.2 Aug -1.5 Jul 2.3 Jun 8.4 May 2014 -3.6 Apr 2013 3.4 Mar 2014 18.1 Feb 2014 9.0 Jan 2014 25.0 Dec 2013 24.7 Nov 2013 21.1 Oct 2013 26.1 Sep 2013 16.5 Aug 2013 16.0 Jul 2013 19.6 Jun 2013 11.8 May 2013 10.0 Apr 2013 9.4 Mar 2013 5.5 Feb 2013 7.3 Jan 2013 7.3 Dec 1.9 Nov 0.8 Oct -1.6 Sep 4.1 Aug -5.4 Jul 2.1
China		2015 -15.0 Mar 48.3 Feb -3.3 Jan 2014 9.7 Dec 4.7 Nov 11.6 Oct 15.3 Sep 9.4 Aug 14.5 Jul 7.2 Jun 7.0 May 0.9 Apr -6.6 Mar -18.1 Feb 10.6 Jan 2013 4.3 Dec 12.7 Nov 5.6 Oct -0.3 Sep 7.2 Aug 5.1 Jul -3.1 Jun 1.0 May 14.7 Apr 10.0 Mar 21.8 Feb 25.0 Jan		2015 -12.7 Mar -20.5 Feb -19.9 Jan 2014 -2.4 Dec -6.7 Nov 4.6 Oct 7.0 Sep -2.4 Aug -1.6 Jul 5.5 Jun -1.6 May -0.8 Apr -11.3 Mar 10.1 Feb 10.0 Jan 2013 8.3 Dec 5.3 Nov 7.6 Oct 7.4 Sep 7.0 Aug 10.9 Jul -0.7 Jun -0.3 May 16.8 Apr 14.1 Mar -15.2 Feb 28.8 Jan
Euro Area	2.2 12 M-Feb	1.8 Jan-Feb	0.1 12-M Feb	-2.8 Jan-Feb
Germany	1.5 Feb CSA	3.9 Feb	1.8 Feb CSA	0.8 Feb
France Feb	1.4	3.0	0.6	1.5
Italy Feb	2.5	3.7	0.6	1.0
UK	-2.4 Feb	0.5 Dec 14-Feb 15 /Dec 13-Feb 14	0.7 Feb	-1.8 Dec 14-Feb 15 /Dec 13-Feb 14
Net Trade % Points GDP Growth	% Points
USA	IVQ2014 -1.15 IIIQ2014 0.78 IIQ2014 -0.34 IQ2014 -1.66 IVQ2013 1.08 IIIQ2013 0.59 IIQ2013 -0.54 IQ2013 -0.08 IVQ2012 +0.79 IIIQ2012 0.39 IIQ2012 -0.04 IQ2012 -0.11
Japan	0.3 IQ2012 -1.4 IIQ2012 -1.9 IIIQ2012 -0.4 IVQ2012 1.6 IQ2013 0.2 IIQ2013 -1.5 IIIQ2013 -2.1 IVQ2013 -1.2 IQ2014 4.2 IIQ2014 0.2 IIIQ2014 0.9 IVQ2014
Germany	IQ2012 0.8 IIQ2012 0.4 IIIQ2012 0.3 IVQ2012 -0.5 IQ2013 -0.3 IIQ2013 0.1 IIIQ2013 -0.5 IVQ2013 0.5 IQ2014 -0.1 IIQ2014 0.0 IIIQ2014 0.4 IVQ2014 0.2
France	0.1 IIIQ2012 0.1 IVQ2012 -0.1 IQ2013 0.3 IIQ2013 -1.7 IIIQ2013 0.1 IVQ2013 -0.1 IQ2014 -0.2 IIQ2014 -0.2 IIIQ2014 0.2 IVQ2014
UK	0.7 IIQ2013 -1.7 IIIQ2013 0.1 IVQ2013 0.1 IQ2014 0.2 IIQ2214 -0.5 IIIQ2014 0.8 IVQ2014

Sources: Country Statistical Agencies http://www.census.gov/foreign-trade/

The geographical breakdown of exports and imports of Japan with selected regions and countries is in Table VB-11 for Mar 2015. The share of Asia in Japan’s trade is close to one-half for 53.1 percent of exports and 45.9 percent of imports. Within Asia, exports to China are 17.3 percent of total exports and imports from China 20.5 percent of total imports. While exports to China increased 3.9 percent in the 12 months ending in Mar 2015, imports from China decreased 19.6 percent. The largest export market for Japan in Mar 2015 is the US with share of 19.9 percent of total exports, which is close to that of China, and share of imports from the US of 11.6 percent in total imports. Japan’s exports to the US increased 21.3 percent in the 12 months ending in Mar 2015 and imports from the US increased 23.9 percent. Western Europe has share of 10.3 percent in Japan’s exports and of 11.7 percent in imports. Rates of growth of exports of Japan in Mar 2015 are 21.3 percent for exports to the US, 9.0 percent for exports to Brazil and minus 3.6 percent for exports to Germany. Comparisons relative to 2011 may have some bias because of the effects of the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Deceleration of growth in China and the US and threat of recession in Europe can reduce world trade and economic activity. Growth rates of imports in the 12 months ending in Mar 2015 are mixed. Imports from Asia decreased 10.7 percent in the 12 months ending in Mar 2015 while imports from China decreased 19.6 percent. Data are in millions of yen, which may have effects of recent depreciation of the yen relative to the United States dollar (USD).

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

Mar 2015	Exports Millions Yen	12 months ∆%	Imports Millions Yen	12 months ∆%
Total	6,927,379	8.5	6,698,119	-14.5
Asia	3,677,463 % Total 53.1	6.7	3,074,462 % Total 45.9	-10.7
China	1,201,176 % Total 17.3	3.9	1,375,355 % Total 20.5	-19.6
USA	1,377,789 % Total 19.9	21.3	774,670 % Total 11.6	23.9
Canada	94,159	35.7	99,652	-2.6
Brazil	50,729	9.0	86,588	13.9
Mexico	119,275	38.9	45,965	26.1
Western Europe	716,847 % Total 10.3	7.0	782,157 % Total 11.7	-4.5
Germany	173,178	-3.6	243,929	2.1
France	54,809	-0.1	87,960	-35.5
UK	96,536	12.7	64,488	15.4
Middle East	309,463	15.4	919,821	-42.6
Australia	123,384	-10.5	370,137	-14.8

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

World trade projections of the IMF are in Table V-6. There is increasing growth of the volume of world trade of goods and services from 3.5 percent in 2013 to 3.7 percent in 2015 and 5.0 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 I-10, IMF, Projections of World Trade, USD Billions, USD/Barrel and Annual ∆%

	2013	2014	2015	Average ∆% 2016-2019
World Trade Volume (Goods and Services)	3.5	3.4	3.7	5.0
Exports Goods & Services	3.7	3.3	4.0	5.0
Imports Goods & Services	3.3	3.4	3.4	5.1
World Trade Value of Exports Goods & Services USD Billion	23,117	23,476	21,818	Average ∆% 2007-2016 20,724
Value of Exports of Goods USD Billion	18,632	18,817	17,285	Average ∆% 2007-2016 16,612
Average Oil Price USD/Barrel	104.07	96.25	58.14	Average ∆% 2007-2016 84.21
Average Annual ∆% Export Unit Value of Manufactures	-1.4	-0.8	-3.3	Average ∆% 2007-2016 0.9
Exports of Goods & Services	2013	2014	2015	Average ∆% 2016-2019
Euro Area	2.1	4.2	4.4	4.4
EMDE	4.6	3.4	5.3	6.0
G7	2.0	3.7	4.1	4.1
Imports Goods & Services
Euro Area	1.0	4.3	4.3	4.3
EMDE	5.5	3.7	3.5	6.0
G7	1.6	3.7	4.1	4.6
Terms of Trade of Goods & Services
Euro Area	0.9	0.8	1.4	-0.5
EMDE	-0.3	-0.6	-3.7	-0.1
G7	0.9	0.5	1.4	0.05
Terms of Trade of Goods
Euro Area	1.2	1.0	1.7	-0.6
EMDE	-0.1	0.2	-4.0	0.3
G7	0.8	0.2	1.0	0.1

Notes: Commodity Price Index includes Fuel and Non-fuel Prices; Commodity Industrial Inputs Price includes agricultural raw materials and metal prices; Oil price is average of WTI, Brent and Dubai

Source: International Monetary Fund World Economic Outlook databank

http://www.imf.org/external/pubs/ft/weo/2015/01/weodata/index.aspx

The JP Morgan Global All-Industry Output Index of the JP Morgan Manufacturing and Services PMI^™, produced by JP Morgan and Markit in association with ISM and IFPSM, with high association with world GDP, increased to 54.8 in Mar from 53.9 in Feb, indicating expansion at higher rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/29a6f1bcf0bd43358458fd301141a6d1). This index has remained above the contraction territory of 50.0 during 68 consecutive months. The employment index increased from 51.8 in Feb to 52.0 in Mar with input prices rising at faster rate, new orders increasing at faster rate and output increasing at faster rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/29a6f1bcf0bd43358458fd301141a6d1). David Hensley, Director of Global Economic Coordination at JP Morgan, finds acceleration of world economic growth in IQ2015 (http://www.markiteconomics.com/Survey/PressRelease.mvc/29a6f1bcf0bd43358458fd301141a6d1). The JP Morgan Global Manufacturing PMI^™, produced by JP Morgan and Markit in association with ISM and IFPSM, decreased to 51.8 in Mar from 51.9 in Feb (http://www.markiteconomics.com/Survey/PressRelease.mvc/667a34f2b7664124b9bacd22a85f00d9). New export orders expanded for the twentieth consecutive month. David Hensley, Director of Global Economics Coordination at JP Morgan Chase, finds continuing growth in global manufacturing with output increasing at rates around those in past months (http://www.markiteconomics.com/Survey/PressRelease.mvc/667a34f2b7664124b9bacd22a85f00d9). The HSBC Brazil Composite Output Index, compiled by Markit, decreased from 51.3 in Feb to 47.0 in Mar, indicating contraction in activity of Brazil’s private sector (http://www.markiteconomics.com/Survey/PressRelease.mvc/98cdf9074e5e4da68b6de8f3bbf1dd75). The HSBC Brazil Services Business Activity index, compiled by Markit, decreased from 52.3 in Feb to 47.9 in Mar, indicating contracting services activity (http://www.markiteconomics.com/Survey/PressRelease.mvc/98cdf9074e5e4da68b6de8f3bbf1dd75). Pollyana De Lima, Economist at Markit, finds weaker private sector activity (http://www.markiteconomics.com/Survey/PressRelease.mvc/98cdf9074e5e4da68b6de8f3bbf1dd75). The HSBC Brazil Purchasing Managers’ Index^TM (PMI^™) decreased from 49.6 in Feb to 46.2 in Mar, indicating deterioration in manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/a7a09c9443da4a7b91e8017781be1fd3). Pollyanna De Lima, Economist at Markit, finds the fastest contraction of manufacturing output in three and a half years (http://www.markiteconomics.com/Survey/PressRelease.mvc/a7a09c9443da4a7b91e8017781be1fd3).

VA United States. The Markit Flash US Manufacturing Purchasing Managers’ Index^™ (PMI^™) seasonally adjusted decreased to 54.2 in Apr from 55.7 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/2981f1d7493e4d95ae88cb7a2dd6bc34). New export orders declined with weakness in Europe partly because of dollar revaluation. Chris Williamson, Chief Economist at Markit, finds that manufacturing expanding with challenges to competitiveness from the strong dollar (http://www.markiteconomics.com/Survey/PressRelease.mvc/2981f1d7493e4d95ae88cb7a2dd6bc34). The Markit Flash US Services PMI™ Business Activity Index increased from 57.1 in Feb to 58.6 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/89c23ff78b0f4f29a791fd417b52764d). The Markit Flash US Composite PMI™ Output Index increased from 57.2 in Feb to 58.5 in Mar. Chris Williamson, Chief Economist at Markit, finds that the surveys are consistent with slowing GDP growth that may accelerate in the second quarter (http://www.markiteconomics.com/Survey/PressRelease.mvc/89c23ff78b0f4f29a791fd417b52764d). The Markit US Composite PMI™ Output Index of Manufacturing and Services increased to 59.2 in Mar from 57.2 in Feb (http://www.markiteconomics.com/Survey/PressRelease.mvc/8bf81bec1dc54c04acb6fec388744e9f). The Markit US Services PMI™ Business Activity Index increased from 57.1 in Feb to 59.2 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/8bf81bec1dc54c04acb6fec388744e9f). Tim Moore, Senior Economist at Markit, finds the indexes consistent with US growth in IIQ2015 (http://www.markiteconomics.com/Survey/PressRelease.mvc/8bf81bec1dc54c04acb6fec388744e9f). The Markit US Manufacturing Purchasing Managers’ Index^™ (PMI^™) increased to 55.7 in Mar from 55.1 in Feb, which indicates expansion at faster rate (http://www.markiteconomics.com/Survey/PressRelease.mvc/ddc73e386ca84f55aef2be31c5af4241). New foreign orders stagnated. Tim Moore, Senior Economist at Markit, finds that the index suggests restrain of foreign orders because of dollar appreciation (http://www.markiteconomics.com/Survey/PressRelease.mvc/ddc73e386ca84f55aef2be31c5af4241). The purchasing managers’ index (PMI) of the Institute for Supply Management (ISM) Report on Business^® decreased 1.4 percentage points from 52.9 in Feb to 51.5 in Mar, which indicates growth at slower rate (http://www.ism.ws/ISMReport/MfgROB.cfm?navItemNumber=29253). The index of new orders decreased 0.7 percentage points from 52.5 in Feb to 51.8 in Mar. The index of new export orders decreased 1.0 percentage points from 48.5 in Feb to 47.5 in Mar, contracting at faster rate. The Non-Manufacturing ISM Report on Business^® PMI decreased 0.4 percentage points from 56.9 in Feb to 56.5 in Mar, indicating growth of business activity/production during 68 consecutive months, while the index of new orders increased 1.1 percentage points from 56.7 in Feb to 57.8 in Mar (http://www.ism.ws/ISMReport/NonMfgROB.cfm?navItemNumber=29259). Table USA provides the country economic indicators for the US.

Table USA, US Economic Indicators

Consumer Price Index	Mar 12 months NSA ∆%: minus 0.1; ex food and energy ∆%: 1.8 Mar month SA ∆%: 0.2; ex food and energy ∆%: 0.2 Blog 4/19/15
Producer Price Index	Finished Goods Mar 12-month NSA ∆%: -3.3; ex food and energy ∆% 2.0 Mar month SA ∆% = 0.5; ex food and energy ∆%: 0.5 Final Demand Mar 12-month NSA ∆%: -0.8; ex food and energy ∆% 0.9 Mar month SA ∆% = 0.2; ex food and energy ∆%: 0.2 Blog 4/19/15
PCE Inflation	Feb 12-month NSA ∆%: headline 0.3; ex food and energy ∆% 1.4 Blog 4/5/15
Employment Situation	Household Survey: Mar Unemployment Rate SA 5.5% Blog calculation People in Job Stress Mar: 26.7 million NSA, 16.1% of Labor Force Establishment Survey: Mar Nonfarm Jobs +126,000; Private +129,000 jobs created  Feb 12-month Average Hourly Earnings Inflation Adjusted ∆%: 2.0 Blog 4/5/15
Nonfarm Hiring	Nonfarm Hiring fell from 63.3 million in 2006 to 54.2 million in 2013 or by 9.1 million and to 58.7 million in 2014 or by 4.6 million Private-Sector Hiring Feb 2015 3.998 million lower by 0.395 million than 4.393 million in Feb 2006 Blog 4/12/15
GDP Growth	BEA Revised National Income Accounts IQ2012/IQ2011 ∆%: 2.6 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 IIIQ2014/IIIQ2013 2.7 IVQ2014/IVQ2013 2.4 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 IIIQ2014 SAAR 5.0 IVQ2014 SAAR 2.2 Blog 3/29/15
Real Private Fixed Investment	SAAR IVQ2014 4.5 ∆% IVQ2007 to IVQ2014: 3.3% Blog 3/29/15
Corporate Profits	IVQ2014 SAAR: Corporate Profits -1.4; Undistributed Profits -6.6 Blog 3/29/15
Personal Income and Consumption	Feb month ∆% SA Real Disposable Personal Income (RDPI) SA ∆% 0.2 Real Personal Consumption Expenditures (RPCE): -0.1 12-month Feb NSA ∆%: RDPI: 4.0; RPCE ∆%: 2.6 Blog 4/5/15
Quarterly Services Report	IVQ14/IVQ13 NSA ∆%: Information 4.6 Financial & Insurance 5.2 Blog 3/22/15
Employment Cost Index	Compensation Private IVQ2014 SA ∆%: 0.6 Dec 12 months ∆%: 2.3 Blog 2/1/15
Industrial Production	Mar month SA ∆%: -0.6 Mar 12 months SA ∆%: 2.0 Manufacturing Mar SA 0.1 ∆% Mar 12 months SA ∆% 2.4, NSA 2.4 Capacity Utilization: 78.9 Blog 4/19/15
Productivity and Costs	Nonfarm Business Productivity IVQ2014∆% SAAE -2.2; IVQ2014/IVQ2013 ∆% -0.1; Unit Labor Costs SAAE IVQ2014 ∆% 4.1; IVQ2014/IVQ2013 ∆%: 2.6 Blog 3/8/15
New York Fed Manufacturing Index	General Business Conditions From Mar 6.90 to Apr minus 1.19 New Orders: From Mar minus 2.39 to Apr minus 6.0 Blog 4/19/15
Philadelphia Fed Business Outlook Index	General Index from Mar 5.0 to Apr 7.5 New Orders from Mar 3.9 to Apr 0.7 Blog 4/19/15
Manufacturing Shipments and Orders	New Orders SA Feb ∆% 0.2 Ex Transport 0.8 Jan-Feb NSA New Orders ∆% minus 5.4 Ex transport minus 5.9 Blog 4/5/15
Durable Goods	Mar New Orders SA ∆%: 4.0; ex transport ∆%: minus 0.2 Jan-Mar 15/Jan-Mar 14 New Orders NSA ∆%: 0.1; ex transport ∆% -0.7 Blog 4/26/15
Sales of New Motor Vehicles	Mar 2015 3,954,544; Mar 2014 3,743,742. Mar 15 SAAR 17.15 million, Feb 15 SAAR 16.23 million, Mar 2014 SAAR 16.49 million Blog 4/5/15
Sales of Merchant Wholesalers	Jan-Feb 2015/Jan-Feb 2014 NSA ∆%: Total -2.6; Durable Goods: 3.4; Nondurable Goods: -7.6 Blog 4/12/15
Sales and Inventories of Manufacturers, Retailers and Merchant Wholesalers	Feb 15 12-M NSA ∆%: Sales Total Business -1.6; Manufacturers -3.1 Retailers 0.6; Merchant Wholesalers -1.8 Blog 4/19/15
Sales for Retail and Food Services	Jan-Mar 2015/Jan-Mar 2014 ∆%: Retail and Food Services 2.1; Retail ∆% 1.3 Blog 4/19/15
Value of Construction Put in Place	Feb SAAR month SA ∆%: minus 0.1 Feb 12-month NSA:3.1 Blog 4/5/15
Case-Shiller Home Prices	Jan 2015/ Jan 2014 ∆% NSA: 10 Cities 4.4; 20 Cities: 4.6; National: 4.5 ∆% Jan SA: 10 Cities 0.9 ; 20 Cities: 0.9 Blog 4/5/15
FHFA House Price Index Purchases Only	Feb SA ∆% 0.7; 12 month NSA ∆%: 5.4 Blog 4/26/15
New House Sales	Mar 2015 month SAAR ∆%: minus 11.4 Jan-Mar 2015/Jan-Mar 2014 NSA ∆%: 20.6 Blog 4/26/15
Housing Starts and Permits	Mar Starts month SA ∆% 2.0; Permits ∆%: -5.7 Jan-Mar 2015/Jan-Mar 2014 NSA ∆% Starts 4.0; Permits  ∆% 7.2 Blog 4/19/15
Trade Balance	Balance Feb SA -$35,444 million versus Jan -$42,676 million Exports Feb SA ∆%: -1.6 Imports Feb SA ∆%: -4.4 Goods Exports Jan-Feb 2015/Feb 2014 NSA ∆%: -4.6 Goods Imports Jan-Feb 2015/Jan 2014 NSA ∆%: -3.5 Blog 4/5/15
Export and Import Prices	Mar 12-month NSA ∆%: Imports -10.5; Exports -6.7 Blog 4/12/15
Consumer Credit	Feb ∆% annual rate: Total 5.6; Revolving 5.6; Nonrevolving 9.4 Blog 4/12/15
Net Foreign Purchases of Long-term Treasury Securities	Feb Net Foreign Purchases of Long-term US Securities: minus $10.6 billion Major Holders of Treasury Securities: Japan $1224.4 billion; China $1223.7 billion; Total Foreign US Treasury Holdings Jan $6163 billion Blog 4/19/15
Treasury Budget	Fiscal Year 2015/2014 ∆% Mar: Receipts 7.3; Outlays 7.1; Individual Income Taxes 8.1 Deficit Fiscal Year 2011 $1,300 billion Deficit Fiscal Year 2012 $1,087 billion Deficit Fiscal Year 2013 $680 billion Deficit Fiscal Year 2014 $483 billion Blog 4/19/2015
CBO Budget and Economic Outlook	2012 Deficit $1087 B 6.8% GDP Debt $11,281 B 70.4% GDP 2013 Deficit $680 B, 4.1% GDP Debt $11,983 B 72.3% GDP 2014 Deficit $483 B 2.8% GDP Debt $12,779 B 74.1% GDP 2025 Deficit $1,088B, 4.0% GDP Debt $21,605B 78.7% 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 3/1/15
Commercial Banks Assets and Liabilities	Mar 2015 SAAR ∆%: Securities 0.2 Loans 10.9 Cash Assets 6.9 Deposits 4.8 Blog 4/26/15
Flow of Funds Net Worth of Families and Nonprofits	IVQ2014 ∆ since 2007 Assets +$15,921.0 BN Nonfinancial $898.5 BN Real estate $172.1 BN Financial +15,022.4 BN Net Worth +$16,162.4 BN Blog 3/29/15
Current Account Balance of Payments	IVQ2014 -111,222 MM % GDP 2.6 Blog 3/22/15
Collapse of United States Dynamism of Income Growth and Employment Creation	Blog 4/12/15
IMF View	World Real Economic Growth 2015 ∆% 3.5 Blog 4/26/15

Links to blog comments in Table USA:

4/19/2015 http://cmpassocregulationblog.blogspot.com/2015/04/global-portfolio-reallocations-squeeze.html

4/12/15 http://cmpassocregulationblog.blogspot.com/2015/04/dollar-revaluation-recovery-without.html

4/5/15 http://cmpassocregulationblog.blogspot.com/2015/04/volatility-of-valuations-of-financial.html

3/29/15 http://cmpassocregulationblog.blogspot.com/2015/03/dollar-revaluation-and-financial-risk.html

3/22/15 http://cmpassocregulationblog.blogspot.com/2015/03/impatience-with-monetary-policy-of.html

3/8/15 http://cmpassocregulationblog.blogspot.com/2015/03/global-competitive-devaluation-rules.html

3/1/15 http://cmpassocregulationblog.blogspot.com/2015/03/irrational-exuberance-mediocre-cyclical.html

2/1/15 http://cmpassocregulationblog.blogspot.com/2015/02/financial-and-international.html

9/14/14 http://cmpassocregulationblog.blogspot.com/2014/09/geopolitics-monetary-policy-and.html

8/24/14 http://cmpassocregulationblog.blogspot.com/2014/08/monetary-policy-world-inflation-waves.html

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

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

2/10/13 http://cmpassocregulationblog.blogspot.com/2013/02/united-states-unsustainable-fiscal.html

Manufacturers’ shipments of durable goods increased 1.1 percent in Mar 2015, decreasing 0.2 percent in Feb 2015 and decreasing 1.4 percent in Jan 2015. New orders increased 4.0 percent in Mar 2015 after decreasing 1.4 percent in Feb 2015 and increasing 1.9 percent in Jan 2015, as shown in Table VA-1. These data are very volatile. Volatility is illustrated by decrease of 12.9 percent in Nov 2012 after increase of orders for nondefense aircraft of 2642.2 percent in Sep 2012 after decrease of 97.2 percent in Aug and increases of 51.1 percent in Jul 2012 and 32.5 percent in Jun 2012. Nondefense aircraft new orders increased 30.6 percent in Mar 2015 after decreasing 2.2 percent in Feb 2015 and increasing 122.3 percent in Jan 2015. New orders excluding transportation equipment decreased 0.2 percent in Mar 2015, decreasing 1.3 percent in Feb 2015 and decreasing 0.9 percent in Jan 2015. Capital goods new orders, indicating investment, increased 4.8 percent in Mar 2015, decreasing 1.3 percent in Feb 2015 and increasing 7.1 percent in Jan 2015. New orders of nondefense capital goods increased 3.5 percent in Mar 2015, after decreasing 2.2 percent in Feb 2015 and increasing 8.5 percent in Jan 2015. Capital goods orders excluding volatile aircraft decreased 0.5 percent in Mar 2015, decreasing 2.2 percent in Feb 2015 and decreasing 0.3 percent in Jan 2015.

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

	Mar 2015 ∆%	Feb 2015  ∆%	Jan 2015 ∆%
Total
S	1.1	-0.2	-1.4
NO	4.0	-1.4	1.9
Excluding Transport
S	-0.3	-0.5	-1.5
NO	-0.2	-1.3	-0.9
Excluding Defense
S	0.8	-0.3	-0.8
NO	2.6	-1.0	2.2
Machinery
S	-1.6	0.3	-2.6
NO	-1.5	-2.5	-0.2
Computers & Electronic Products
S	1.6	0.8	-1.2
NO	3.0	-1.2	0.8
Computers
S	10.6	1.1	3.4
NO	11.0	0.9	7.6
Transport Equipment
S	4.3	0.4	-1.1
NO	13.5	-1.8	8.9
Motor Vehicles
S	5.4	0.8	-2.8
NO	5.4	0.2	-2.4
Nondefense Aircraft
S	0.2	-1.0	10.4
NO	30.6	-2.2	122.3
Capital Goods
S	0.6	0.0	-0.9
NO	4.8	-1.3	7.1
Nondefense Capital Goods
S	-0.4	-0.1	0.8
NO	3.5	-2.2	8.5
Capital Goods ex Aircraft
S	-0.4	0.1	-0.6
NO	-0.5	-2.2	-0.3

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

Source: US Census Bureau

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

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

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

Source: US Census Bureau

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

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

Chart VA-2, US, Manufacturers’ Durable Goods New Orders 2014-2015

Source: US Census Bureau

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

Additional perspective on manufacturers’ shipments and new orders of durable goods is in Table VA-2. Values are cumulative millions of dollars in Jan-Mar 2015 not seasonally adjusted (NSA) and without adjustment for inflation. Shipments of durable goods of all manufacturing industries in Jan-Mar 2015 total $707.7 billion and new orders total $686.6 billion, growing respectively by 3.6 percent and 0.1 percent relative to the same period in 2014. Excluding transportation equipment, shipments grew 1.2 percent and new orders decreased 0.7 percent. Excluding defense, shipments grew 3.9 percent and new orders increased 0.3 percent. Important information not in Table VA-2 is the large share of nondurable goods. Capital goods have relatively high value of $256.2 billion for shipments, growing 4.0 percent, and new orders $252.5 billion, decreasing 2.3 percent. Excluding aircraft, capital goods shipments reached 201.8 billion, growing by 2.7 percent, and new orders $205.5 billion, decreasing 1.8 percent. Data weakened in 2013-2015 with effects of lower inflation on nominal values with recovery recently.

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

Jan-Feb 2015	Shipments	∆% Jan-Mar 2015/Jan-Mar 2014	New Orders	∆% Jan-Mar 2015/Jan-Mar  2014
Total	707,695	3.6	686,604	0.1
Excluding Transport	486,952	1.2	474,212	-0.7
Excluding Defense	674,281	3.9	656,236	0.3
Machinery	101,297	-2.2	100,816	-9.3
Computers & Electronic Products	81,627	-0.9	65,078	2.1
Computers & Related Products	5,628	-9.0	5,764	-4.2
Transport Equipment	220,743	9.1	212,392	1.9
Motor Vehicles	145,927	7.7	146,360	7.6
Nondefense Aircraft	39,290	19.0	33,237	-17.3
Capital Goods	256,210	4.0	252,493	-2.3
Nondefense Capital Goods	228,911	4.7	226,327	-2.6
Capital Goods ex Aircraft	201,874	2.7	205,517	-1.8

Note: Transport: transportation

Source: US Census Bureau

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

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

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

Source: US Census Bureau

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

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

Chart VA-4, US, Output of Durable Manufacturing, 1972-2015

Source: Board of Governors of the Federal Reserve System

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

Manufacturing jobs not seasonally adjusted increased 195,000 from Mar 2014 to
Mar 2015 or at the average monthly rate of 16,250. There are effects of the weaker economy and international trade together with the yearly adjustment of labor statistics. Industrial production increased 0.1 percent in Feb 2015 and decreased 0.3 percent in Jan 2015 after decreasing 0.2 percent in Dec 2014, with all data seasonally adjusted. The Federal Reserve completed its annual revision of industrial production and capacity utilization on Mar 28, 2014 (http://www.federalreserve.gov/releases/g17/revisions/Current/DefaultRev.htm). The report of the Board of Governors of the Federal Reserve System states (http://www.federalreserve.gov/releases/g17/Current/default.htm):

Industrial production decreased 0.6 percent in Mar 2015 and increased 0.1 percent in Feb 2015 after decreasing 0.4 percent in Jan 2015, with all data seasonally adjusted. The Federal Reserve completed its annual revision of industrial production and capacity utilization on Mar 28, 2014 (http://www.federalreserve.gov/releases/g17/revisions/Current/DefaultRev.htm). The report of the Board of Governors of the Federal Reserve System states (http://www.federalreserve.gov/releases/g17/Current/default.htm):

“Industrial production decreased 0.6 percent in March after increasing 0.1 percent in February. For the first quarter of 2015 as a whole, industrial production declined at an annual rate of 1.0 percent, the first quarterly decrease since the second quarter of 2009. The decline last quarter resulted from a drop in oil and gas well drilling and servicing of more than 60 percent at an annual rate and from a decrease in manufacturing production of 1.2 percent. In March, manufacturing output moved up 0.1 percent for its first monthly gain since November; however, factory output in January is now estimated to have fallen 0.6 percent, about twice the size of the previously reported decline. The index for mining decreased 0.7 percent in March. The output of utilities fell 5.9 percent to largely reverse a similarly sized increase in February, which was related to unseasonably cold temperatures. At 105.2 percent of its 2007 average, total industrial production in March was 2.0 percent above its level of a year earlier. Capacity utilization for the industrial sector decreased 0.6 percentage point in March to 78.4 percent, a rate that is 1.7 percentage points below its long-run (1972–2014) average.” In the six months ending in Mar 2015, United States national industrial production accumulated increase of 0.1 percent at the annual equivalent rate of 0.2 percent, which is lower than growth of 2.0 percent in the 12 months ending in Mar 2015. Excluding growth of 1.1 percent in Nov 2014, growth in the remaining five months from Oct 2014 to Mar 2015 accumulated to minus 1.0 percent or minus 2.4 percent annual equivalent. Industrial production declined in three of the past six months. Industrial production contracted at annual equivalent 3.5 percent in the most recent quarter from Jan 2015 to Mar 2015 and expanded at 4.1 percent in the prior quarter Oct to Dec 2014. Business equipment accumulated growth of 1.5 percent in the six months from Oct 2014 to Mar 2015 at the annual equivalent rate of 3.0 percent, which is lower than growth of 3.2 percent in the 12 months ending in Mar 2015. The Fed analyzes capacity utilization of total industry in its report (http://www.federalreserve.gov/releases/g17/Current/default.htm): “Capacity utilization for the industrial sector decreased 0.6 percentage point in March to 78.4 percent, a rate that is 1.7 percentage points below its long-run (1972–2014) average.” United States industry apparently decelerated to a lower growth rate followed by possible acceleration and oscillating growth in past months.

Manufacturing fell 21.9 from the peak in Jun 2007 to the trough in Apr 2009 and increased by 25.1 percent from the trough in Apr 2009 to Dec 2014. Manufacturing grew 26.5 percent from the trough in Apr 2009 to Mar 2015. Manufacturing output in Mar 2015 is 1.2 percent below the peak in Jun 2007. The US maintained growth at 3.0 percent on average over entire cycles with expansions at higher rates compensating for contractions. Growth at trend in the entire cycle from IVQ2007 to IVQ2014 would have accumulated to 23.0 percent. GDP in IVQ2014 would be $18,438.0 billion (in constant dollars of 2009) if the US had grown at trend, which is higher by $2,143.3 billion than actual $16,294.7 billion. There are about two trillion dollars of GDP less than at trend, explaining the 26.7 million unemployed or underemployed equivalent to actual unemployment/underemployment of 16.1 percent of the effective labor force (http://cmpassocregulationblog.blogspot.com/2015/04/volatility-of-valuations-of-financial.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/global-competitive-devaluation-rules.html). US GDP in IVQ2014 is 11.6 percent lower than at trend. US GDP grew from $14,991.8 billion in IVQ2007 in constant dollars to $16,294.7 billion in IVQ2014 or 8.7 percent at the average annual equivalent rate of 1.2 percent. Cochrane (2014Jul2) estimates US GDP at more than 10 percent below trend. The US missed the opportunity to grow at higher rates during the expansion and it is difficult to catch up because growth rates in the final periods of expansions tend to decline. The US missed the opportunity for recovery of output and employment always afforded in the first four quarters of expansion from recessions. Zero interest rates and quantitative easing were not required or present in successful cyclical expansions and in secular economic growth at 3.0 percent per year and 2.0 percent per capita as measured by Lucas (2011May). There is cyclical uncommonly slow growth in the US instead of allegations of secular stagnation. There is similar behavior in manufacturing. There is classic research on analyzing deviations of output from trend (see for example Schumpeter 1939, Hicks 1950, Lucas 1975, Sargent and Sims 1977). The long-term trend is growth at average 3.3 percent per year from Mar 1919 to Mar 2015. Growth at 3.3 percent per year would raise the NSA index of manufacturing output from 99.2392 in Dec 2007 to 125.5771 in Mar 2015. The actual index NSA in Mar 2015 is 101.8045, which is 18.9 percent below trend. Manufacturing output grew at average 2.4 percent between Dec 1986 and Dec 2014, raising the index at trend to 117.2305 in Mar 2015. The output of manufacturing at 101.8045 in Mar 2015 is 13.2 percent below trend under this alternative calculation.

Table I-13 provides national income by industry without capital consumption adjustment (WCCA). “Private industries” or economic activities have share of 87.6 percent in IVQ2014. Most of US national income is in the form of services. In Mar 2015, there were 140.326 million nonfarm jobs NSA in the US, according to estimates of the establishment survey of the Bureau of Labor Statistics (BLS) (http://www.bls.gov/news.release/empsit.nr0.htm Table B-1). Total private jobs of 118.035 million NSA in Mar 2015 accounted for 84.1 percent of total nonfarm jobs of 140.326 million, of which 12.256 million, or 10.4 percent of total private jobs and 8.7 percent of total nonfarm jobs, were in manufacturing. Private service-providing jobs were 98.884 million NSA in Mar 2015, or 70.5 percent of total nonfarm jobs and 83.8 percent of total private-sector jobs. Manufacturing has share of 11.3 percent in US national income in IVQ2014 and durable goods 6.5 percent, as shown in Table I-13. Most income in the US originates in services. Subsidies and similar measures designed to increase manufacturing jobs will not increase economic growth and employment and may actually reduce growth by diverting resources away from currently employment-creating activities because of the drain of taxation.

Table I-13, US, National Income without Capital Consumption Adjustment by Industry, Seasonally Adjusted Annual Rates, Billions of Dollars, % of Total

	SAAR IIIQ2014	% Total	SAAR IVQ2014	% Total
National Income WCCA	15,494.0	100.0	15,575.3	100.0
Domestic Industries	15,264.1	98.5	15,382.8	98.8
Private Industries	13,538.5	87.4	13,649.7	87.6
Agriculture	167.6	1.1	168.7	1.1
Mining	273.9	1.8	266.7	1.7
Utilities	221.8	1.4	212.8	1.4
Construction	681.7	4.4	694.5	4.5
Manufacturing	1743.0	11.2	1759.9	11.3
Durable Goods	1002.2	6.5	1013.6	6.5
Nondurable Goods	740.8	4.8	746.3	4.8
Wholesale Trade	944.4	6.1	954.3	6.1
Retail Trade	1055.1	6.8	1081.1	6.9
Transportation & WH	479.8	3.1	476.6	3.1
Information	574.9	3.7	578.1	3.7
Finance, Insurance, RE	2794.1	18.0	2765.8	17.8
Professional & Business Services	2066.4	13.3	2109.5	13.5
Education, Health Care	1494.6	9.6	1515.6	9.7
Arts, Entertainment	609.4	3.9	627.7	4.0
Other Services	431.9	2.8	438.5	2.8
Government	1725.6	11.1	1733.1	11.1
Rest of the World	229.9	1.5	192.5	1.2

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

Source: US Bureau of Economic Analysis

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

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 2014. Growth weakened from 1.9 per cent in 1995 and 2.6 percent in 1996 to contractions of 2.0 percent in 1998 and 0.2 percent in 1999. Growth rates were below 2 percent with exception of 2.3 percent in 2000, 2.4 percent in 2004 and 2.2 percent in 2007. Japan’s GDP contracted sharply by 1.0 percent in 2008 and 5.5 percent in 2009. As in most advanced economies, growth was robust at 4.7 percent in 2010 but mediocre at minus 0.5 percent in 2011 because of the tsunami and 1.8 percent in 2012. Japan’s GDP grew 1.6 percent in 2013 and stagnated in 2014. There is classic research on analyzing deviations of output from trend (see for example Schumpeter 1939, Hicks 1950, Lucas 1975, Sargent and Sims 1977). Japan’s real GDP in calendar year 2014 is 0.7 percent higher than in calendar year 2007 (http://www.esri.cao.go.jp/index-e.html).

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

Calendar Year	∆%
1995	1.9
1996	2.6
1997	1.6
1998	-2.0
1999	-0.2
2000	2.3
2001	0.4
2002	0.3
2003	1.7
2004	2.4
2005	1.3
2006	1.7
2007	2.2
2008	-1.0
2009	-5.5
2010	4.7
2011	-0.5
2012	1.8
2013	1.6
2014	0.0

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/announcements/release_2015/k150121a.pdf) with changes on Jul 21, 2015 (https://www.boj.or.jp/en/announcements/release_2015/k150121a.pdf). For fiscal 2014, the forecast is of growth of GDP between minus 0.7 to minus 0.3 percent, with the all items CPI less fresh food 2.9 to 3.3 percent (https://www.boj.or.jp/en/announcements/release_2015/k150121a.pdf). The critical difference is forecast of the CPI excluding fresh food of 0.3 to 1.4 percent in 2015 and 0.9 to 2.3 percent in 2016 (https://www.boj.or.jp/en/announcements/release_2015/k150121a.pdf). Consumer price inflation in Japan excluding fresh food was minus 0.2 percent in Dec 2014 and 2.5 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:

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

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

Fiscal Year Date of Forecast	Real GDP	CPI All Items Less Fresh Food	Excluding Effects of Consumption Tax Hikes
2013
Apr 2014	+2.2 to +2.3 [+2.2]	+0.8
Jan 2014	+2.5 to +2.9 [+2.7]	+0.7 to +0.9 [+0.7]
Oct 2013	+2.6 to +3.0 [+2.7]	+0.6 to +1.0 [+0.7]
Jul 2013	+2.5 to +3.0 [+2.8]	+0.5 to +0.8 [+0.6]
2014
Jan 2015	-0.6 to -0.4 [-0.5]	+2.9 to +3.2 [+2.9]	+0.9 to +1.2 [+0.9]
Oct 2014	+0.2 to +0.7 [+0.5]	+3.1 to +3.4 [+3.2]	+1.1 to +1.4 [+1.2]
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 [+1.1]	+3.0 to +3.5 [+3.3]	+1.0 to +1.5 [+1.3]
Jan 2014	+0.9 to 1.5 [+1.4]	+2.9 to +3.6 [+3.3]	+0.9 to +1.6 [+1.3]
Oct 2013	+0.9 to +1.5 [+1.5]	+2.8 to +3.6 [+3.3]	+0.8 to +1.6 [+1.3]
Jul 2013	+0.8 to +1.5 [+1.3]	+2.7 to +3.6 [+3.3]	+0.7 to +1.6 [+1.3]
2015
Jan 2015	+1.8 to +2.3 [+2.1]	+0.4 to +1.3 [+1.0]	+0.4 to +1.3 [+1.0]
Oct 2014	+1.2 to +1.7 [+1.5]	+1.8 to 2.6 [+2.4]	+1.1 to +1.9 [+1.7]
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 [+1.5]	+1.9 to +2.8 [+2.6]	+1.2 to +2.1 [+1.9]
Jan 2014	+1.2 to +1.8 [+1.5]	+1.7 to +2.9 [+2.6]	+1.0 to +2.2 [+1.9]
Oct 2013	+1.3 to +1.8 [+1.5]	+1.6 to +2.9 [+2.6]	+0.9 to +2.2 [+1.9]
Jul 2013	+1.3 to +1.9 [+1.5]	+1.6 to +2.9 [+2.6]	+0.9 to +2.2 [+1.9]
2016
Jan 2015	+1.5 to +1.7 [+1.6]	+1.5 to +2.3 [+2.2]	+1.5 to +2.3 [+2.2]
Oct 2014	+1.0 to +1.4 [+1.2]	+1.9 to 3.0 [+2.8]	+1.2 to 2.3 [+2.1]
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 [+1.3]	+2.0 to +3.0 [+2.8]	+1.3 to +2.3 [+2.1]

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

Source: Policy Board, Bank of Japan

https://www.boj.or.jp/en/announcements/release_2015/k150121a.pdf

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 50.3 in Mar to 49.7 in Apr and the Flash Japan Manufacturing Output Index™ decreased from 52.0 in Mar to 49.7 in Apr (http://www.markiteconomics.com/Survey/PressRelease.mvc/2c56e9c9e3ad4210be7839132c683da4). New export orders increased at slower pace. Amy Brownbill, Economist at Markit, finds weaker improvement in Japan’s manufacturing with devaluation of the yen relative to the dollar enhancing competitiveness (http://www.markiteconomics.com/Survey/PressRelease.mvc/2c56e9c9e3ad4210be7839132c683da4). The Markit Composite Output PMI Index decreased from 50.0 in Feb to 48.4 in Mar, indicating mildly deteriorating business activity (http://www.markiteconomics.com/Survey/PressRelease.mvc/74103110a2a2461e922e8e3112487235). The Markit Business Activity Index of Services decreased to 48.4 in Mar from 48.5 in Feb (http://www.markiteconomics.com/Survey/PressRelease.mvc/74103110a2a2461e922e8e3112487235). Amy Brownbill, Ecoomist at Markit and author of the report, finds weak current conditions with positive business expectations (http://www.markiteconomics.com/Survey/PressRelease.mvc/74103110a2a2461e922e8e3112487235). The Markit/JMMA Purchasing Managers’ Index^™ (PMI™), seasonally adjusted, decreased from 51.6 in Feb to 50.3 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/b911afd82d224220a79b04adddf770f4). New orders declined while foreign orders increased. Amy Brownbill, Economist at Markit, finds manufacturing improvement with increasing foreign orders influenced by devaluation of the yen (http://www.markiteconomics.com/Survey/PressRelease.mvc/b911afd82d224220a79b04adddf770f4).Table JPY provides the country data table for Japan.

Table JPY, Japan, Economic Indicators

Historical GDP and CPI	1981-2010 Real GDP Growth and CPI Inflation 1981-2010 Blog 8/9/11 Table 26
Corporate Goods Prices	Mar ∆% 0.3 12 months ∆% 0.7 Blog 4/19/15
Consumer Price Index	Feb NSA ∆% -0.2; Feb 12 months NSA ∆% 2.2 Blog 3/29/15
Real GDP Growth	IVQ2014 ∆%: 0.4 on IIIQ2014;  IVQ2014 SAAR 1.5; ∆% from quarter a year earlier: -0.8 % Blog 6/16/13 8/18/13 9/15/13 11/17/13 12/15/13 2/23/14 3/16/14 5/18/14 6/15/14 8/17/14 9/14/14 11/23/14 12/14/14 2/22/15 3/15/15
Employment Report	Feb Unemployed 2.26 million Change in unemployed since last year: minus 60 thousand Unemployment rate: 3.5 % Blog 3/29/15
All Industry Indices	Feb month SA ∆% 0.1 12-month NSA ∆% -1.2 Blog 4/26/15
Industrial Production	Feb SA month ∆%: -3.4 12-month NSA ∆% -2.6 Blog 3/29/15
Machine Orders	Total Feb ∆% -1.4 Private ∆%: -10.4 Feb ∆% Excluding Volatile Orders minus 0.4 Blog 4/19/15
Tertiary Index	Feb month SA ∆% 0.3 Feb 12 months NSA ∆% minus -0.4 Blog 4/26/15
Wholesale and Retail Sales	Feb 12 months: Total ∆%: -3.1 Wholesale ∆%: -3.7 Retail ∆%: -1.8 Blog 3/29/15
Family Income and Expenditure Survey	Feb 12-month ∆% total nominal consumption -0.4, real -2.9 Blog 3/29/15
Trade Balance	Exports Mar 12 months ∆%: 8.5 Imports Mar 12 months ∆% -14.5 Blog 4/26/15

Links to blog comments in Table JPY:

4/19/2015 http://cmpassocregulationblog.blogspot.com/2015/04/global-portfolio-reallocations-squeeze.html

3/29/15 http://cmpassocregulationblog.blogspot.com/2015/03/dollar-revaluation-and-financial-risk.html

3/15/15 http://cmpassocregulationblog.blogspot.com/2015/03/global-exchange-rate-struggle-recovery.html

2/22/15 http://cmpassocregulationblog.blogspot.com/2015/02/world-financial-turbulence-squeeze-of.html

12/14/14 http://cmpassocregulationblog.blogspot.com/2014/12/global-financial-and-economic-risk.html

11/23/14 http://cmpassocregulationblog.blogspot.com/2014/11/squeeze-of-economic-activity-by-carry.htm

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

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

The indices of all industry activity of Japan, which approximates GDP or economic activity, fell to levels close to the worst point of the recession, showing the brutal impact of the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Table VB-1 with the latest revisions shows the quarterly index, which permits comparison with the movement of real GDP. The first row provides weights of the various components of the index: AG (agriculture) 1.4 percent (not shown), CON (construction) 5.7 percent, IND (industrial production) 18.3 percent, TERT (services) 63.2 percent, and GOVT (government) 11.4 percent. GDP increased 0.4 percent in IVQ2014 (Table VB-1 at http://cmpassocregulationblog.blogspot.com/2015/03/global-exchange-rate-struggle-recovery.html), industry increased 0.8 percent, the tertiary sector increased 1.0 percent, government decreased 0.3 percent and construction increased 0.2 percent. The report shows that the all industry index increased 1.0 percent in IVQ2014. Industry added 0.14 percentage points to growth of the all industry index and the tertiary index added 0.67 percentage points. Anticipation of purchases to avoid the increase in the sales tax in Apr 2014 explains unusually high activity in the economy of Japan in IQ2014 and subsequent decline in IIQ2014. Japan had already experienced a very weak quarter in IVQ2010, with decline of GDP of 0.6 percent (Table VB-1 at http://cmpassocregulationblog.blogspot.com/2015/03/global-exchange-rate-struggle-recovery.html) when it was unexpectedly hit by the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. GDP fell 1.9 percent in IQ2011 and decreased 0.5 percent in IIQ2011. GDP changed 0.0 percent in IQ2011 relative to a year earlier and fell 1.5 percent in IIQ2011 relative to a year earlier (Table VB-1 and Table VB-4 at http://cmpassocregulationblog.blogspot.com/2015/03/global-exchange-rate-struggle-recovery.html). The all industry activity index fell in all quarters of 2012 with exception of growth of 0.1 percent in IQ2012. Weakness in industry was the driver of decline.

Table VB-1, Japan, Indices of All Industry Activity Percentage Change from Prior Quarter SA ∆%

	CON	IND	TERT	GOVT	ALL IND	REAL GDP
Weight %	5.7	18.3	63.2	11.4	100.0
2014
IVQ2014	0.2	0.8	1.0	-0.3	1.0	0.4
Cont to IVQ % Change	0.01	0.14	0.67	-0.04
IIIQ2014	-0.2	-1.3	0.7	-0.3	0.4	-0.7
IIQ2014	-2.8	-3.1	-3.9	-0.2	-3.6	-1.6
IQ	-3.1	2.3	1.6	-0.6	1.4	1.3
2013
IVQ	2.8	1.8	-0.2	0.4	0.3	-0.3
IIIQ	4.3	1.8	0.1	-0.2	0.5	0.4
IIQ	3.6	1.6	0.3	0.0	0.6	0.8
IQ	0.9	0.4	0.5	-0.3	0.4	1.4
2012
IVQ2012	3.0	-1.8	0.3	0.1	-0.1	-0.2
IIIQ	1.6	-3.3	0.0	0.0	-0.4	-0.5
IIQ	1.3	-2.1	0.0	0.0	-0.2	-0.4
IQ	2.0	1.6	0.0	0.2	0.1	1.1

AG: indices of agriculture, forestry and fisheries has weight of 1.4% and is not included in official report or in this table; CON: indices of construction industry activity; IND: indices of industrial production; TERT: indices of tertiary industry activity; GOVT: indices of government services, etc.; ALL IND: indices of all industry activity

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

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

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

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

There are more details in Table VB-2. In Feb 2015, the all industry activity index increased 0.1 percent with industry decreasing 3.1 percent and services increasing 0.3 percent while construction decreased 1.3 percent and government increased 0.5 percent. Industry deducted 0.57 percentage points and services added 0.20 percentage points while construction subtracted 0.07 percentage points and government added 0.06 percentage points. The all industry activity index is stronger in 2013 with growth of 0.5 percent in Dec 2012, 0.4 percent in Feb 2013, 0.1 percent in Mar 2013, 0.1 percent in Apr 2013 and 0.6 percent in May 2013. After decline of 0.3 percent in Jun 2013, the all industry index rose 0.3 percent in Jul 2013, 0.2 percent in Aug 2013 and 0.3 percent in Sep 2013. The index fell 0.1 percent in Oct 2013 but increased 0.2 percent in Nov 2013. The index changed 0.0 percent in Dec 2013 and increased 1.1 percent in Jan 2014, decreasing 0.1 percent in Feb 2014. The index increased 0.9 percent in Mar 2014 in the rush of expenditures in anticipation of the sales tax increase in Apr 2014 and fell 4.5 percent in Apr 2014 because of the impact of the sales tax. The all industry index rebounded 0.5 percent in May 2014 and fell 0.2 percent in Jun 2014, changing 0.0 percent in Jul 2014. The index increased 0.2 percent in Aug 2014 and rebounded 0.7 percent in Sep 2014. The index increased 0.2 percent in Nov 2014 and increased 0.2 percent in Dec 2014. The index increased 0.5 percent in Jan 2015 and increased 0.1 percent in Feb 2015. Industry is recovering 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 and 2.1 percent in May 2013. After decline of 2.7 percent in Jun 2003, industry grew 2.7 percent in Jul 2013 and declined 0.4 percent in Aug 2013. Industry rebounded with 1.5 percent in Sep 2013 and 0.5 percent in Oct 2013. Industry rose 0.3 percent in Nov 2013 and increased 0.5 percent in Dec 2013. Industry grew 3.2 percent in Jan 2014 and fell 2.2 percent in Feb 2014. Industry increased 0.5 percent in Mar 2014 and fell 2.3 percent in Apr 2014. Industry increased 0.3 percent in May 2014 and decreased 1.9 percent in Jun 2014. Industry decreased 0.1 percent in Jul 2014, fell 0.8 percent in Aug 2014 and increased 1.4 percent in Sep 2014. Industry increased 0.4 percent in Oct 2014 and fell 0.6 percent in Nov 2014, increasing 0.2 percent in Dec 2014. Industry increased 4.1 percent in Jan 2015 and fell 3.1 percent in Feb 2015. The highest risk to Japan is if weakening world growth would affect Japanese exports.

Table VB-2, Japan, Indices of All Industry Activity Percentage Change from Prior Month SA ∆%

	CON	IND	TERT	GOVT	ALL IND
Feb	-1.3	-3.1	0.3	0.5	0.1

Cont to Feb % Change	-0.07	-0.57	0.20	0.06
Jan 2015	-0.2	4.1	0.7	-1.8	0.5
Dec	-0.4	0.2	0.2	-0.2	0.2
Nov	-0.7	-0.6	0.3	-0.2	0.2
Oct	0.5	0.4	0.1	0.4	0.3
Sep	0.0	1.4	0.8	-0.6	0.7
Aug	1.2	-0.8	0.2	-0.3	0.2
Jul	-0.8	-0.1	0.0	0.1	0.0
Jun	0.0	-1.9	0.1	0.0	-0.2
May	-0.6	0.3	0.6	-0.1	0.5
Apr	-1.9	-2.3	-5.6	0.0	-4.5
Mar	-0.5	0.5	2.2	-0.2	0.9
Feb	-0.9	-2.2	-0.2	0.0	-0.1
Jan	-2.7	3.2	1.0	-0.4	1.1
Dec 2013	-0.2	0.5	-0.1	0.1	0.0
Nov	1.5	0.3	0.3	-0.6	0.2
Oct	1.0	0.5	-0.5	0.8	-0.1
Sep	1.0	1.5	0.1	-0.1	0.3
Aug	0.3	-0.4	0.2	0.1	0.2
Jul	1.1	2.7	-0.1	-0.3	0.3
Jun	2.5	-2.7	-0.3	0.1	-0.3
May	3.0	2.1	0.5	0.2	0.6
Apr	0.8	0.6	-0.1	0.0	0.1
Mar	0.0	0.3	0.1	-0.3	0.1
Feb	0.1	0.9	0.5	-0.1	0.4
Jan	-0.7	-0.8	0.0	0.0	-0.2
Dec 2012	0.9	1.4	0.2	-0.3	0.5
Nov	3.0	-0.9	-0.1	0.3	-0.2
Oct	-0.1	0.3	0.2	0.2	0.2
Sep	1.2	-2.2	0.0	-0.3	-0.4
Aug	0.1	-1.4	0.2	0.1	0.0
Jul	-1.0	-0.5	-0.3	-0.1	-0.3
Jun	1.7	-0.9	0.0	0.1	0.1
May	3.0	-1.8	0.5	0.0	-0.1
Apr	-1.1	-0.4	-0.2	0.0	-0.1
Mar	-0.5	-0.2	-0.3	0.1	-0.2
Feb	0.7	-0.2	0.2	-0.2	0.1
Jan	2.6	0.8	-0.8	0.4	-0.7

AG: indices of agriculture, forestry and fisheries has weight of 1.4% and is not included in official report or in this table; CON: indices of construction industry activity; IND: indices of industrial production; TERT: indices of tertiary industry activity; GOVT: indices of government services, etc.; ALL IND: indices of all industry activity

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

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

Percentage changes from a year earlier in calendar years and relative to the same quarter a year earlier of the all industry activity indices are in Table VB-3. The first row shows that services contribute 63.2 percent of the total index and industry contributes 18.3 percent for joint contribution of 81.5 percent. The all industry activity index decreased 1.3 percent in IVQ2014 relative to a year earlier and GDP decreased 0.8 percent relative to a year earlier (Table VB-4 at http://cmpassocregulationblog.blogspot.com/2015/03/global-exchange-rate-struggle-recovery.html). Industry decreased 1.4 percent relative to a year earlier while the tertiary sector decreased 1.1 percent, deducting combined 0.95 percentage points to growth of the all industry activity index of minus 1.3 percent while construction deducted 0.27 percentage points and government deducted 0.12 percentage points. The fall of industrial production in 2009 was by a catastrophic 21.9 percent. Japan emerged from the crisis with industrial growth of 16.4 percent in 2010. Quarterly data show that industry is the most dynamic sector of the Japanese economy. The all-industry index decreased 0.3 percent in 2014 and real GDP changed 0.0 percent. Industry increased 2.1 percent, adding 0.36 percentage points, while the tertiary sector decreased 0.6 percent, deducting 0.53 percentage points. The Tōhoku or Great East Earthquake and Tsunami of Mar 11, 201, declining world trade and revaluation of the yen in fear of world financial risks interrupted the recovery of the Japanese economy from the global recession.

Table VB-3, Japan, Indices of All Industry Activity Percentage Change from Earlier Calendar Year and Same Quarter Year Earlier NSA ∆%

	CON	IND	TERT	GOVT	ALL IND	REAL GDP
Weight %	5.7	18.3	63.2	11.4	100.0
Calendar Year
2014	-0.6	2.1	-0.8	-0.7	-0.3	0.0
Cont to 2014 % Change	-0.03	0.36	-0.53	-0.08
2013	10.4	-0.8	0.7	-0.1	0.7	1.6
2012	3.2	0.1	1.4	0.3	1.2	1.8
2011	-2.0	-2.3	0.1	-0.2	-0.5	-0.5
2010	-7.0	16.4	1.3	-0.7	3.1	4.7
2009	-5.6	-21.9	-5.2	0.1	-7.7	-5.5
2008	-7.6	-3.4	-1.0	-1.4	-1.9	-1.0
2014
IVQ	-4.7	-1.4	-1.1	-1.0	-1.3	-0.8
Cont to IVQ % Change	-0.27	-0.24	-0.71	-0.12
IIIQ	-3.9	-0.7	-1.9	-0.8	-1.7	-1.4
IIQ	-0.7	2.6	-2.1	-0.7	-1.0	-0.3
IQ	8.0	8.3	2.0	-0.5	3.1	2.4
2013
IVQ	13.4	5.7	0.5	0.0	1.9	2.3
IIIQ	13.0	2.2	1.2	-0.5	1.8	2.2
IIQ	8.8	-3.1	1.3	-0.2	0.6	1.4
IQ2013	5.4	-7.8	-0.1	0.3	-1.2	0.5
2012
IVQ	6.7	-5.9	0.7	-0.1	-0.3	0.0
IIIQ	3.1	-4.2	0.5	0.4	-0.2	0.2
IIQ	4.9	5.5	2.1	0.6	2.6	3.5
IQ	-1.1	6.2	2.4	0.3	2.6	3.5

AG: indices of agriculture, forestry and fisheries has weight of 1.4% and is not included in official report or in this table; CON: indices of construction industry activity; IND: indices of industrial production; TERT: indices of tertiary industry activity; GOVT: indices of government services, etc.; ALL IND: indices of all industry activity

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

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

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

Percentage changes of a month relative to the same month a year earlier for the indices of all industry activity of Japan are shown in Table VB-4. The all industry activity index decreased 1.2 percent in Feb 2015 relative to Feb 2014. Industry decreased 2.1 percent in Feb 2015 relative to a year earlier, deducting 0.37 percentage points to growth of the all industry activity index. The tertiary sector decreased 0.4 percent, subtracting 0.27 percentage points. Construction deducted 0.26 percentage points from the index and government deducted 0.29 percentage points.

Table VB-4, Japan, Indices of All Industry Activity Percentage Change from Same Month Year Earlier NSA ∆%

	CON	IND	TERT	GOVT	ALL IND
Feb	-4.7	-2.1	-0.4	-2.4	-1.2
Cont to Feb % Change	-0.26	-0.37	-0.27	-0.29
Jan 2015	-4.1	-2.5	-1.1	-2.2	-1.7
Dec 2014	-4.8	-0.1	-0.6	-2.2	-0.9
Nov	-5.8	-3.7	-1.9	0.1	-2.3
Oct	-3.6	-0.5	-0.8	-1.1	-0.9
Sep	-3.8	0.9	-0.8	-2.0	-0.8
Aug	-2.8	-3.0	-2.7	-0.1	-2.5
Jul	-5.2	-0.5	-2.2	-0.2	-1.8
Jun	-2.8	3.2	-1.5	-1.3	-0.7
May	-0.8	0.9	-2.4	-0.2	-1.5
Apr	2.0	3.7	-2.5	-0.4	-1.1
Mar	6.3	7.3	3.1	-0.6	3.7
Feb	8.1	7.0	0.7	-0.4	2.1
Jan	9.7	10.7	2.0	-0.7	3.5
Dec 2013	11.8	7.2	0.8	-0.4	2.2
Nov	14.2	4.8	0.5	-0.2	1.9
Oct	14.4	5.3	0.1	0.6	1.8
Sep	12.8	5.2	1.4	-0.6	2.4
Aug	13.0	-0.7	0.8	0.1	1.0
Jul	13.2	1.9	1.5	-1.0	1.7
Jun	11.2	-4.7	0.6	0.5	0.0
May	8.9	-0.9	1.8	-0.2	1.3
Apr	6.3	-3.2	1.5	-1.1	0.6
Mar	5.4	-6.9	0.7	0.0	-0.6
Feb	4.3	-9.9	-1.5	1.5	-2.4
Jan	6.8	-6.4	0.3	-0.6	-0.7
Dec 2012	8.7	-7.5	-0.1	0.6	-0.9
Nov	7.6	-5.7	1.0	0.3	0.0
Oct	3.5	-4.7	1.3	-1.1	0.1
Sep	2.9	-7.7	0.1	0.7	-1.2
Aug	2.6	-4.4	0.6	0.9	-0.1
Jul	3.8	-0.2	0.8	-0.3	0.6
Jun	6.7	-1.5	0.8	0.9	0.6
May	5.3	6.1	3.1	-0.4	3.3
Apr	2.6	13.6	2.4	1.3	4.1
Mar	3.0	16.2	4.2	0.5	5.8
Feb	-2.5	2.8	2.4	-0.7	1.8
Jan	-3.4	-1.6	0.4	0.4	-0.1

AG: indices of agriculture, forestry and fisheries has weight of 1.4% and is not included in official report or in this table; CON: indices of construction industry activity; IND: indices of industrial production; TERT: indices of tertiary industry activity; GOVT: indices of government services, etc.; ALL IND: indices of all industry activity

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

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

The tertiary activity index of Japan increased 0.3 percent SA in Feb 2015 and decreased 0.4 percent NSA in the 12 months ending in Feb 2015, as shown in Table VB-5. There are effects of the increase in the tax on value added of consumption in Apr 2014. The index is showing significant volatility with increases of 0.5 percent in Feb 2013 and 0.5 percent in May 2013 but decreases in multiple months. The indexed increased 2.6 percent in Mar 2014 largely because of anticipation of expenditures to avoid the increase in the tax on consumption in Apr 2014. The index fell 5.6 percent in Apr 2014 because of the increases in the tax on consumption. The tertiary activity index fell 5.2 percent in 2009, growing 1.3 percent in 2010, 0.1 percent in 2011 and 1.4 percent in 2012. The tertiary activity index increased 0.7 percent in 2013 and fell 0.8 percent in 2014.

Table VB-5, Japan, Tertiary Activity Index, ∆%

	Month ∆% SA	12 Months ∆% NSA
Feb 2015	0.3	-0.4
Jan	0.7	-1.1
Dec 2014	0.2	-0.6
Nov	0.3	-1.9
Oct	0.1	-0.8
Sep	0.8	-0.8
Aug	0.2	-2.7
Jul	0.0	-2.2
Jun	0.1	-1.5
May	0.6	-2.4
Apr	-5.6	-2.5
Mar	2.2	3.1
Feb	-0.2	0.7
Jan	1.0	2.0
Dec 2013	-0.1	0.8
Nov	0.3	0.5
Oct	-0.5	0.1
Sep	0.1	1.4
Aug	0.2	0.8
Jul	-0.1	1.5
Jun	-0.3	0.6
May	0.5	1.8
Apr	-0.1	1.5
Mar	0.1	0.7
Feb	0.5	-1.5
Jan	0.0	0.3
Dec 2012	0.2	-0.1
Nov	-0.1	1.0
Oct	0.2	1.3
Sep	0.0	0.1
Aug	0.2	0.6
Jul	-0.3	0.8
Jun	0.0	0.8
May	0.5	3.1
Apr	-0.2	2.4
Mar	-0.3	4.2
Feb	0.2	2.4
Jan	-0.8	0.3
Calendar Year
2014		-0.8
2013		0.7
2012		1.4
2011		0.1
2010		1.3
2009		-5.2
2008		-1.0
2007		1.0
2006		1.8
2005		1.9
2004		1.8

Source: Japan, Ministry of Economy, Trade and Industry

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

Month and 12-month rates of growth of the tertiary activity index of Japan and components in Feb 2015 are provided in Table VB-6. Electricity, gas, heat supply and water decreased 0.9 percent in Feb 2015 and decreased 3.4 percent in the 12 months ending in Feb 2015. Wholesale and retail trade decreased 0.7 percent in Feb 2015, rebounding from decline of 14.4 percent in the month of Apr because of the increase in the tax on value added of consumption. Information and communications decreased 0.5 percent in Feb and increased 0.8 percent in 12 months.

Table VB-6, Japan, Tertiary Index and Components, Month and 12-Month Percentage Changes ∆%

Feb 2015	Weight	Month ∆% SA	12 Months ∆% NSA
Tertiary Index	10,000.0	0.3	-0.4
Electricity, Gas, Heat Supply & Water	372.9	-0.9	-3.4
Information & Communications	951.2	-0.5	0.8
Wholesale & Retail Trade	2,641.2	-0.7	-3.7
Finance & Insurance	971.1	0.3	2.0
Real Estate & Goods Rental & Leasing	903.4	0.7	0.6
Scientific Research, Professional & Technical Services	551.3	0.9	-2.6
Accommodations, Eating, Drinking	496.0	2.2	1.2
Living-Related, Personal, Amusement Services	552.7	-0.5	-2.6
Learning Support	116.9	1.4	0.0
Medical, Health Care, Welfare	921.1	-0.4	3.5
Miscellaneous ex Government	626.7	-2.9	-0.3

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

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

The structure of exports and imports of Japan is in Table VB-7. Japan imports all types of raw materials and fuels at rapidly increasing prices caused by the carry trade from zero interest rates to commodities, oscillating under shocks of risk aversion. Mineral fuels account for 26.4 percent of Japan’s imports and decreased 36.5 percent in the 12 months ending in Mar 2015 because of alternating carry trades into commodity futures in accordance with risk aversion together with yen devaluation. Weakness of world demand depresses prices of industrial goods. Manufactured products contribute 12.6 percent of Japan’s exports with increase of 5.2 percent in the 12 months ending in Mar 2015. Machinery contributes 20.8 percent of Japan’s exports with increase of 10.3 percent in the 12 months ending in Mar 2015. Electrical machinery contributes 16.8 percent of Japan’s exports with increase of 8.4 percent in the 12 months ending in Mar 2015. Exports of transport equipment with share of 23.3 percent in total exports increased 10.0 percent in the 12 months ending in Mar 2015 but had been increasing at high rates because of the low level after the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. The breakdown of transport equipment in Table VB-9 shows increase of the major categories of motor vehicles of 8.8 percent: cars increased 10.5 percent with increase of 9.8 percent in the minor category of buses and trucks, increase of 6.5 percent for parts of motor vehicles, increase of 6.1 percent for motorcycles and increase of 5.8 percent for ships. The result of rising commodity prices and stable or declining prices of industrial products is pressure on Japan’s terms of trade with oscillations when risk aversion causes reversal of carry trades from zero interest rates to commodity prices. Data in Table VB-7 are in millions of yen that have been affected by recent depreciation of the yen relative to the USD with invoicing of many products in dollars in world trade.

Table VB-7, Japan, Structure and Growth of Exports and Imports % and ∆% Millions Yens

Mar 2015	Value JPY Millions	% of Total	12 Months ∆%	Contribution Degree %
Exports	6,927,379	100.0	8.5	8.5
Foodstuffs	49,684	0.7	27.8	0.2
Raw Materials	107,410	1.6	5.8	0.1
Mineral Fuels	93,461	1.3	-37.6	-0.9
Chemicals	717,284	10.4	5.5	0.6
Manufactured Goods	875,822	12.6	5.2	0.7
Machinery	1,442,830	20.8	10.3	2.1
Electrical Machinery	1,165,796	16.8	8.4	1.4
Transport Equipment	1,613,811	23.3	10.0	2.3
Motor Vehicles	1,013,551	14.6	10.5	1.5
Cars	861,882	12.4	10.5	1.3
Buses & Trucks	142,948	2.1	9.8	0.2
Parts of Motor Vehicles	309,126	4.5	6.5	0.3
Motorcycles	35,175	0.5	6.1	0.0
Ships	164,977	2.4	5.8	0.1
Other	861,281	12.4	17.8	2.0
Imports	6,698,119	100.0	-14.5	-14.5
Foodstuffs	557,391	8.3	7.2	0.5
Raw Materials	441,821	6.6	-3.4	-0.2
Mineral Fuels	1,765,597	26.4	-36.5	-13.0
Chemicals	624,342	9.3	7.1	0.5
Manufactured Goods	568,346	8.5	-3.6	-0.3
Machinery	599,054	8.9	-5.9	-0.5
Electrical Machinery	1,007,942	15.0	-2.8	-0.4
Transport Equipment	284,162	4.2	-0.6	0.0
Other	849,466	12.7	-10.0	-1.2

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

Table VB-8 provides Japan’s exports, imports and trade balance in five-year intervals from 1950 to 1975 and then yearly from 1979 to 2014. Exports grew at the average yearly rate of 3.4 percent while imports grew at 3.7 percent per year in the years from 1979 to 2014. Abstracting from the global recession and the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011, exports grew at the average annual rate of 4.8 percent between 1979 and 2007 and imports at 4.0 percent. The global recession had a brutal impact on Japan’s trade. Exports fell 35.5 percent from 2007 to 2009 while imports fell 29.6 percent. Japan had the first trade deficit in 2011 since 1980 and the highest deficits in 2012, 2013 and 2014.

Table VB-8, Japan, Exports and Imports Calendar Year 1950-2013 Billion Yen

Years	Exports	Imports	Balance
1950	298	348	-50
1955	723	889	-166
1960	1,459	1,616	-157
1965	3,042	2,940	102
1970	6,954	6,797	157
1975	16,545	17,170	-625
1979	22,531	24,245	-1,714
1980	29,382	31,995	-2,613
1981	33,468	31,464	2,004
1982	34,432	32,656	1,776
1983	34,909	30,014	4,895
1984	40,325	32,321	8,004
1985	41,955	31,084	10,871
1986	35,289	21,550	13,739
1987	33,315	21,736	11,579
1988	33,939	24,006	9,933
1989	37,822	28,978	8,844
1990	41,456	33,855	7,601
1991	42,359	31,900	10,459
1992	43,012	29,527	13,485
1993	40,202	26,826	13,376
1994	40,497	28,104	12,393
1995	41,530	31,548	9,982
1996	44,731	37,993	6,738
1997	50,937	40,956	9,981
1998	50,645	36,653	13,992
1999	47,547	35,268	12,279
2000	51,654	40,938	10,716
2001	48,979	42,415	6,564
2002	52,108	42,227	9,881
2003	54,548	44,362	10,186
2004	61,169	49,216	11,953
2005	65,656	56,949	8,707
2006	75,246	67,344	7,902
2007	83,931	73,135	10,796
2008	81,018	78,955	2,063
2009	54,170	51,499	2,671
2010	67,399	60,764	6,635
2011	65,546	68,111	-2,565
2012	63,748	70,689	-6,941
2013	69,774	81,243	-11,469
2014	73,093	85,909	-12,816

Source: Japan, Ministry of Finance

http://www.customs.go.jp/toukei/info/index_e.htm

The geographical breakdown of exports and imports of Japan with selected regions and countries is in Table VB-9 for Mar 2015. The share of Asia in Japan’s trade is close to one-half for 53.1 percent of exports and 45.9 percent of imports. Within Asia, exports to China are 17.3 percent of total exports and imports from China 20.5 percent of total imports. While exports to China increased 3.9 percent in the 12 months ending in Mar 2015, imports from China decreased 19.6 percent. The largest export market for Japan in Mar 2015 is the US with share of 19.9 percent of total exports, which is close to that of China, and share of imports from the US of 11.6 percent in total imports. Japan’s exports to the US increased 21.3 percent in the 12 months ending in Mar 2015 and imports from the US increased 23.9 percent. Western Europe has share of 10.3 percent in Japan’s exports and of 11.7 percent in imports. Rates of growth of exports of Japan in Mar 2015 are 21.3 percent for exports to the US, 9.0 percent for exports to Brazil and minus 3.6 percent for exports to Germany. Comparisons relative to 2011 may have some bias because of the effects of the Tōhoku or Great East Earthquake and Tsunami of Mar 11, 2011. Deceleration of growth in China and the US and threat of recession in Europe can reduce world trade and economic activity. Growth rates of imports in the 12 months ending in Mar 2015 are mixed. Imports from Asia decreased 10.7 percent in the 12 months ending in Mar 2015 while imports from China decreased 19.6 percent. Data are in millions of yen, which may have effects of recent depreciation of the yen relative to the United States dollar (USD).

Table VB-9, Japan, Value and 12-Month Percentage Changes of Exports and Imports by Regions and Countries, ∆% and Millions of Yen

Mar 2015	Exports Millions Yen	12 months ∆%	Imports Millions Yen	12 months ∆%
Total	6,927,379	8.5	6,698,119	-14.5
Asia	3,677,463 % Total 53.1	6.7	3,074,462 % Total 45.9	-10.7
China	1,201,176 % Total 17.3	3.9	1,375,355 % Total 20.5	-19.6
USA	1,377,789 % Total 19.9	21.3	774,670 % Total 11.6	23.9
Canada	94,159	35.7	99,652	-2.6
Brazil	50,729	9.0	86,588	13.9
Mexico	119,275	38.9	45,965	26.1
Western Europe	716,847 % Total 10.3	7.0	782,157 % Total 11.7	-4.5
Germany	173,178	-3.6	243,929	2.1
France	54,809	-0.1	87,960	-35.5
UK	96,536	12.7	64,488	15.4
Middle East	309,463	15.4	919,821	-42.6
Australia	123,384	-10.5	370,137	-14.8

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

Table VB-10 provides the trade balance of Japan by countries and regions in Mar 2015. The significantly large deficits of JPY 610,358 million with the Middle East, JPY 174,179 million with China, JPY 246,753 million with Australia and JPY 65,310 million with Western Europe exceed surpluses of JPY 603,119 million with the US, JPY 73,310 million with Mexico and JPY 32,048 million with the UK.

Table VB-10, Japan, Trade Balance, Millions of Yen

Mar 2015	Millions of Yen
Total	229,260
Asia	603,001
China	-174,179
USA	603,119
Canada	-5,493
Brazil	-35,859
Mexico	73,310
Western Europe	-65,310
Germany	-70,751
France	-33,151
UK	32,048
Middle East	-610,358
Australia	-246,753

Source: Japan, Ministry of Finance

http://www.customs.go.jp/toukei/info/index_e.htm

Long-term economic growth in Japan significantly improved by increasing competitiveness in world markets. Net trade of exports and imports is an important component of the GDP accounts of Japan. Table VB-3 provides quarterly data for net trade, exports and imports of Japan. Net trade had strong positive contributions to GDP growth in Japan in all quarters from IQ2007 to IIQ2009 with exception of IVQ2008 and IQ2009. The US recession is dated by the National Bureau of Economic Research (NBER) as beginning in IVQ2007 (Dec) and ending in IIQ2009 (Jun) (http://www.nber.org/cycles/cyclesmain.html). Net trade contributions helped to cushion the economy of Japan from the global recession. Net trade deducted from GDP growth in seven of the nine quarters from IVQ2010 IQ2012. The only strong contribution of net trade was 3.9 percent in IIIQ2011. Net trade added 1.6 percentage points to GDP growth in IQ2013 and 0.2 percentage points in IIQ2013 but deducted 1.5 percentage points in IIIQ2013 and deducted 2.1 percentage points in IVQ2013. Net trade deducted 1.2 percentage points from GDP growth in IQ2014. Net trade added 4.2 percentage points to GDP growth in IIQ2014 and 0.2 percentage points in IIIQ2014. Net trade added 0.9 percentage points to GDP growth in IVQ2014. Private consumption assumed the role of driver of Japan’s economic growth but should moderate as in most mature economies.

Table VB-3, Japan, Contributions to Changes in Real GDP, Seasonally Adjusted Annual Rates (SAAR), %

	Net Trade	Exports	Imports
2014
I	-1.2	4.2	-5.4
II	4.2	-0.2	4.5
III	0.2	1.0	-0.8
IV	0.9	1.9	-1.1
2013
I	1.6	2.4	-0.9
II	0.2	1.8	-1.5
III	-1.5	-0.3	-1.2
IV	-2.1	-0.1	-2.0
2012
I	0.3	1.7	-1.4
II	-1.4	-0.3	-1.2
III	-1.9	-2.4	0.5
IV	-0.4	-2.0	1.6
2011
I	-1.1	-0.4	-0.7
II	-4.4	-4.6	0.2
III	3.9	5.7	-1.9
IV	-3.0	-2.0	-0.9
2010
I	2.2	3.5	-1.4
II	0.1	2.7	-2.6
III	0.5	1.4	-0.9
IV	-0.4	0.0	-0.4
2009
I	-4.4	-16.4	12.0
II	7.4	4.7	2.7
III	2.2	5.2	-3.1
IV	2.7	4.1	-1.4
2008
I	1.2	2.2	-1.0
II	0.5	-1.6	2.1
III	0.0	0.1	-0.2
IV	-11.4	-10.2	-1.2
2007
I	1.2	1.7	-0.5
II	0.8	1.6	-0.8
III	2.0	1.4	0.6
IV	1.4	2.1	-0.7

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

There was milder increase in Japan’s export corporate goods price index during the global recession in 2008 but similar sharp decline during the bank balance sheets effect in late 2008, as shown in Chart IV-5 of the Bank of Japan. Japan exports industrial goods whose prices have been less dynamic than those of commodities and raw materials. As a result, the export CGPI on the yen basis in Chart IV-5 trends down with oscillations after a brief rise in the final part of the recession in 2009. The export corporate goods price index on the yen basis fell from 104.9 in Jun 2009 to 94.0 in Jan 2012 or minus 10.4 percent and increased to 113.0 in Mar 2015 for gain of 20.2 percent relative to Jan 2012 and 7.7 percent relative to Jun 2009. The choice of Jun 2009 is designed to capture the reversal of risk aversion beginning in Sep 2008 with the announcement of toxic assets in banks that would be withdrawn with the Troubled Asset Relief Program (TARP) (Cochrane and Zingales 2009). Reversal of risk aversion in the form of flight to the USD and obligations of the US government opened the way to renewed carry trades from zero interest rates to exposures in risk financial assets such as commodities. Japan exports industrial products and imports commodities and raw materials. The recovery from the global recession began in the third quarter of 2009.

Chart IV-5, Japan, Export Corporate Goods Price Index, Monthly, Yen Basis, 2008-2015

Source: Bank of Japan

http://www.stat-search.boj.or.jp/index_en.html

Chart IV-5A provides the export corporate goods price index on the basis of the contract currency. The export corporate goods price index on the basis of the contract currency increased from 97.9 in Jun 2009 to 103.1 in Apr 2012 or 5.3 percent but dropped to 93.9 in Mar 2015 or minus 8.9 percent relative to Apr 2012 and fell 4.1 percent to 93.9 in Mar 2015 relative to Jun 2009.

Chart IV-5A, Japan, Export Corporate Goods Price Index, Monthly, Contract Currency Basis, 2008-2015

Source: Bank of Japan

http://www.stat-search.boj.or.jp/index_en.html

Japan imports primary commodities and raw materials. As a result, the import corporate goods price index on the yen basis in Chart IV-6 shows an upward trend after declining from the increase during the global recession in 2008 driven by carry trades from fed funds rates. The index increases with carry trades from zero interest rates into commodity futures and declines during risk aversion from late 2008 into beginning of 2008 originating in doubts about soundness of US bank balance sheets. More careful measurement should show that the terms of trade of Japan, export prices relative to import prices, declined during the commodity shocks originating in unconventional monetary policy. The decline of the terms of trade restricted potential growth of income in Japan (for the relation of terms of trade and growth see Pelaez 1979, 1976a). The import corporate goods price index on the yen basis increased from 93.5 in Jun 2009 to 113.1 in Apr 2012 or 21.0 percent and to 117.1 in Mar 2015 or gain of 3.5 percent relative to Apr 2012 and 25.2 percent relative to Jun 2009.

Chart IV-6, Japan, Import Corporate Goods Price Index, Monthly, Yen Basis, 2008-2015

Source: Bank of Japan

http://www.stat-search.boj.or.jp/index_en.html

Chart IV-6A provides the import corporate goods price index on the contract currency basis. The import corporate goods price index on the basis of the contract currency increased from 86.2 in Jun 2009 to 119.5 in Apr 2012 or 38.6 percent and to 94.0 in Mar 2015 or minus 21.3 percent relative to Apr 2012 and gain of 9.0 percent relative to Jun 2009. There is evident deterioration of the terms of trade of Japan: the export corporate goods price index on the basis of the contract currency decreased 4.1 percent from Jun 2009 to Mar 2015 while the import corporate goods price index increased 9.0 percent. Prices of Japan’s exports of corporate goods, mostly industrial products, increased only 5.3 percent from Jun 2009 to Apr 2012, while imports of corporate goods, mostly commodities and raw materials increased 38.6 percent. Unconventional monetary policy induces carry trades from zero interest rates to exposures in commodities that squeeze economic activity of industrial countries by increases in prices of imported commodities and raw materials during periods without risk aversion. Reversals of carry trades during periods of risk aversion decrease prices of exported commodities and raw materials that squeeze economic activity in economies exporting commodities and raw materials. Devaluation of the dollar by unconventional monetary policy could increase US competitiveness in world markets but economic activity is squeezed by increases in prices of imported commodities and raw materials. Unconventional monetary policy causes instability worldwide instead of the mission of central banks of promoting financial and economic stability.

Chart IV-6A, Japan, Import Corporate Goods Price Index, Monthly, Contract Currency Basis, 2008-2015

Source: Bank of Japan

http://www.stat-search.boj.or.jp/index_en.html

Table IV-6B provides the Bank of Japan’s Corporate Goods Price indexes of exports and imports on the yen and contract bases from Jan 2008 to Mar 2015. There are oscillations of the indexes that are shown vividly in the four charts above. For the entire period from Jan 2008 to Mar 2015, the export index on the contract currency basis decreased 5.3 percent and decreased 2.2 percent on the yen basis. For the entire period from Jan 2008 to Mar 2015, the import price index decreased 6.7 percent on the contract currency basis and increased 1.6 percent on the yen basis. During significant part of the expansion period, prices of Japan’s exports of corporate goods, mostly industrial products, increased only 5.3 percent from Jun 2009 to Apr 2012, while imports of corporate goods, mostly commodities and raw materials increased 38.6 percent. The charts show sharp deteriorations in relative prices of exports to prices of imports during multiple periods. Price margins of Japan’s producers are subject to periodic squeezes resulting from carry trades from zero interest rates of monetary policy to exposures in commodities.

Table IV-6B, Japan, Exports and Imports Corporate Goods Price Index, Contract Currency Basis and Yen Basis

	X-CC	X-Y	M-CC	M-Y
2008/01	99.2	115.5	100.7	119.0
2008/02	99.8	116.1	102.4	120.6
2008/03	100.5	112.6	104.5	117.4
2008/04	101.6	115.3	110.1	125.2
2008/05	102.4	117.4	113.4	130.4
2008/06	103.5	120.7	119.5	140.3
2008/07	104.7	122.1	122.6	143.9
2008/08	103.7	122.1	123.1	147.0
2008/09	102.7	118.3	117.1	137.1
2008/10	100.2	109.6	109.1	121.5
2008/11	98.6	104.5	97.8	105.8
2008/12	97.9	100.6	89.3	93.0
2009/01	98.0	99.5	85.6	88.4
2009/02	97.5	100.1	85.7	89.7
2009/03	97.3	104.2	85.2	93.0
2009/04	97.6	105.6	84.4	93.0
2009/05	97.5	103.8	84.0	90.8
2009/06	97.9	104.9	86.2	93.5
2009/07	97.5	103.1	89.2	95.0
2009/08	98.3	104.4	89.6	95.8
2009/09	98.3	102.1	91.0	94.7
2009/10	98.0	101.2	91.0	94.0
2009/11	98.4	100.8	92.8	94.8
2009/12	98.3	100.7	95.4	97.5
2010/01	99.4	102.2	97.0	100.0
2010/02	99.7	101.6	97.6	99.8
2010/03	99.7	101.8	97.0	99.2
2010/04	100.5	104.6	99.9	104.6
2010/05	100.7	102.9	101.7	104.9
2010/06	100.1	101.6	100.0	102.3
2010/07	99.4	99.0	99.9	99.8
2010/08	99.1	97.3	99.5	97.5
2010/09	99.4	97.0	100.0	97.2
2010/10	100.1	96.4	100.5	95.8
2010/11	100.7	97.4	102.6	98.2
2010/12	101.2	98.3	104.4	100.6
2011/01	102.1	98.6	107.2	102.6
2011/02	102.9	99.5	109.0	104.3
2011/03	103.5	99.6	111.8	106.3
2011/04	104.1	101.7	115.9	111.9
2011/05	103.9	99.9	118.8	112.4
2011/06	103.8	99.3	117.5	110.5
2011/07	103.6	98.3	118.3	110.2
2011/08	103.6	96.6	118.6	108.1
2011/09	103.7	96.1	117.0	106.2
2011/10	103.0	95.2	116.6	105.6
2011/11	101.9	94.8	115.4	105.4
2011/12	101.5	94.5	116.1	106.2
2012/01	101.8	94.0	115.0	104.2
2012/02	102.4	95.8	115.8	106.4
2012/03	102.9	99.2	118.3	112.9
2012/04	103.1	98.7	119.5	113.1
2012/05	102.3	96.3	118.1	109.8
2012/06	101.4	95.0	115.2	106.7
2012/07	100.6	94.0	112.0	103.5
2012/08	100.9	94.1	112.4	103.6
2012/09	101.0	94.1	114.7	105.2
2012/10	101.1	94.7	113.8	105.2
2012/11	100.9	95.9	113.2	106.5
2012/12	100.7	98.0	113.4	109.5
2013/01	101.0	102.4	113.8	115.4
2013/02	101.5	105.9	114.8	120.2
2013/03	101.3	106.6	115.1	122.0
2013/04	100.2	107.5	114.1	123.8
2013/05	99.6	109.1	112.6	125.3
2013/06	99.2	106.1	112.0	121.2
2013/07	99.1	107.5	111.6	122.8
2013/08	99.0	106.1	111.8	121.3
2013/09	99.0	107.2	113.0	124.0
2013/10	99.2	106.7	113.1	122.9
2013/11	99.1	108.0	113.1	124.9
2013-12	99.1	110.4	113.8	129.0
2014-01	99.2	110.7	114.4	130.1
2014-02	98.9	109.2	113.8	127.7
2014-03	98.6	109.1	113.4	127.4
2014-04	98.3	109.0	112.7	126.9
2014-05	98.1	108.2	112.4	125.9
2014-06	97.9	108.0	112.5	126.2
2014-07	98.0	107.9	112.5	125.9
2014-08	98.1	108.8	112.3	126.7
2014-09	97.9	111.0	111.5	129.4
2014-10	97.3	110.7	109.6	127.9
2014-11	96.9	115.7	106.9	131.6
2014-12	96.0	116.4	103.3	129.3
2015-01	94.5	113.2	98.3	121.4
2015-02	93.8	112.2	93.1	114.8
2015-03	93.9	113.0	94.0	117.1

Note: X-CC: Exports Contract Currency; X-Y: Exports Yen; M-CC: Imports Contract; M-Y: Imports Yen

Source: Bank of Japan

http://www.boj.or.jp/en/statistics/index.htm/

Chart IV-7 provides the monthly corporate goods price index (CGPI) of Japan from 1970 to 2015. Japan also experienced sharp increase in inflation during the 1970s as in the episode of the Great Inflation in the US. Monetary policy focused on accommodating higher inflation, with emphasis solely on the mandate of promoting employment, has been blamed as deliberate or because of model error or imperfect measurement for creating the Great Inflation (http://cmpassocregulationblog.blogspot.com/2011/05/slowing-growth-global-inflation-great.html http://cmpassocregulationblog.blogspot.com/2011/04/new-economics-of-rose-garden-turned.html http://cmpassocregulationblog.blogspot.com/2011/03/is-there-second-act-of-us-great.html and Appendix I The Great Inflation; see Taylor 1993, 1997, 1998LB, 1999, 2012FP, 2012Mar27, 2012Mar28, 2012JMCB and http://cmpassocregulationblog.blogspot.com/2012/06/rules-versus-discretionary-authorities.html). A remarkable similarity with US experience is the sharp rise of the CGPI of Japan in 2008 driven by carry trades from policy interest rates rapidly falling to zero to exposures in commodity futures during a global recession. Japan had the same sharp waves of consumer price inflation during the 1970s as in the US (see Chart IV-5 and associated table at http://cmpassocregulationblog.blogspot.com/2015/03/dollar-revaluation-and-financial-risk.html http://cmpassocregulationblog.blogspot.com/2015/03/irrational-exuberance-mediocre-cyclical.html http://cmpassocregulationblog.blogspot.com/2015/02/financial-and-international.html http://cmpassocregulationblog.blogspot.com/2014/12/valuations-of-risk-financial-assets.html http://cmpassocregulationblog.blogspot.com/2014/09/financial-volatility-mediocre-cyclical.html http://cmpassocregulationblog.blogspot.com/2014/09/geopolitical-and-financial-risks_71.html http://cmpassocregulationblog.blogspot.com/2014/03/financial-uncertainty-mediocre-cyclical_8145.html http://cmpassocregulationblog.blogspot.com/2014/03/financial-risks-slow-cyclical-united.html http://cmpassocregulationblog.blogspot.com/2014/02/mediocre-cyclical-united-states.html http://cmpassocregulationblog.blogspot.com/2013/12/collapse-of-united-states-dynamism-of.html http://cmpassocregulationblog.blogspot.com/2013/12/exit-risks-of-zero-interest-rates-world_1.html and earlier http://cmpassocregulationblog.blogspot.com/2013/10/twenty-eight-million-unemployed-or_561.html and at http://cmpassocregulationblog.blogspot.com/2013/09/increasing-interest-rate-risk_1.html http://cmpassocregulationblog.blogspot.com/2012/07/recovery-without-jobs-stagnating-real_09.html).

Chart IV-7, Japan, Domestic Corporate Goods Price Index, Monthly, 1970-2015

Source: Bank of Japan

http://www.stat-search.boj.or.jp/index_en.html

The producer price index of the US from 1970 to 2015 in Chart IV-8 shows various periods of more rapid or less rapid inflation but no bumps. The major event is the decline in 2008 when risk aversion because of the global recession caused the collapse of oil prices from $148/barrel to less than $80/barrel with most other commodity prices also collapsing. The event had nothing in common with explanations of deflation but rather with the concentration of risk exposures in commodities after the decline of stock market indexes. Eventually, there was a flight to government securities because of the fears of insolvency of banks caused by statements supporting proposals for withdrawal of toxic assets from bank balance sheets in the Troubled Asset Relief Program (TARP), as explained by Cochrane and Zingales (2009). The bump in 2008 with decline in 2009 is consistent with the view that zero interest rates with subdued risk aversion induce carry trades into commodity futures.

Chart IV-8, US, Producer Price Index Finished Goods, Monthly, 1970-2015

Source: US Bureau of Labor Statistics

http://www.bls.gov/ppi/

Further insight into inflation of the corporate goods price index (CGPI) of Japan is provided in Table IV-7. The increase in the tax on value added of consumption caused sharp increases in prices across all segments. Petroleum and coal with weight of 5.7 percent increased 3.4 percent in Mar 2015 and decreased 20.9 percent in 12 months. Japan exports manufactured products and imports raw materials and commodities such that the country’s terms of trade, or export prices relative to import prices, deteriorate during commodity price increases. In contrast, prices of production machinery, with weight of 3.1 percent, decreased 0.1 percent in Mar 2015 and increased 2.9 percent in 12 months. In general, most manufactured products have been experiencing negative or low increases in prices while inflation rates have been high in 12 months for products originating in raw materials and commodities. Ironically, unconventional monetary policy of zero interest rates and quantitative easing that intended to increase aggregate demand and GDP growth deteriorated the terms of trade of advanced economies with adverse effects on real income (for analysis of terms of trade and growth see Pelaez (1979, 1976a). There are now inflation effects of the intentional policy of devaluing the yen and recent collapse of commodity prices.

Table IV-7, Japan, Corporate Goods Prices and Selected Components, % Weights, Month and 12 Months ∆%

Mar 2015	Weight	Month ∆%	12 Month ∆%
Total	1000.0	0.3	0.7
Food, Beverages, Tobacco, Feedstuffs	137.5	0.1	3.4
Petroleum & Coal	57.4	3.4	-20.9
Production Machinery	30.8	-0.1	2.9
Electronic Components	31.0	-0.1	0.3
Electric Power, Gas & Water	52.7	0.7	8.1
Iron & Steel	56.6	0.0	0.4
Chemicals	92.1	0.0	-5.0
Transport Equipment	136.4	0.0	2.9

Source: Bank of Japan

http://www.boj.or.jp/en/statistics/index.htm/

Percentage point contributions to change of the corporate goods price index (CGPI) in Mar 2015 are provided in Table IV-8 divided into domestic, export and import segments. The final block provides change in the corporate goods price without the effects of the increase in the tax on value added of consumption. In the domestic CGPI, increasing 0.3 percent in Mar 2015, the energy shock is evident in the contribution of 0.19 percentage points by petroleum and coal products and 0.05 percentage points by electric power, gas and water in renewed carry trades of exposures in commodity futures. The exports CGPI increased 0.1 percent on the basis of the contract currency with contribution of 0.13 percentage points by chemicals and related products and 0.09 percentage points by electric and electronic products. The imports CGPI increased 1.0 percent on the contract currency basis. Petroleum, coal and natural gas products contributed 1.08 percentage points. Shocks of risk aversion cause unwinding carry trades that result in declining commodity prices with resulting downward pressure on price indexes. The volatility of inflation adversely affects financial and economic decisions worldwide. The final block D shows that the change in the domestic corporate goods price index without the effects of the consumption tax is 0.3 percent.

Table IV-8, Japan, Percentage Point Contributions to Change of Corporate Goods Price Index

Groups Mar 2015	Contribution to Change Percentage Points
A. Domestic Corporate Goods Price Index	Monthly Change:  0.3%
Petroleum & Coal Products	0.19
Electric Power, Gas & Water	0.05
Nonferrous Metals	0.03
Food, Beverages, Tobacco & Feedstuffs	0.01
Agriculture, Forestry & Fishery Products	-0.01
B. Export Price Index	Monthly Change:    0.1% contract currency
Chemicals & Related Products	0.13
Electric & Electronic Products	0.09
Metals & Related Products	-0.15
Other Primary Products & Manufactured Goods	-0.03
C. Import Price Index	Monthly Change: 1.0% contract currency basis
Petroleum, Coal & Natural Gas	1.08
Transportation Equipment	0.02
Foodstuffs & Feedstuffs	-0.09
Other Primary Products & Manufactured Goods	-0.03
D. Domestic Corporate Goods Price Index Excluding Consumption Tax	Monthly Change: 0.3%
Petroleum & Coal Products	0.19
Electric Power, Gas & Water	0.05
Nonferrous Metals	0.03
Food, Beverages, Tobacco & Feedstuffs	0.01
Agriculture, Forestry & Fishery Products	-0.01

Source: Bank of Japan

http://www.boj.or.jp/en/statistics/index.htm/

There are two categories of responses in the Empire State Manufacturing Survey of the Federal Reserve Bank of New York (http://www.newyorkfed.org/survey/empire/empiresurvey_overview.html): current conditions and expectations for the next six months. There are responses in the survey for two types of prices: prices received or inputs of production and prices paid or sales prices of products. Table IV-5 provides indexes for the two categories and within them for the two types of prices from Jan 2011 to Apr 2015. The index of current prices paid or costs of inputs moved from 16.13 in Dec 2012 to 19.15 in Apr 2015 while the index of current prices received or sales prices increased from 1.08 in Dec 2012 to 4.26 in Apr 2015. The farther the index is from the area of no change at zero, the faster the rate of change. Prices paid or costs of inputs at 19.15 in Apr 2015 are expanding at faster pace than prices received or of sales of products at 4.6. The index of future prices paid or expectations of costs of inputs in the next six months fell from 51.61 in Dec 2012 to 38.30 in Apr 2015 while the index of future prices received or expectation of sales prices in the next six months decreased from 25.81 in Dec 2012 to 13.83 in Apr 2015. Priced paid or of inputs are expected to increase at a faster pace in the next six months than prices received or prices of sales products. Prices of sales of finished products are less dynamic than prices of costs of inputs during waves of increases. Prices of costs of costs of inputs fall less rapidly than prices of sales of finished products during waves of price decreases. As a result, margins of prices of sales less costs of inputs oscillate with typical deterioration against producers, forcing companies to manage tightly costs and labor inputs. Instability of sales/costs margins discourages investment and hiring.

Table IV-5, US, FRBNY Empire State Manufacturing Survey, Diffusion Indexes, Prices Paid and Prices Received, SA

	Current Prices Paid	Current Prices Received	Six Months Prices Paid	Six Months Prices Received
Jan-11	35.79	15.79	60	42.11
Feb-11	45.78	16.87	55.42	27.71
Mar-11	53.25	20.78	71.43	36.36
Apr-11	57.69	26.92	56.41	38.46
May-11	69.89	27.96	68.82	35.48
Jun-11	56.12	11.22	55.1	19.39
Jul-11	43.33	5.56	51.11	30
Aug-11	28.26	2.17	42.39	15.22
Sep-11	32.61	8.7	53.26	22.83
Oct-11	22.47	4.49	40.45	17.98
Nov-11	18.29	6.1	36.59	25.61
Dec-11	24.42	3.49	56.98	36.05
Jan-12	26.37	23.08	53.85	30.77
Feb-12	25.88	15.29	62.35	34.12
Mar-12	50.62	13.58	66.67	32.1
Apr-12	45.78	19.28	50.6	22.89
May-12	37.35	12.05	57.83	22.89
Jun-12	19.59	1.03	34.02	17.53
Jul-12	7.41	3.7	35.8	16.05
Aug-12	16.47	2.35	31.76	14.12
Sep-12	19.15	5.32	40.43	23.4
Oct-12	17.2	4.3	44.09	24.73
Nov-12	14.61	5.62	39.33	15.73
Dec-12	16.13	1.08	51.61	25.81
Jan-13	22.58	10.75	38.71	21.51
Feb-13	26.26	8.08	44.44	13.13
Mar-13	25.81	2.15	50.54	23.66
Apr-13	28.41	5.68	44.32	14.77
May-13	20.45	4.55	29.55	14.77
Jun-13	20.97	11.29	45.16	17.74
Jul-13	17.39	1.09	28.26	11.96
Aug-13	20.48	3.61	40.96	19.28
Sep-13	21.51	8.6	39.78	24.73
Oct-13	21.69	2.41	45.78	25.3
Nov-13	17.11	-3.95	42.11	17.11
Dec-13	15.66	3.61	48.19	27.71
Jan-14	36.59	13.41	45.12	23.17
Feb-14	25	15	40	23.75
Mar-14	21.18	2.35	43.53	25.88
Apr-14	22.45	10.2	33.67	14.29
May-14	19.78	6.59	31.87	14.29
Jun-14	17.2	4.3	36.56	16.13
Jul-14	25	6.82	37.5	18.18
Aug-14	27.27	7.95	42.05	21.59
Sep-14	23.91	17.39	43.48	32.61
Oct-14	11.36	6.82	42.05	26.14
Nov-14	10.64	0	41.49	25.53
Dec-14	10.42	6.25	40.63	32.29
Jan-15	12.63	12.63	33.68	15.79
Feb-15	14.61	3.37	26.97	5.62
Mar-15	12.37	8.25	31.96	12.37
Apr-15	19.15	4.26	38.30	13.83

Source: Federal Reserve Bank of New York http://www.newyorkfed.org/survey/empire/empiresurvey_overview.html

Price indexes of the Federal Reserve Bank of Philadelphia Outlook Survey are in Table IV-6. As inflation waves throughout the world (Section I and earlier http://cmpassocregulationblog.blogspot.com/2015/03/dollar-revaluation-and-financial-risk.html) indexes of both current and expectations of future prices paid and received were quite high until May 2011. Prices paid, or inputs, were more dynamic, reflecting carry trades from zero interest rates to commodity futures. All indexes softened after May 2011 with even decline of prices received in Aug 2011 during the first round of risk aversion. Current and future price indexes have increased again but not back to the intensity in the beginning of 2011 because of risk aversion frustrating carry trades even induced by zero interest rates. The index of prices paid or prices of inputs moved from 20.8 in Dec 2012 to minus 7.5 in Apr 2015. The index of current prices received was minus 2.4 in Apr 2013, indicating decrease of prices received. The index of current prices received decreased from 2.0 in Dec 2012 to minus 4.1in Apr 2015. The farther the index is from the area of no change at zero, the faster the rate of change. The index of current prices paid or costs of inputs at minus 7.5 in Apr 2015 indicates faster contraction than the index of current prices received or sales prices of production contracting at 4.1. Prices paid indicate faster contraction than prices received during most of the history of the index. The index of future prices paid decreased to 19.9 in Apr 2015 from 40.6 in Dec 2012 while the index of future prices received decreased from 21.9 in Dec 2012 to 10.7 in Apr 2015. Expectations are incorporating faster increases in prices of inputs or costs of production, 19.9 in Apr 2015, than of sales prices of produced goods, 10.7 in Apr 2015, forcing companies to manage tightly costs and labor inputs. Volatility of margins of sales/costs discourages investment and hiring.

Table IV-6, US, Federal Reserve Bank of Philadelphia Business Outlook Survey, Current and Future Prices Paid and Prices Received, SA

	Current Prices Paid	Current Prices Received	Future Prices Paid	Future Prices Received
10-Dec	42.8	5.3	56.0	24.2
11-Jan	48.1	12.3	58.3	34.8
11-Feb	61.1	13.4	67.7	31.5
11-Mar	59	17.6	62.4	33.4
11-Apr	52.1	23.6	56.2	35.7
11-May	49.8	20.6	54.9	28.6
11-Jun	37.4	7.2	41.4	6.9
11-Jul	34.4	5.5	49.3	17.5
11-Aug	23.6	-3.9	43.5	22.8
11-Sep	30.7	6.3	38.3	20.6
11-Oct	23	1.7	41.5	27.9
11-Nov	22.2	5.3	33.3	26.3
11-Dec	25.1	5.8	42	21.1
12-Jan	25.8	8.6	46.9	22.2
12-Feb	32.7	9.9	50.5	26.3
12-Mar	16.6	6.5	38.7	24.3
12-Apr	19.9	10	36.7	23.7
12-May	8.9	0.9	39.9	9.6
12-Jun	3.4	-4.5	34.5	16.9
12-Jul	9	3.5	29.1	21.4
12-Aug	17	6.1	36.8	23.9
12-Sep	14	2.6	39	24.9
12-Oct	18	5.2	44.1	15.4
12-Nov	22.8	5.1	44.6	10.6
12-Dec	20.8	2.0	40.6	21.9
13-Jan	12.3	-0.5	33.2	22.3
13-Feb	11.9	-0.7	33.9	22.5
13-Mar	11.4	0.6	34.3	19.3
13-Apr	7.6	-2.4	31.1	14.7
13-May	11.9	0.5	34.3	19.8
13-Jun	20.8	13.6	33.1	24
13-Jul	20.3	6	42.7	26.9
13-Aug	19.6	12	36.9	23
13-Sep	23.8	11.6	39	27.9
13-Oct	18.5	10.2	41.2	35
13-Nov	24.4	7.6	39.4	36
13-Dec	16.9	8.5	37.9	28.8
14-Jan	18.8	6.3	34.3	14.2
14-Feb	14.8	7.9	27.2	18.1
14-Mar	18.3	6.4	31.8	18.8
14-Apr	14.5	9.6	38.3	18.6
14-May	26.5	18	36.9	29.6
14-Jun	32	13.1	45.1	30.1
14-Jul	32.3	14.7	40.1	25
14-Aug	24.1	5.1	47.5	27.7
14-Sep	24.4	8	41.9	26.6
14-Oct	24.9	18.2	30.5	23
14-Nov	15.8	10	30.5	18.7
14-Dec	14.4	9.8	22.3	20.6
15-Jan	9.8	-0.2	26	20.7
15-Feb	4.7	-0.2	32.2	19.3
15-Mar	-3	-6.4	27.5	7.4
15-Apr	-7.5	-4.1	19.9	10.7

Source: Federal Reserve Bank of Philadelphia

http://www.philadelphiafed.org/index.cfm

Chart IV-1 of the Business Outlook Survey of the Federal Reserve Bank of Philadelphia Outlook Survey provides the diffusion index of current prices paid or prices of inputs from 2006 to 2015. Recession dates are in shaded areas. In the middle of deep global contraction after IVQ2007, input prices continued to increase in speculative carry trades from central bank policy rates falling toward zero into commodities futures. The index peaked above 70 in the second half of 2008. Inflation of inputs moderated significantly during the shock of risk aversion in late 2008, even falling briefly into contraction territory below zero during several months in 2009 in the flight away from risk financial assets into US government securities (Cochrane and Zingales 2009) that unwound carry trades. Return of risk appetite induced carry trade with significant increase until return of risk aversion in the first round of the European sovereign debt crisis in Apr 2010. Carry trades returned during risk appetite in expectation that the European sovereign debt crisis was resolved. The various inflation waves originating in carry trades induced by zero interest rates with alternating episodes of risk aversion are mirrored in the prices of inputs after 2011, in particular after Aug 2012 with the announcement of the Outright Monetary Transactions Program of the European Central Bank (http://www.ecb.int/press/pr/date/2012/html/pr120906_1.en.html). Subsequent risk aversion and flows of capital away from commodities into stocks and high-yield bonds caused sharp decline in the index of prices paid followed by another recent rebound with marginal decline and new increase. The index falls, rebounds and falls again in the final segment but there are no episodes of contraction after 2009 with exception of minus 3.0 in Mar 2015 and -7.5 in Apr 2015.

Chart IV-1, Federal Reserve Bank of Philadelphia Business Outlook Survey Current Prices Paid Diffusion Index SA

Source: Federal Reserve Bank of Philadelphia

http://www.philadelphiafed.org/index.cfm

Chart IV-2 of the Federal Reserve Bank of Philadelphia Outlook Survey provides the diffusion index of current prices received from 2006 to 2015. The significant difference between the index of current prices paid in Chart IV-1 and the index of current prices received in Chart IV-2 is that increases in prices paid are significantly sharper than increases in prices received. There were several periods of negative readings of prices received from 2010 to 2015. There were only two contraction of prices paid at 3.0 Mar 2015 with sharper contraction of 6.4 of prices received and minus 7.5 for prices paid in Apr 2015 with minus 4.1 for prices received. Prices paid relative to prices received deteriorate most of the time largely because of the carry trades from zero interest rates to commodity futures. Profit margins of business are compressed intermittently by fluctuations of commodity prices induced by unconventional monetary policy of zero interest rates, frustrating production, investment and hiring decisions of business, which is precisely the opposite outcome pursued by unconventional monetary policy.

Chart IV-2, Federal Reserve Bank of Philadelphia Business Outlook Survey Current Prices Received Diffusion Index SA

Source: Federal Reserve Bank of Philadelphia

http://www.philadelphiafed.org/index.cfm

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 53.7 in Mar 2015. 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 moved to 50.3 in Mar 2015.

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

	Total Index	New Orders	Interm. Input Prices	Subs Prices	Exp
Mar 2015	53.7	50.3	50.0	48.4	58.8
Feb	53.9	51.2	52.5	51.2	58.7
Jan	53.7	50.2	47.6	46.9	59.6
Dec 2014	54.1	50.5	50.1	47.3	59.5
Nov	53.9	50.1	50.6	47.7	59.7
Oct	53.8	51.0	52.0	48.8	59.9
Sep	54.0	49.5	49.8	47.3	60.9
Aug	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 56.0 in Oct 2013 to 53.7 in Mar 2015.

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, 50.1 in Dec 2014 and 50.1 in Mar 2015. 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 moved to 50.4 in Dec 2014. The index moved to 50.2 in Mar 2015.

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

	IPM	PI	NOI	INV	EMP	SDEL
2015
Mar	50.1	52.1	50.2	48.0	48.4	50.1
Feb	49.9	51.4	50.4	48.2	47.8	49.9
Jan	49.8	51.7	50.2	47.3	47.9	50.2
2014
Dec	50.1	52.2	50.4	47.5	48.1	49.9
Nov	50.3	52.5	50.9	47.7	48.2	50.3
Oct	50.8	53.1	51.6	48.4	48.4	50.1
Sep	51.1	53.6	52.2	48.8	48.2	50.1
Aug	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 50.1 in Mar 2015.

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 IQ2015 relative to the same period in 2014 was 7.0 percent, as shown in Table VC-GDP. Secondary industry accounts for 42.9 percent of cumulative GDP in IQ2015. In cumulative IQ2015, industry accounts for 38.0 percent of GDP and construction for 5.1 percent. Tertiary industry accounts for 51.6 percent of cumulative GDP in IQ2015 and primary industry for 5.5 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 7.0 percent and to 7.4 percent in IIQ2013, rebounding to 9.5 percent in IIIQ2013. Annual equivalent growth was 7.4 percent in IVQ2013, declining to 6.6 percent in IQ2014 and increasing to 8.2 percent in IIQ2014. Annual equivalent growth slowed to 7.8 percent in IIIQ2014 and 6.1 percent in IVQ2014. Growth slowed to annual equivalent 5.3 percent in IQ2015.

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

Cumulative GDP IVQ2014	Value Current CNY Billion	IQ2015 Year-on-Year Constant Prices ∆%
GDP	14,066.7	7.0
Primary Industry	777.0	3.2
Farming	807.9	3.3
Secondary Industry	6,029.2	6.4
Industry	5,345.2	6.1
Construction	715.0	8.8
Tertiary Industry	7,260.5	7.9
Transport, Storage, Post	707.2	5.5
Wholesale, Retail Trades	1,346.0	5.8
Accommodation and Restaurants	255.9	5.3
Finance	1,366.9	15.9
Real Estate	970.3	2.0
Other	2,552.4	9.0
Growth in Quarter Relative to Prior Quarter	∆% on Prior Quarter	∆% Annual Equivalent
2015
IQ2015	1.3	5.3
2014
IVQ2014	1.5	6.1
IIIQ2014	1.9	7.8
IIQ2014	2.0	8.2
IQ2014	1.6	6.6
2013
IVQ2013	1.8	7.4
IIIQ2013	2.3	9.5
IIQ2013	1.8	7.4
IQ2013	1.7	7.0
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/

Cumulative growth of China’s GDP in IQ2015 relative to the same period in 2014 was 7.0 percent, as shown in Table VC-GDPA. Secondary industry accounts for 42.6 percent of cumulative GDP in IVQ2014. Secondary industry accounts for 42.9 percent of cumulative GDP in IQ2015. In cumulative IQ2015, industry accounts for 38.0 percent of GDP and construction for 5.1 percent. Tertiary industry accounts for 51.6 percent of cumulative GDP in IQ2015 and primary industry for 5.5 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. GDP growth decelerated from 12.1 percent in IQ2010 and 11.2 percent in IIQ2010 to 7.8 percent in IQ2013, 7.5 percent in IIQ2013 and 7.9 percent in IIIQ2013. GDP grew 7.6 percent in IVQ2013 relative to a year earlier and 1.8 percent relative to IIIQ2013, which is equivalent to 7.4 percent per year. GDP grew 7.4 percent in IQ2014 relative to a year earlier and 1.6 percent in IQ2014 that is equivalent to 6.6 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. In IIIQ2014, GDP grew 7.3 percent relative to a year earlier and 1.9 percent relative to the prior quarter, which is 7.8 percent in annual equivalent. GDP grew 1.5 percent in IVQ2014, which is 6.1 percent in annual equivalent and 7.3 percent relative to a year earlier. In IQ2015, GDP grew 1.3 percent, which is equivalent in a year to a year earlier.

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

	IQ2015
GDP	7.0
Primary Industry	3.2
Secondary Industry	6.4
Tertiary Industry	7.9
GDP ∆% Relative to a Prior Quarter	1.3
	IQ 2013	IIQ 2013	IIIQ 2013	IVQ 2013	IQ 2014	IIQ 2014	IIIQ 2014	IVQ 2014
GDP	7.8	7.5	7.9	7.6	7.4	7.5	7.3	7.3
Primary Industry	3.4	3.0	3.4	4.0	3.5	3.9	4.2	4.1
Secondary Industry	7.8	7.6	7.8	7.8	7.3	7.4	7.4	7.3
Tertiary Industry	8.3	8.3	8.4	8.3	7.1	8.0	7.9	8.1
GDP ∆% Relative to a Prior Quarter	1.7	1.8	2.3	1.8	1.6	2.0	1.9	1.5
	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/42e219843597406983d9e4633c324d53) is weakening. The overall Flash HSBC China Manufacturing PMI^™ decreased from 49.6 in Mar to 49.2 in Apr, while the Flash HSBC China Manufacturing Output Index decreased from 51.3 in Mar to 50.4 in Apr, indicating moderate growth. Exports orders indicate expansion. Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds moderate deterioration in manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/42e219843597406983d9e4633c324d53). The HSBC China Services PMI^™, compiled by Markit, shows the HSBC Composite Output, combining manufacturing and services, unchanged from 51.8 in Feb to 51.8 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/9a0545fb09ca43af984c9e78444837d5). Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds modest output growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/9a0545fb09ca43af984c9e78444837d5). The HSBC China Services Business Activity index increased from 52.0 in Feb to 52.3 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/9a0545fb09ca43af984c9e78444837d5). Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC, finds that the services PMI shows sustained activity at modest pace (http://www.markiteconomics.com/Survey/PressRelease.mvc/9a0545fb09ca43af984c9e78444837d5). The HSBC Purchasing Managers’ Index^™ (PMI^™), compiled by Markit, decreased to 49.6 in Mar from 50.7 in Feb, indicating moderate deterioration in manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/2c31cfa7df914ac09be4c0b5d1da2988). New export orders declined modestly. Hongbin Qu, Chief Economist, China and Co-Head of Asian Economic Research at HSBC, finds weak internal and external demand (http://www.markiteconomics.com/Survey/PressRelease.mvc/2c31cfa7df914ac09be4c0b5d1da2988). Table CNY provides the country data table for China.

Table CNY, China, Economic Indicators

Price Indexes for Industry	Mar 12-month ∆%: minus 4.6 Mar month ∆%: -0.1 Blog 4/12/15
Consumer Price Index	Mar 12-month ∆%: 1.4 Feb month ∆%: -0.5 Blog 4/12/15
Value Added of Industry	Mar month ∆%: 0.25 Jan-Mar 2015/Jan-Mar 2014 ∆%: 6.4 Blog 4/19/15
GDP Growth Rate	Year IQ2015 ∆%: 7.0 First Quarter 2015 ∆%: 7.0 Quarter IQ2015 AE ∆%: 5.3 Blog 4/26/15
Investment in Fixed Assets	Total Jan-Mar 2015 ∆%: 13.5 Real estate development: 8.5 Blog 4/19/15
Retail Sales	Mar month ∆%: 0.71 Jan-Mar 12 month ∆%: NA Jan-Mar ∆%: 10.6 Blog 4/19/15
Trade Balance	Mar balance $3.08 billion Exports 12M ∆% -15.0 Imports 12M ∆% -12.7 Cumulative Mar 2015: $124.03 billion Blog 4/19/15

Links to blog comments in Table CNY:

4/19/2015 http://cmpassocregulationblog.blogspot.com/2015/04/global-portfolio-reallocations-squeeze.html

4/12/15 http://cmpassocregulationblog.blogspot.com/2015/04/dollar-revaluation-recovery-without.html

Cumulative growth of China’s GDP in IQ2015 relative to the same period in 2014 was 7.0 percent, as shown in Table VC-1. Secondary industry accounts for 42.9 percent of cumulative GDP in IQ2015. In cumulative IQ2015, industry accounts for 38.0 percent of GDP and construction for 5.1 percent. Tertiary industry accounts for 51.6 percent of cumulative GDP in IQ2015 and primary industry for 5.5 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 7.0 percent and to 7.4 percent in IIQ2013, rebounding to 9.5 percent in IIIQ2013. Annual equivalent growth was 7.4 percent in IVQ2013, declining to 6.6 percent in IQ2014 and increasing to 8.2 percent in IIQ2014. Annual equivalent growth slowed to 7.8 percent in IIIQ2014 and 6.1 percent in IVQ2014. Growth slowed to annual equivalent 5.3 percent in IQ2015.

Table VC-1 China, Quarterly Growth of GDP, Current CNY 100 Million and Inflation Adjusted ∆%

Cumulative GDP IVQ2014	Value Current CNY Billion	IQ2015 Year-on-Year Constant Prices ∆%
GDP	14,066.7	7.0
Primary Industry	777.0	3.2
Farming	807.9	3.3
Secondary Industry	6,029.2	6.4
Industry	5,345.2	6.1
Construction	715.0	8.8
Tertiary Industry	7,260.5	7.9
Transport, Storage, Post	707.2	5.5
Wholesale, Retail Trades	1,346.0	5.8
Accommodation and Restaurants	255.9	5.3
Finance	1,366.9	15.9
Real Estate	970.3	2.0
Other	2,552.4	9.0
Growth in Quarter Relative to Prior Quarter	∆% on Prior Quarter	∆% Annual Equivalent
2015
IQ2015	1.3	5.3
2014
IVQ2014	1.5	6.1
IIIQ2014	1.9	7.8
IIQ2014	2.0	8.2
IQ2014	1.6	6.6
2013
IVQ2013	1.8	7.4
IIIQ2013	2.3	9.5
IIQ2013	1.8	7.4
IQ2013	1.7	7.0
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/

Cumulative growth of China’s GDP in IQ2015 relative to the same period in 2014 was 7.0 percent as, shown in Table VC-2. Secondary industry accounts for 42.6 percent of cumulative GDP in IVQ2014. Secondary industry accounts for 42.9 percent of cumulative GDP in IQ2015. In cumulative IQ2015, industry accounts for 38.0 percent of GDP and construction for 5.1 percent. Tertiary industry accounts for 51.6 percent of cumulative GDP in IQ2015 and primary industry for 5.5 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. GDP growth decelerated from 12.1 percent in IQ2010 and 11.2 percent in IIQ2010 to 7.8 percent in IQ2013, 7.5 percent in IIQ2013 and 7.9 percent in IIIQ2013. GDP grew 7.6 percent in IVQ2013 relative to a year earlier and 1.8 percent relative to IIIQ2013, which is equivalent to 7.4 percent per year. GDP grew 7.4 percent in IQ2014 relative to a year earlier and 1.6 percent in IQ2014 that is equivalent to 6.6 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. In IIIQ2014, GDP grew 7.3 percent relative to a year earlier and 1.9 percent relative to the prior quarter, which is 7.8 percent in annual equivalent. GDP grew 1.5 percent in IVQ2014, which is 6.1 percent in annual equivalent and 7.3 percent relative to a year earlier. In IQ2015, GDP grew 1.3 percent, which is equivalent in a year to

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

	IQ2015
GDP	7.0
Primary Industry	3.2
Secondary Industry	6.4
Tertiary Industry	7.9
GDP ∆% Relative to a Prior Quarter	1.3
	IQ 2013	IIQ 2013	IIIQ 2013	IVQ 2013	IQ 2014	IIQ 2014	IIIQ 2014	IVQ 2014
GDP	7.8	7.5	7.9	7.6	7.4	7.5	7.3	7.3
Primary Industry	3.4	3.0	3.4	4.0	3.5	3.9	4.2	4.1
Secondary Industry	7.8	7.6	7.8	7.8	7.3	7.4	7.4	7.3
Tertiary Industry	8.3	8.3	8.4	8.3	7.1	8.0	7.9	8.1
GDP ∆% Relative to a Prior Quarter	1.7	1.8	2.3	1.8	1.6	2.0	1.9	1.5
	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/

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 1999. Growth was very strong at 3.3 percent in 2006 and 3.1 percent in 2007. The global recession had strong impact with growth of only 0.5 percent in 2008 and decline of 4.5 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 0.8 percent in 2012 and minus 0.4 percent in 2013 but 0.9 percent in 2014.

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

Year	HICP ∆%	Unemployment %	GDP ∆%
1999	1.2	9.7	2.9
2000	2.2	8.8	3.8
2001	2.4	8.3	2.1
2002	2.3	8.6	0.9
2003	2.1	9.1	0.7
2004	2.2	9.3	2.2
2005	2.2	9.1	1.7
2006	2.2	8.4	3.3
2007	2.2	7.5	3.1
2008	3.3	7.6	0.5
2009	0.3	9.6	-4.5
2010	1.6	10.2	2.0
2011	2.7	10.2	1.6
2012	2.5	11.4	-0.8
2013	1.3	12.0	-0.4
2014	0.4	11.6	0.9

http://ec.europa.eu/eurostat

http://ec.europa.eu/eurostat/data/database

The GDP of the euro area in 2013 in current US dollars in the dataset of the World Economic Outlook (WEO) of the International Monetary Fund (IMF) is $12,753.7 billion or 17.1 percent of world GDP of $74,699.3 billion (http://www.imf.org/external/pubs/ft/weo/2014/02/weodata/weoselgr.aspx). The sum of the GDP of France $2807.3 billion with the GDP of Germany of $3635.9 billion, Italy of $2071.9 billion and Spain $1358.7 billion is $9873.8 billion or 77.4 percent of total euro area GDP and 13.2 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 2014. 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
2014	0.9	1.6	0.4	-0.4	1.4
2013	-0.4	0.1	0.3	-1.7	-1.2
2012	-0.8	0.4	0.3	-2.8	-2.1
2011	1.6	3.6	2.1	0.6	-0.6
2010	2.0	4.1	2.0	1.7	0.0
2009	-4.5	-5.6	-2.9	-5.5	-3.6
2008	0.5	1.1	0.2	-1.0	1.1
2007	3.1	3.3	2.4	1.5	3.8
2006	3.3	3.7	2.4	2.0	4.2
2005	1.7	0.7	1.6	0.9	3.7
2004	2.2	1.2	2.8	1.6	3.2
2003	0.7	-0.7	0.8	0.2	3.2
2002	0.9	0.0	1.1	0.3	2.9
2001	2.1	1.7	2.0	1.8	4.0
2000	3.8	3.0	3.9	3.7	5.3
1999	2.9	2.0	3.4	1.6	4.5
1998	2.9	2.0	3.6	1.4	4.3
1997	2.6	1.8	2.3	1.8	3.7
1996	1.6	0.8	1.4	1.3	2.7

Source: EUROSTAT

http://ec.europa.eu/eurostat

http://ec.europa.eu/eurostat/data/database

The Flash Eurozone PMI Composite Output Index of the Markit Flash Eurozone PMI^®, combining activity in manufacturing and services, decreased from 54.0 in Mar to 53.5 in Apr (http://www.markiteconomics.com/Survey/PressRelease.mvc/8a6a0f50febb4223a82a464ad147e9fd). Chris Williamson, Chief Economist at Markit, finds that the Markit Flash Eurozone PMI index suggests GDP growth at around 0.4 percent in IIQ2015 (http://www.markiteconomics.com/Survey/PressRelease.mvc/8a6a0f50febb4223a82a464ad147e9fd). The Markit Eurozone PMI^® Composite Output Index, combining services and manufacturing activity with close association with GDP increased from 53.3 in Feb to 54.0 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/3de234401ab34b9fa89ccae8af205624). Chris Williamson, Chief Economist at Markit, finds slowing growth of GDP at around 0.3 percent in IQ2015 with improved prospects in coming months (http://www.markiteconomics.com/Survey/PressRelease.mvc/3de234401ab34b9fa89ccae8af205624). The Markit Eurozone Services Business Activity Index increased from 53.7 in Feb to 54.2 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/3de234401ab34b9fa89ccae8af205624). The Markit Eurozone Manufacturing PMI^® increased from 51.0 in Feb to 51.9 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/75a84292bf394732a98dc4a53cad080c). New export orders increased. Chris Williamson, Chief Economist at Markit, finds improvement of industrial growth in the euro area (http://www.markiteconomics.com/Survey/PressRelease.mvc/75a84292bf394732a98dc4a53cad080c). Table EUR provides the data table for the euro area.

Table EUR, Euro Area Economic Indicators

GDP	IVQ2014 ∆% 0.3; IVQ2014/IVQ2013 ∆% 0.9 Blog 3/15/15
Unemployment	Feb 2015: 11.3 % unemployment rate; Feb 2015: 18.204 million unemployed Blog 4/5/15
HICP	Mar month ∆%: 1.1 12 months Mar ∆%: -0.1 Blog 4/19/15
Producer Prices	Euro Zone industrial producer prices Feb ∆%: 0.5 Feb 12-month ∆%: -2.8 Blog 4/12/15
Industrial Production	Feb month ∆%: 1.1; Feb 12 months ∆%: 1.6 Blog 4/19/15
Retail Sales	Jan month ∆%: 1.1 Jan 12 months ∆%: 3.7 Blog 3/15/15
Confidence and Economic Sentiment Indicator	Sentiment 103.9 Mar 2015 Consumer minus 3.7 Mar 2015 Blog 4/5/15
Trade	Jan-Feb 2015/Jan-Feb 2014 Exports ∆%: 1.8 Imports ∆%: -2.8 Feb 2015 12-month Exports ∆% 4.1 Imports ∆% 0.4 Blog 4/19/15

Links to blog comments in Table EUR:

4/19/2015 http://cmpassocregulationblog.blogspot.com/2015/04/global-portfolio-reallocations-squeeze.html

4/12/15 http://cmpassocregulationblog.blogspot.com/2015/04/dollar-revaluation-recovery-without.html

4/5/15 http://cmpassocregulationblog.blogspot.com/2015/04/volatility-of-valuations-of-financial.html

3/15/15 http://cmpassocregulationblog.blogspot.com/2015/03/global-exchange-rate-struggle-recovery.html

VE Germany. Table VE-DE provides yearly growth rates of the German economy from 1971 to 2014, 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, increasing to 1.6 percent in 2014.

The Federal Statistical Agency of Germany analyzes the fall and recovery of the German economy (http://www.destatis.de/jetspeed/portal/cms/Sites/destatis/Internet/EN/Content/Statistics/VolkswirtschaftlicheGesamtrechnungen/Inlandsprodukt/Aktuell,templateId=renderPrint.psml):

“The German economy again grew strongly in 2011. The price-adjusted gross domestic product (GDP) increased by 3.0% compared with the previous year. Accordingly, the catching-up process of the German economy continued during the second year after the economic crisis. In the course of 2011, the price-adjusted GDP again exceeded its pre-crisis level. The economic recovery occurred mainly in the first half of 2011. In 2009, Germany experienced the most serious post-war recession, when GDP suffered a historic decline of 5.1%. The year 2010 was characterised by a rapid economic recovery (+3.7%).”

Table VE-DE, Germany, GDP ∆% on Prior Year

	Price Adjusted Chain-Linked	Price- and Calendar-Adjusted Chain Linked
Average ∆% 1991-2014	1.3
Average ∆% 1991-1999	1.5
Average ∆% 2000-2007	1.4
Average ∆% 2003-2007	2.2
Average ∆% 2007-2014	0.7
Average ∆% 2009-2014	1.9
2014	1.6	1.6
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/FactsFigures/NationalEconomyEnvironment/NationalAccounts/NationalAccounts.html

https://www.destatis.de/EN/FactsFigures/NationalEconomyEnvironment/NationalAccounts/DomesticProduct/CurrentRevision.html

https://www.destatis.de/EN/Methods/NationalAccountRevision/Revision2014_BackgroundPaper.pdf?__blob=publicationFile

https://www.destatis.de/EN/PressServices/Press/pr/2014/02/PE14_048_811.html

https://www.destatis.de/EN/PressServices/Press/pr/2013/08/PE13_278_811.html https://www.destatis.de/EN/PressServices/Press/pr/2013/11/PE13_381_811.html

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

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

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

https://www.destatis.de/EN/PressServices/Press/pr/2014/09/PE14_306_811.html

https://www.destatis.de/EN/PressServices/Press/pr/2014/11/PE14_401_811.html

https://www.destatis.de/EN/PressServices/Press/pr/2015/02/PE15_048_811.html

https://www.destatis.de/EN/PressServices/Press/pr/2015/02/PE15_61_811.html

The Flash Germany Composite Output Index of the Markit Flash Germany PMI^®, combining manufacturing and services, decreased from 55.4 in Mar to 54.2 in Apr. The index of manufacturing output reached 53.9 in Apr, decreasing from 55.5 in Mar, while the index of services decreased to 54.4 in Apr from 55.4 in Mar. The overall Flash Germany Manufacturing PMI^® decreased from 52.8 in Mar to 51.9 in Apr (http://www.markiteconomics.com/Survey/PressRelease.mvc/70eb1bd5cc374ea99998072b6f324c02). New orders in manufacturing expanded moderately. Oliver Kolodseike, Economist at Markit, finds continuing GDP growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/70eb1bd5cc374ea99998072b6f324c02). 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 53.8 in Feb to 55.4 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/126dd4b9c0244796bf59910d40f88ef8). Oliver Kolodseike, Senior Economist at Markit and author of the report, finds improvement in 2015 (http://www.markiteconomics.com/Survey/PressRelease.mvc/126dd4b9c0244796bf59910d40f88ef8). The Germany Services Business Activity Index increased from 54.7 in Feb to 55.4 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/126dd4b9c0244796bf59910d40f88ef8). The Markit/BME Germany Purchasing Managers’ Index^® (PMI^®), showing close association with Germany’s manufacturing conditions, increased from 51.1 in Feb to 52.8 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/d6d0b52b742b427f9b808a09fd84eb80). New export orders increased. Oliver Kolodseike, Senior Economist at Markit and author of the report, finds improvement of manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/d6d0b52b742b427f9b808a09fd84eb80).Table DE provides the country data table for Germany.

Table DE, Germany, Economic Indicators

GDP	IVQ2014 0.7 ∆%; IV/Q2014/IVQ2013 ∆% 1.6 2014/2013: 1.6% GDP ∆% 1970-2014 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 11/16/14 11/30/14 2/15/15 3/1/15
Consumer Price Index	Mar month NSA ∆%: 0.5 Mar 12-month NSA ∆%: 0.3 Blog 4/19/15
Producer Price Index	Mar month ∆%: 0.1 NSA, 0.1 CSA 12-month NSA ∆%: -1.7 Blog 4/26/15
Industrial Production	MFG Feb month CSA ∆%: 0.6 12-month NSA: -1.2 Blog 4/12/15
Machine Orders	MFG Feb month ∆%: -0.9 Feb 12-month ∆%: -2.4 Blog 4/12/15
Retail Sales	Feb Month ∆% -0.5 12-Month ∆% 3.6 Blog 4/5/15
Employment Report	Unemployment Rate SA Jan 4.8% Blog 4/5/15
Trade Balance	Exports Feb 12-month NSA ∆%: 3.9 Imports Feb 12 months NSA ∆%: 0.8 Exports Feb month CSA ∆%: 1.5; Imports Feb month CSA 1.8 Blog 4/12/15

Links to blog comments in Table DE:

4/19/2015 http://cmpassocregulationblog.blogspot.com/2015/04/global-portfolio-reallocations-squeeze.html

4/12/15 http://cmpassocregulationblog.blogspot.com/2015/04/dollar-revaluation-recovery-without.html

4/5/15 http://cmpassocregulationblog.blogspot.com/2015/04/volatility-of-valuations-of-financial.html

3/22/15 http://cmpassocregulationblog.blogspot.com/2015/03/impatience-with-monetary-policy-of.html

3/1/15 http://cmpassocregulationblog.blogspot.com/2015/03/irrational-exuberance-mediocre-cyclical.html

2/15/15 http://cmpassocregulationblog.blogspot.com/2015/02/g20-monetary-policy-recovery-without.html

11/30/14 http://cmpassocregulationblog.blogspot.com/2014/11/valuations-of-risk-financial-assets.html

11/16/14 http://cmpassocregulationblog.blogspot.com/2014/11/fluctuating-financial-variables.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

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 IVQ2014 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 2014, using fourth quarter data, is 1.0 percent because of the sharp impact of the global recession from IVQ2007 to IIQ2009. 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, 1949-2014

Period	Average ∆%
1949-2014	3.2
2007-2014	0.3
2000-2014	1.0
2000-2013	1.1
2000-2007	1.8
1990-1999	2.0
1980-1989	2.6
1970-1979	3.7
1960-1969	5.7
1950-1959	4.2

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=28&date=20150326

The Markit Flash France Composite Output Index decreased from 51.5 in Mar to 50.2 in Apr (http://www.markiteconomics.com/Survey/PressRelease.mvc/56aafaccd22143ffbf3442285bf568f4). Jack Kennedy, Senior Economist at Markit and author of the report, finds stalling growth (http://www.markiteconomics.com/Survey/PressRelease.mvc/56aafaccd22143ffbf3442285bf568f4). The Markit France Composite Output Index, combining services and manufacturing with close association with French GDP, decreased from 52.2 in Feb to 51.5 in Mar, indicating expansion at slower pace (http://www.markiteconomics.com/Survey/PressRelease.mvc/49268c6ccda04350a1a73584cd782a22). Jack Kennedy, Senior Economist at Markit and author of the France Services PMI^®, finds continuing improvement (http://www.markiteconomics.com/Survey/PressRelease.mvc/49268c6ccda04350a1a73584cd782a22). The Markit France Services Activity index decreased from 53.4 in Feb to 52.4 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/49268c6ccda04350a1a73584cd782a22). The Markit France Manufacturing Purchasing Managers’ Index^® increased to 48.8 in Mar from 47.6 in Feb (http://www.markiteconomics.com/Survey/PressRelease.mvc/c04a6a98761641fa94caae56d7a4b327). Jack Kennedy, Senior Economist at Markit and author of the France Manufacturing PMI^®, finds slower deterioration in manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/c04a6a98761641fa94caae56d7a4b327). Table FR provides the country data table for France.

Table FR, France, Economic Indicators

CPI	Mar month ∆% 0.7 12 months ∆%: -0.1 4/19/15
PPI	Feb month ∆%: 0.8 Feb 12 months ∆%: -2.5 Blog 4/5/15
GDP Growth	IVQ2014/IIIQ2014 ∆%: 0.1 IVQ2014/IVQ2013 ∆%: 0.2 Blog 3/31/13 5/19/12 6/30/13 9/29/13 11/17/13 12/29/13 2/16/14 4/6/14 5/18/14 6/29/14 8/17/14 9/28/14 11/16/14 12/28/14 2/15/15 3/29/15
Industrial Production	Feb ∆%: Manufacturing 0.0 12-Month ∆%: Manufacturing -0.8 Blog 4/12/15
Consumer Spending	Manufactured Goods Feb ∆%: -0.1 Feb 12-Month Manufactured Goods ∆%: 2.4 Blog 4/5/15
Employment	Unemployment Rate: IVQ2014 10.0% Blog 3/15/15
Trade Balance	Feb Exports ∆%: month 1.4, 12 months 3.0 Feb Imports ∆%: month 0.6, 12 months 1.5 Blog 4/12/15
Confidence Indicators	Historical average 100 Apr Mfg Business Climate 101.0 Blog 3/29/15

Links to blog comments in Table FR:

4/19/2015 http://cmpassocregulationblog.blogspot.com/2015/04/global-portfolio-reallocations-squeeze.html

4/12/15 http://cmpassocregulationblog.blogspot.com/2015/04/dollar-revaluation-recovery-without.html

4/5/15 http://cmpassocregulationblog.blogspot.com/2015/04/volatility-of-valuations-of-financial.html

3/29/15 http://cmpassocregulationblog.blogspot.com/2015/03/dollar-revaluation-and-financial-risk.html

3/15/15 http://cmpassocregulationblog.blogspot.com/2015/03/global-exchange-rate-struggle-recovery.html

2/15/15 http://cmpassocregulationblog.blogspot.com/2015/02/g20-monetary-policy-recovery-without.html

12/28/14 http://cmpassocregulationblog.blogspot.com/2014/12/valuations-of-risk-financial-assets.html

11/16/14 http://cmpassocregulationblog.blogspot.com/2014/11/fluctuating-financial-variables.html

9/28/14 http://cmpassocregulationblog.blogspot.com/2014/09/financial-volatility-mediocre-cyclical.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

Table VF-1 shows the INSEE business climate indicator for manufacturing. The headline composite indicator fell from 100 in Jan-Feb 2014 at the average 100 to 99 in Mar 2015 and 101 in Apr 2015. General production expectations deteriorated from 13 in Jan 2015 to 6 in Apr 2015.

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

Mfg 2014	Average since 1976	Apr 15	Mar 15	Feb 15	Jan 15
Composite Indicator	100	101	99	100	100
Past Activity	4	3	-10	0	-2
Finished- Goods Inventory Level	13	9	5	4	13
Global Order Books	-18	-18	-20	-25	-21
Export Order Books	-14	-8	-12	-15	-15
Personal Production Expectations	5	6	8	11	13
General Production Expectations	-9	3	0	-8	-10

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=11&date=20150423

Chart VF-1 of the Institut National de la Statistique et des Études Économiques (INSEE) provides the history of the manufacturing business climate indicator of INSEE since 1992. The index fell during the contractions of 1991, 2001 and 2008. After rapid recovery beginning in 2009 the synthetic index shows declining trend in 2011 with upward reversal in 2012 interrupted in Apr through Jul 2012 and a marginal upward move in Aug-Sep 2012 but new decline in Oct 2012. The manufacturing composite indicator marginally reversed in Nov 2012 with stability in Dec 2012 and decline in Jan 2013 but improvement in Feb 2013 and stability in Mar 2013, deteriorating in Apr 2013 and recovering in May-Aug 2013. The composite indicator of manufacturing eased slightly in Sep 2013 and improved marginally in Oct-Dec 2013, close to the long-term average of 100. The index reached 100 in Dec 2013 and oscillated around the average. The index fell in the recent segment in 2014 followed by recovery into 2015.

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

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=11&date=20150423

Chart VF-2 of the Institut National de la Statistique et des Études Économiques (INSEE) shows strong drops of the turning point indicator in the recessions of 1991, 2001 and 2008. There have been other drops of this index. The turning point indicator has fallen to levels in the direction of past contractions and after rebounding in Oct and Nov 2011 is showing declining trend in Jan 2012 with slight reversal in Feb followed by significant improvement in Mar and deterioration in Apr through Jul 2012. There is new improvement in Aug 2012 followed by decline in Sep-Oct 2012 followed by rebound in Nov 2012 and stability in Dec 2012 to Jan-Mar 2013, deteriorating in Apr-May 2013. The index improved in Jun-Sep 2013 and stabilized in Oct 2013, declining in Nov 2013. The index increased in Dec 2013 and in Jan 2014, declining in Feb 2014 and stabilizing in Mar 2014. The index stabilized in Apr-May 2014 and fell in Jun 2014 with partial recovery in Jul-Aug 2014. The index stabilized in Sep-Oct 2014 and improved in Nov 2014, deteriorating marginally in Dec 2014. There is stability in Jan-Mar 2015 with improvement into Apr 2015.

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

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=11&date=20150423

Chart VF-3 of the Institut National de la Statistique et des Études Économiques (INSEE) of France provides the composite climate indicator for French business. There is recovery in Jul-Sep 2013 and stability in Oct-Nov 2013. The index fell marginally in Dec 2013 and in Jan-Feb 2014. The index increased marginally in Mar 2014, stabilizing in Apr-May 2014. The index fell in Aug-Oct 2014, recovering in Nov 2014 and stabilizing in Dec 2014/Jan-Mar 2015. The index improved in Apr 2015.

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

Source: Institut National de la Statistique et des Études Économiques

http://www.insee.fr/en/themes/info-rapide.asp?id=105&date=20150423

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 1.0 percent in IVQ2011 to minus 2.7 percent in IVQ2012, minus 2.6 percent in IQ2013, minus 2.0 percent in IIQ2013 and minus 1.4 percent in IIIQ2013. GDP fell 0.8 percent in IVQ2013 relative to a year earlier. GDP fell 0.1 percent in IQ2014 relative to a year earlier and decreased 0.3 percent in IIQ2014 relative to a year earlier. GDP fell 0.5 percent in IIIQ2014 relative to a year earlier and fell 0.5 percent in IVQ2014 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 0.4 percent in IQ2014 and GFCF fell 2.5 percent. In IIQ2014, consumption decreased 0.1 percent relative to a year earlier and GFCF fell 3.3 percent. GDP fell 0.5 percent in IIIQ2014 relative to a year earlier while consumption increased 0.2 percent and GFCF fell 4.2 percent. GDP fell 0.5 percent in IVQ2014 relative to a year earlier while consumption increased 0.3 percent and GFCF fell 3.0 percent.

Table VG-IT, Italy, GDP and Expenditure Components, Chained Volume Measures, Quarter ∆% on Same Quarter Year Earlier

	GDP	Imports	Consumption	GFCF	Exports
2014
IVQ	-0.5	2.0	0.3	-3.0	3.8
IIIQ	-0.5	1.3	0.2	-4.2	1.7
IIQ	-0.3	2.8	-0.1	-3.3	2.6
IQ	-0.1	0.4	-0.4	-2.5	3.8
2013
IVQ	-0.8	0.8	-1.2	-4.1	1.2
IIIQ	-1.4	-1.5	-2.1	-4.2	0.0
IIQ	-2.0	-3.7	-2.5	-6.4	0.2
IQ	-2.6	-4.3	-2.7	-8.4	1.5
2012
IVQ	-2.7	-7.5	-3.3	-9.6	1.7
IIIQ	-3.1	-8.2	-3.5	-10.2	3.0
IIQ	-3.1	-8.9	-3.5	-9.6	1.6
IQ	-2.3	-8.7	-3.1	-8.1	1.8
2011
IVQ	-1.0	-7.1	-2.0	-4.5	2.5
IIIQ	0.4	0.3	-0.8	-2.3	4.6
IIQ	1.4	3.8	0.3	-0.6	7.5
IQ	2.0	8.4	0.7	0.7	10.2
2010
IVQ	2.3	14.6	1.3	0.9	13.0
IIIQ	1.8	12.9	1.1	0.6	12.4
IIQ	1.9	14.2	1.0	-0.4	13.2
IQ	0.7	6.7	0.9	-3.3	6.8
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/151830

The Markit/ADACI Business Activity Index increased from 50.0 in Feb to 51.6 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/a6109b353f314494a0b5c5ffab4f1bde). Phil Smith, Economist at Markit and author of the Italy Services PMI^®, finds signs of expansion of private sector activity (http://www.markiteconomics.com/Survey/PressRelease.mvc/a6109b353f314494a0b5c5ffab4f1bde). The Markit/ADACI Purchasing Managers’ Index^® (PMI^®), increased from 51.9 in Feb to 53.3 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/f6e9a5d5010446dc928834dcb0c58152). New export orders continued to increase. Phil Smith, Economist at Markit and author of the Italian Manufacturing PMI^®, finds strengthening conditions in manufacturing (http://www.markiteconomics.com/Survey/PressRelease.mvc/f6e9a5d5010446dc928834dcb0c58152). Table IT provides the country data table for Italy.

Table IT, Italy, Economic Indicators

Consumer Price Index	Mar month ∆%: 0.1 Mar 12-month ∆%: -0.1 Blog 4/19/15
Producer Price Index	Feb month ∆%: -0.5 Feb 12-month ∆%: -3.3 Blog 4/5/15
GDP Growth	IVQ2014/IIIQ2014 SA ∆%: 0.0 IVQ2014/IVQ2013 NSA ∆%: minus 0.5 Blog 3/17/13 6/16/13 8/11/13 9/15/13 11/17/13 12/15/13 2/16/14 3/16/14 5/18/14 6/15/14 8/10/14 8/31/14 10/19/14 11/16/14 12/7/14 2/15/15 3/15/15
Labor Report	Feb 2015 Participation rate 64.0% Employment ratio 55.7% Unemployment rate 12.7% Youth Unemployment 42.6% Blog 4/5/15
Industrial Production	Feb month ∆%: 0.6 12 months CA ∆%: minus 0.2 Blog 4/19/15
Retail Sales	Feb month ∆%: -0.2 Feb 12-month ∆%: 0.1 Blog 4/26/15
Business Confidence	Mfg Mar 103.7, Nov 99.5 Construction Mar 116.0, Nov 103.7 Blog 4/5/15
Trade Balance	Balance Feb SA €4576 million versus Jan €3914 Exports Feb month SA ∆%: 2.5; Imports month ∆%: 0.6 Exports 12 months Feb NSA ∆%: 3.7 Imports 12 months NSA ∆%: 1.0 Blog 4/19/15

Links to blog comments in Table IT:

4/19/2015 http://cmpassocregulationblog.blogspot.com/2015/04/global-portfolio-reallocations-squeeze.html

4/5/15 http://cmpassocregulationblog.blogspot.com/2015/04/volatility-of-valuations-of-financial.html

3/15/15 http://cmpassocregulationblog.blogspot.com/2015/03/global-exchange-rate-struggle-recovery.html

2/15/15 http://cmpassocregulationblog.blogspot.com/2015/02/g20-monetary-policy-recovery-without.html

12/7/14 http://cmpassocregulationblog.blogspot.com/2014/12/financial-risks-twenty-six-million.html

11/16/14 http://cmpassocregulationblog.blogspot.com/2014/11/fluctuating-financial-variables.html

10/19/14 http://cmpassocregulationblog.blogspot.com/2014/10/imf-view-squeeze-of-economic-activity.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

Italy is competitive in various economic activities. Current restraints consist of low economic growth with high debt/GDP ratio and need for structural changes. Table VG-1 provides growth of retail sales for Italy. Retail sales decreased 0.2 percent in Feb 2015 relative to Jan 2015, increased 0.1 percent in Dec 2014-Feb 2015 relative to Sep-Nov 2014, increased 0.1 percent in Feb 2015 relative to Feb 2014 and increased 0.7 percent cumulatively in Jan-Feb 2015 relative to Jan-Feb 2014.

Table VG-1, Italy, Retail Sales ∆%

	Feb 2015/ Jan 2015 SA	Dec 14-Feb 15/   Sep-Nov 14 SA	Feb 2015/ Feb 2014 NSA	Jan-Feb 2015/ Jan-Feb 2014
Food	-0.2	0.2	0.5	1.4
Non-food	-0.1	-0.1	-0.3	0.2
Total	-0.2	0.1	0.1	0.7

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/156999

Chart VG-1 provides 12-month percentage changes of retail sales at current prices. There is improvement in the final segment from Feb to May 2013 with sharper decline in Jun 2013 and recovery in Jul-Aug 2013. Sales declined again in Sep 2013, increasing in Oct-Nov 2013. Sales fell in Dec 2013 and improved in Jan 2014. Sales stabilized in Feb 2014 and deteriorated in Mar 2014. Sales improved in Apr 2014 and deteriorated in May-Jun 2014. There is marginal improvement in Jul 2014 followed by deterioration in Aug-Sep 2014 with stability in Oct 2014 and deterioration in Nov 2014. There is improvement in Dec 2014-Jan 2015 followed by deterioration in Feb 2015.

Chart VG-1, Italy, Percentage Changes of Retail Sales in 12 Months

Source: Istituto Nazionale di Statistica

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

A longer perspective of retail sales in Italy is provided by monthly and 12-month percentage changes in 2011, Jan-Dec 2012, Jan-Dec 2013, Jan-Dec 2014, Jan-Feb 2015 and annual rates for 2011, 2012, 2013 and 2014 in Table VG-2. Retail sales did not decline very sharply during the global recession but fell 0.8 percent in 2011, 1.7 percent in 2012 and 2.1 percent in 2013. Retail sales fell 1.2 percent in 2014. There is an evident declining trend in 2011 with few monthly increases and similar weakness in 2012 with multiple monthly declines. Negative percentage changes in 12 months increased to more than 3 percent with decrease of 3.2 percent in the 12 months ending in Mar 2013 and decrease of 3.0 percent in the 12 months ending in Jun 2013. Retail sales decreased 0.2 percent in Feb 2015 and increased 0.1 percent in 12 months.

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

	Month ∆% SA	12-Month ∆% NSA
Feb 2015	-0.2	0.1
Jan	0.2	1.2
Dec 2014	-0.1	0.1
Nov	0.1	-2.0
Oct	0.0	-1.0
Sep	-0.1	-0.6
Aug	0.0	-3.0
Jul	-0.1	-1.7
Jun	-0.2	-2.7
May	-0.5	-0.4
Apr	0.4	2.7
Mar	0.0	-3.5
Feb	-0.1	-1.0
Jan	-0.2	-0.9
Dec 2013	-0.1	-2.6
Nov	-0.2	0.2
Oct	-0.1	-1.6
Sep	-0.2	-2.8
Aug	0.0	0.2
Jul	-0.2	-0.8
Jun	-0.1	-3.0
May	0.6	-1.2
Apr	-0.4	-2.9
Mar	-0.2	-3.2
Feb	0.0	-4.8
Jan	-0.5	-2.8
Dec 2012	0.1	-3.4
Nov	-0.1	-2.4
Oct	-0.8	-3.4
Sep	-0.1	-1.0
Aug	0.0	-0.4
Jul	-0.2	-3.1
Jun	-0.1	0.2
May	0.0	-1.1
Apr	-1.4	-6.3
Mar	0.4	2.3
Feb	-0.5	0.7
Jan	1.1	-0.9
Dec 2011	-0.9	-3.2
Nov	-0.5	-1.5
Oct	0.7	-0.9
Sep	-0.3	-1.1
Aug	-0.4	0.1
July	0.0	-1.7
Jun	-0.4	-0.6
May	-0.5	-0.3
Apr	0.9	3.3
Mar	-0.2	-1.9
Feb	-0.3	0.1
Jan	-0.2	-0.5
Dec 2010	0.5	0.6
2014		-1.2
2013		-2.1
2012		-1.7
2011		-0.8

Source: Istituto Nazionale di Statistica

http://www.istat.it/it/archivio/156999

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 and 2.8 percent in 2014. 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 2014, 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 from 2010 to 2014 has been only at 1.7 percent as advanced economies struggle with weak internal demand and world trade. GDP in 2014 higher by 4.0 percent relative to 2007 while it would have been 22.2 higher at trend of 2.9 percent as from 2000 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
2014	2.8
Average Growth Rates ∆% per Year
1948-2014	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
2007-2013*	1.1
2007-2014*	4.0
2000-2014	1.7

*Absolute change from 2007 to 2013 and from 2007 to 2014

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/naa2/quarterly-national-accounts/q4-2014/index.html

The Business Activity Index of the Markit/CIPS UK Services PMI^® increased from 56.7 in Feb to 58.9 in Mar (http://www.markiteconomics.com/Survey/PressRelease.mvc/eea7d1909f424b1183ca33dba0220983). Chris Williamson, Chief Economist at Markit, finds the combined indices consistent with the UK economy growing at around 0.7 percent in IQ2015 (http://www.markiteconomics.com/Survey/PressRelease.mvc/eea7d1909f424b1183ca33dba0220983). The Markit/CIPS UK Manufacturing Purchasing Managers’ Index^® (PMI^®) increased to 54.4 in Mar from 54.0 in Feb (http://www.markiteconomics.com/Survey/PressRelease.mvc/755229914755421b894871d706a09d19). New export orders increased. Rob Dobson, Senior Economist at Markit that compiles the Markit/CIPS Manufacturing PMI^®, finds that manufacturing conditions suggest growth at a quarterly rate of 0.6 percent (http://www.markiteconomics.com/Survey/PressRelease.mvc/755229914755421b894871d706a09d19). Table UK provides the economic indicators for the United Kingdom.

Table UK, UK Economic Indicators

CPI	Mar month ∆%: 0.2 Mar 12-month ∆%: 0.0 Blog 4/19/15
Output/Input Prices	Output Prices: Mar 12-month NSA ∆%: -1.7; excluding food, petroleum ∆%: 0.1 Input Prices: Mar 12-month NSA ∆%: -13.0 Excluding ∆%: -4.1 Blog 4/19/15
GDP Growth	IVQ2014 prior quarter ∆% 0.6; year earlier same quarter ∆%: 3.0 Blog 3/31/13 4/28/13 5/26/13 7/28/13 8/25/13 9/29/13 10/27/13 12/1/13 12/22/13 2/2/14 3/2/14 4/6/14 5/4/14 5/25/14 6/29/14 7/27/14 8/17/14 10/5/14 10/26/14 11/30/14 12/28/14 2/1/15 3/1/15 4/5/15
Industrial Production	Feb 2015/Feb 2014 ∆%: Production Industries 0.1; Manufacturing 1.1 Blog 4/12/15
Retail Sales	Mar month ∆%: -0.5 Mar 12-month ∆%: 4.2 Blog 4/26/15
Labor Market	Dec-Feb Unemployment Rate: 5.6%; Claimant Count 2.3%; Earnings Growth 1.7% Blog 4/19/15 LMGDP 3/22/15
GDP and the Labor Market	IVQ2014 Employment 102.6 IQ2008 =100 GDP IIIQ14 103.4 IQ2008=100 Blog 3/22/14
Trade Balance	Balance SA Feb minus ₤2859 million Exports Feb ∆%: -2.4; Dec-Feb ∆%: 0.5 Imports Feb ∆%: 0.7 Dec-Feb ∆%: -1.8 Blog 4/12/15

Links to blog comments in Table UK:

4/19/2015 http://cmpassocregulationblog.blogspot.com/2015/04/global-portfolio-reallocations-squeeze.html

4/12/15 http://cmpassocregulationblog.blogspot.com/2015/04/dollar-revaluation-recovery-without.html

4/5/15 http://cmpassocregulationblog.blogspot.com/2015/04/volatility-of-valuations-of-financial.html

3/22/15 http://cmpassocregulationblog.blogspot.com/2015/03/impatience-with-monetary-policy-of.html

3/1/15 http://cmpassocregulationblog.blogspot.com/2015/03/irrational-exuberance-mediocre-cyclical.html

2/1/15 http://cmpassocregulationblog.blogspot.com/2015/02/financial-and-international.html

12/28/14 http://cmpassocregulationblog.blogspot.com/2014/12/valuations-of-risk-financial-assets.html

11/30/14 http://cmpassocregulationblog.blogspot.com/2014/11/valuations-of-risk-financial-assets.html

10/26/14 http://cmpassocregulationblog.blogspot.com/2014/10/financial-oscillations-world-inflation.html

10/5/14 http://cmpassocregulationblog.blogspot.com/2014/10/world-financial-turbulence-twenty-seven.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

The volume of retail sales in the UK decreased 0.5 percent in Mar 2015 and increased 4.2 percent in the 12 months ending in Jan 2015, as shown in Table VH-1. Percentage changes of retail sales in 12 months had been positive in several months since Sep 2011 with exceptions, such as declines of 2.5 percent in Apr 2012 and 0.9 percent in Mar 2013. The quarter ending in Jul 2013 is quite strong with growth of 2.4 percent in May, 0.3 percent in Jun and 0.9 percent in Jul, interrupted by decline of 0.7 percent in Aug 2013 followed by increase of 1.0 percent in Sep 2013. The volume of retail sales fell 1.1 percent in Oct 2013, decreasing 0.1 percent in Nov 2013 and jumping 2.5 percent in Dec 2013. Retail sales decreased 1.6 percent in Jan 2014 and increased 0.8 percent in Apr 2014. The rate of growth in 12 months fell from 5.9 percent in Jan 2015 to 4.2 percent in Mar 2015.

Table VH-1, UK, Volume of Retail Sales ∆%

		∆% Month	∆% 12 Months
2012	May	1.3	1.3
	Jun	0.3	1.6
	Jul	0.2	1.4
	Aug	0.2	1.9
	Sep	0.3	1.8
	Oct	-0.7	0.1
	Nov	-0.2	0.1
	Dec	-0.6	-0.3
2013	Jan	-0.2	-1.3
	Feb	1.7	1.7
	Mar	-0.9	-1.2
	Apr	-0.8	0.5
	May	2.4	1.6
	Jun	0.3	1.6
	Jul	0.9	2.3
	Aug	-0.7	1.4
	Sep	1.0	2.1
	Oct	-1.1	1.7
	Nov	-0.1	1.7
	Dec	2.6	5.0
2014	Jan	-1.7	3.4
	Feb	1.0	2.7
	Mar	0.6	4.3
	Apr	0.8	6.0
	May	0.0	3.5
	Jun	0.1	3.3
	Jul	0.2	2.6
	Aug	0.4	3.7
	Sep	-0.4	2.3
	Oct	1.2	4.7
	Nov	1.6	6.5
	Dec	0.0	3.8
2015	Jan	0.2	5.9
	Feb	0.6	5.4
	Mar	-0.5	4.2

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/rsi/retail-sales/march-2015/index.html

Retail sales in the UK struggle with oscillating and relatively high inflation, declining recently. Table VH-2 provides 12-month percentage changes of the implied deflator of UK retail sales. The implied deflator of all retail sales declined 3.1 percent in the 12 months ending in Mar 2015 while that of sales excluding auto fuel decreased 2.0 percent. The 12-month increase of the implied deflator of auto fuel in Mar 2015 was minus 12.8 percent. The 12-month increase of the implied deflator of auto fuel sales rose to 17.1 percent in Sep 2011, which is the highest 12-month increase in 2011, but then declined to 0.3 percent in Dec 2012 and minus 0.2 percent in Jan 2013. The 12-month implied deflator of auto fuel sales decreased 2.3 percent in May 2013, increasing 1.3 percent in Jun 2013 and 2.6 percent in Jul 2013. The percentage change of the implied deflator of sales of food stores at 2.3 percent in Dec 2013 is higher than for total retail sales of 0.7 percent. Increases in fuel prices at the retail level have occurred throughout most years since 2005 with exception of the decline of 9.7 percent in Dec 2008 when commodity carry trades were reversed in the panic of the financial crisis. UK inflation is particularly sensitive to changes in commodity prices. There is new decline of the 12-month percentage changes of the implied deflator of retail sales in 2014-2015 because of the decrease in energy prices and also soft prices in general.

Table VH-2, UK, Implied Deflator of Retail Sales, 12-Month Percentage Changes

		All Retail	All Retail Ex Auto Fuel	Mostly Food Stores	Mostly Nonfood Stores	Mostly Automotive Fuel Stores
2009	Apr	0.2	1.8	6.2	-1.8	-11.2
	May	-	1.6	5.7	-1.8	-12.5
	Jun	-1.0	0.7	4.3	-2.3	-13.3
	Jul	-1.4	0.4	3.5	-2.3	-13.7
	Aug	-0.9	0.2	2.3	-1.7	-9.0
	Sep	-0.7	0.1	1.9	-1.4	-5.9
	Oct	0.3	0.6	2.5	-1.1	-0.8
	Nov	1.5	0.6	1.8	-0.7	10.1
	Dec	3.8	2.5	2.2	2.0	17.0
2010	Jan	4.2	2.1	2.7	1.4	23.4
	Feb	3.1	1.1	1.6	0.9	20.6
	Mar	3.7	1.6	2.3	1.0	22.8
	Apr	4.2	2.1	3.0	1.5	23.4
	May	3.5	1.6	2.1	1.3	21.0
	Jun	2.7	1.4	2.2	0.9	14.8
	Jul	2.8	1.7	3.0	0.6	13.5
	Aug	2.7	1.8	3.5	0.5	11.4
	Sep	3.2	2.7	4.4	1.4	8.4
	Oct	3.4	2.6	4.2	1.2	10.8
	Nov	3.7	3.1	5.0	1.5	9.8
	Dec	3.7	3.3	5.3	1.5	12.5
2011	Jan	4.3	3.3	5.5	1.5	14.5
	Feb	4.9	3.9	5.6	2.3	15.1
	Mar	4.3	3.1	4.4	2.0	15.0
	Apr	4.2	3.4	4.9	2.0	12.3
	May	4.7	3.6	5.7	1.9	13.2
	Jun	4.8	3.6	6.3	1.4	14.6
	Jul	5.3	4.1	6.1	2.4	14.6
	Aug	5.6	4.2	6.1	2.7	16.3
	Sep	5.4	3.9	6.3	2.0	17.1
	Oct	5.1	3.8	5.2	2.7	14.8
	Nov	4.4	3.3	4.8	2.1	12.7
	Dec	3.7	2.7	4.4	1.4	9.1
2012	Jan	3.0	2.6	3.6	1.7	5.3
	Feb	3.0	2.6	4.1	1.3	5.4
	Mar	3.1	2.9	4.6	1.4	4.9
	Apr	2.6	2.2	3.8	0.8	5.2
	May	1.6	1.7	3.2	0.5	1.2
	Jun	0.7	1.0	2.3	-	-1.2
	Jul	0.6	0.9	2.1	-	-1.4
	Aug	0.6	0.7	2.2	-0.5	0.3
	Sep	1.0	0.9	2.1	-0.1	2.9
	Oct	1.3	1.2	2.9	-0.2	2.6
	Nov	1.1	1.1	3.2	-0.6	1.3
	Dec	1.5	1.4	3.1	0.1	0.3
2013	Jan	1.3	1.5	3.8	-0.6	-0.2
	Feb	1.2	1.2	3.3	-0.6	1.1
	Mar	1.1	1.3	3.1	-0.5	0.5
	Apr	0.7	1.2	3.5	-0.7	-3.0
	May	1.1	1.6	3.6	-0.2	-2.3
	Jun	1.8	1.8	3.4	0.6	1.3
	Jul	1.9	1.8	3.5	0.3	2.6
	Aug	1.7	1.7	3.5	0.3	1.5
	Sep	1.1	1.4	3.4	-0.2	-1.2
	Oct	0.8	1.4	3.4	-0.2	-3.5
	Nov	0.7	1.1	2.7	-0.1	-3.0
	Dec	0.7	0.8	2.3	-0.1	-1.0
2014	Jan	0.4	0.6	1.8	-0.3	-1.4
	Feb	0.0	0.6	1.7	-0.3	-4.5
	Mar	-0.3	0.4	1.9	-0.5	-5.9
	Apr	-0.3	0.2	1.0	-0.4	-4.4
	May	-0.4	-0.2	0.4	-0.6	-2.2
	Jun	0.1	0.5	0.9	0.4	-2.5
	Jul	-0.7	-0.4	0.2	-0.6	-2.5
	Aug	-1.0	-0.5	0.0	-0.5	-5.1
	Sep	-1.4	-0.9	-0.3	-1.2	-5.4
	Oct	-1.5	-1.2	-0.4	-1.6	-4.3
	Nov	-2.0	-1.7	-1.0	-1.8	-5.3
	Dec	-2.2	-1.5	-0.9	-1.6	-9.7
2015	Jan	-3.1	-1.6	-1.6	-1.2	-15.1
	Feb	-3.6	-2.0	-2.0	-1.5	-15.5
	Mar	-3.1	-2.0	-2.1	-1.7	-12.8

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/rsi/retail-sales/march-2015/index.html

UK monthly retail volume of sales is quite volatile, as shown in Table VH-3. Total volume of sales decreased 0.8 percent in Apr 2013 and increased 2.4 percent in May 2013, 0.3 percent in Jun 2013 and 0.9 percent in Jul 2013 but declined 0.7 percent in Aug 2013. Retail sales increased 1.0 percent in Sep 2013 and fell 1.1 percent in Oct 2013. Retail sales decreased 0.1 percent in Nov 2013 and increased 2.6 percent in Dec 2013. Total volume of retail sales fell 1.7 percent in Jan 2014 and increased 1.0 percent in Feb 2014. Total volume of retail sales increased 0.6 percent in Mar 2014 and 0.8 percent in Apr 2014. Retail sales changed 0.0 percent in May 2014. Retail sales increased 0.1 percent in Jun 2014 and increased 0.2 percent in Jul 2014. Retail sales increased 0.4 percent in Aug 2014. There was increase of 0.2 percent in retail sales excluding auto fuels in Mar 2015 and increase of 0.4 percent in food stores, decrease of 0.1 percent in nonfood stores and decrease of 6.2 percent in auto fuel stores. Multiple positive and negative variations and changes in magnitudes confirm high volatility.

Table VH-3, UK, Growth of Retail Sales Volume by Component Groups Month SA ∆%

		All Retail	All Retail ex Auto Fuel	Mostly Food Stores	Mostly Nonfood Stores	Mostly Automotive Fuel Stores
2012	May	1.3	0.8	0.7	0.9	5.4
	Jun	0.3	0.7	0.1	1.5	-3.5
	Jul	0.2	-0.2	-0.1	-0.8	3.1
	Aug	0.2	0.2	0.6	0.6	0.5
	Sep	0.3	0.1	-0.2	-0.3	1.8
	Oct	-0.7	-0.4	-0.8	-0.4	-3.0
	Nov	-0.2	0.0	-0.4	0.3	-1.6
	Dec	-0.6	-0.8	-0.4	-1.5	0.7
2013	Jan	-0.2	0.0	-0.1	-0.2	-2.1
	Feb	1.7	1.6	0.2	3.1	1.9
	Mar	-0.9	-1.0	1.6	-4.5	0.3
	Apr	-0.8	-0.9	-4.8	3.8	0.0
	May	2.4	2.5	4.1	0.6	1.7
	Jun	0.3	0.5	0.1	0.8	-1.3
	Jul	0.9	0.7	2.5	-1.2	2.0
	Aug	-0.7	-0.7	-2.2	0.0	-0.9
	Sep	1.0	1.1	-0.3	3.5	-0.4
	Oct	-1.1	-1.0	-0.2	-2.0	-2.5
	Nov	-0.1	-0.2	0.1	-0.4	0.1
	Dec	2.6	2.9	2.0	3.2	-0.3
2014	Jan	-1.7	-1.8	-2.8	0.4	-1.4
	Feb	1.0	1.0	1.7	-1.0	1.4
	Mar	0.6	-0.1	-1.8	1.9	6.6
	Apr	0.8	1.6	3.0	-0.3	-5.2
	May	0.0	0.1	-1.2	1.0	-0.7
	Jun	0.1	-0.2	0.0	-0.2	3.2
	Jul	0.2	0.5	0.1	1.1	-2.5
	Aug	0.4	0.4	-0.6	1.6	0.7
	Sep	-0.4	-0.4	0.4	-1.9	-0.6
	Oct	1.2	1.2	0.5	2.0	1.1
	Nov	1.6	1.7	0.5	2.4	0.7
	Dec	0.0	-0.4	1.0	-1.6	2.9
2015	Jan	0.2	-0.3	-0.7	-0.4	4.6
	Feb	0.6	0.6	0.2	1.0	0.0
	Mar	-0.5	0.2	0.4	-0.1	-6.2

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/rsi/retail-sales/march-2015/index.html

Percentage growth in 12 months of retail sales volume by component groups in the UK is in Table VH-4. Total retail sales increased 4.2 percent in the 12 months ending in Mar 2015 with increase of 5.0 percent in sales excluding auto fuel. Sales of food stores increased 3.5 percent in the 12 months ending in Mar 2015 while sales of nonfood stores increased 4.5 percent. Sales of auto fuel stores decreased 2.6 percent in Mar 2015 relative to a year earlier.

Table VH-4, UK, Growth of Retail Sales Volume by Component Groups 12-Month ∆%

		All Retail	All Retail ex Auto Fuel	Mostly Food Stores	Mostly Nonfood Stores	Mostly Automotive Fuel Stores
2012	May	1.3	1.8	0.9	1.4	-2.2
	Jun	1.6	2.5	1.3	3.1	-5.4
	Jul	1.4	2.0	0.4	2.1	-2.5
	Aug	1.9	2.3	0.8	3.7	-1.5
	Sep	1.8	2.2	0.6	2.9	-0.7
	Oct	0.1	0.7	-1.1	1.2	-4.8
	Nov	0.1	1.3	-0.9	2.8	-9.2
	Dec	-0.3	0.6	-1.0	0.6	-6.4
2013	Jan	-1.3	-0.2	-2.0	-0.4	-9.2
	Feb	1.7	2.5	-1.3	4.3	-4.8
	Mar	-1.2	0.0	1.0	-3.6	-9.9
	Apr	0.5	0.2	-3.6	2.2	3.0
	May	1.6	1.8	-0.4	1.9	-0.6
	Jun	1.6	1.6	-0.4	1.2	1.6
	Jul	2.3	2.5	2.2	0.9	0.6
	Aug	1.4	1.7	-0.6	0.3	-0.7
	Sep	2.1	2.7	-0.7	4.1	-2.9
	Oct	1.7	2.2	-0.1	2.4	-2.4
	Nov	1.7	2.0	0.3	1.7	-0.8
	Dec	5.0	5.8	2.7	6.6	-1.7
2014	Jan	3.4	3.9	-0.1	7.2	-1.1
	Feb	2.7	3.3	1.4	2.9	-1.5
	Mar	4.3	4.3	-2.0	9.7	4.7
	Apr	6.0	6.8	6.0	5.4	-0.7
	May	3.5	4.3	0.7	5.8	-3.0
	Jun	3.3	3.6	0.6	4.7	1.5
	Jul	2.6	3.3	-1.8	7.1	-3.0
	Aug	3.7	4.4	-0.2	8.8	-1.5
	Sep	2.3	2.8	0.5	3.2	-1.7
	Oct	4.7	5.0	1.2	7.4	1.9
	Nov	6.5	7.0	1.6	10.4	2.6
	Dec	3.8	3.6	0.7	5.3	5.9
2015	Jan	5.9	5.2	2.8	4.5	12.3
	Feb	5.4	4.8	1.3	6.7	10.7
	Mar	4.2	5.0	3.5	4.5	-2.6

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/rsi/retail-sales/march-2015/index.html

Table VH-5 provides the analysis of the UK Office for National Statistics of contributions to 12-month percentage changes of value and volume of retail sales in the UK. The volume of retail sales seasonally adjusted increased 4.2 percent in the 12 months ending in Mar 2015. Sales of predominantly food stores with weight of 41.6 percent increased 3.5 percent in the 12 months ending in Mar 2015, adding 1.5 percentage points. Mostly nonfood stores with weight of 41.0 percent increased 4.5 percent with contribution of 1.9 percentage points. Positive contribution to 12-month percentage changes of volume was made by non-store retailing with weight of 6.5 percent, growth of 16.4 percent and positive contribution of 1.1 percentage points. Automotive fuel with weight of 10.9 percent and growth of minus 2.6 percent deducted 1.2 percentage points. The value of retail sales increased 0.7 percent in the 12 months ending in Mar 2015. There were positive contributions: 1.1 percentage points for predominantly nonfood stores and 0.7 percentage points for non-store retailing. Automotive fuel stores deducted 1.5 percentage points while food stores added 0.4 percentage points.

Table VH-5, UK, Volume and Value of Retail Sales 12-month ∆% and Percentage Points Contributions by Sectors

Jan 2015	Weight % of All Retailing	Volume SA 12- Month ∆%	PP Cont. % points	Value SA 12- Month ∆%	PP Cont. % points
All Retailing	100.0	4.2		0.7
Mostly Food Stores	41.6	3.5	1.5	0.9	0.4
Mostly Nonfood Stores	41.0	4.5	1.9	2.8	1.1
Non-store Retailing	6.5	16.4	1.1	11.0	0.7
Automotive Fuel	10.9	-2.6	-0.3	-15.0	-1.5

Cont.: Contribution

Source: UK Office for National Statistics

http://www.ons.gov.uk/ons/rel/rsi/retail-sales/march-2015/index.html

© Carlos M. Pelaez, 2009, 2010, 2011, 2012, 2013, 2014, 2015.