institute of supply management manufacturing composite index rose from october to december 2011. improvements were particularly notable in new orders and production activity. stronger growth of consumer spending on durable goods is likely boosting the manufacturing sector. in addition, growth of u. s. exports has been well maintained, while import growth has been subdued. alongside the somewhat stronger near - term growth we have also seen some improvement in the labor market. workers are filing fewer initial claims for unemployment insurance. new claims have fallen to levels not seen since mid - 2008. private - sector employees are working more hours. aggregate hours worked rose at a 3 percent annual rate in the fourth quarter of 2011, up from essentially no growth in the third quarter. combined with average hourly earnings rising at a 1. 8 percent rate, the increase in hours worked suggests an annual rate of bis central bankers ’ speeches increase in private wage and salary income of close to 5 percent. this is a respectable rate that might support more spending – if sustained. a firmer labor market has been accompanied by partial recovery in consumer confidence over the past few months. confidence is rising up from levels that were often – in the third quarter of 2011 – lower than at the depths of the great recession. it should be noted that while workers ’ hours grew at a healthy pace in the fourth quarter, employers added an average of just 140, 000 payroll jobs per month, somewhat less than in the third quarter. despite this rather tepid increase in jobs, the unemployment rate fell a cumulative 0. 5 percentage points from september to december. this apparent discrepancy is due to two factors – faster job growth as measured by the household survey and an outright decline of the labor force. workers aged 25 to 54 have been particularly prone to dropping out, which suggests that the decline in the unemployment rate may overstate the improvement in labor market conditions. despite some improvements, the economy continues to operate with significant excess slack. less than 59 percent of the u. s. working - age population has a job. this is unacceptably low – just about the same share as in late 2009 and well below the levels in 2006 and 2007. once again, this large amount of slack is putting downward pressure on trend inflation. after a brief run - up during the second quarter of 2011 – reflecting the pass - through from higher commodity prices and supply - chain disruptions – inflation has retreated and may be headed down further. as i noted earlier, it is unlikely that the faster growth experienced in

prasarn trairatvorakul : thailand ’ s financial challenges in global capital markets speech by dr prasarn trairatvorakul, governor of the bank of thailand, at the thailand focus 2012 “ positioning thailand for the next growth phase ”, bangkok, 29 august 2012. * * * it ’ s an honor to speak before you today at the thailand focus conference. this morning you heard finance minister kittiratt na ranong speak on thailand ’ s competitiveness and fiscal policy. later on in the conference, other distinguished speakers will discuss thailand ’ s investment opportunities in greater detail. to complement the picture, i will speak on monetary policy to complete your views on the investment opportunities and prospects of the thai economy. as international investors, i believe you need to have a firm understanding of the country ’ s policy direction – something that is sorely needed in the current uncertain global economic environment. so today i will share with you my thinking on the monetary policy options going forward in light of my assessment of the global economy and the risks to the thai economy. the organizer of this conference, president charamporn, has kindly asked me to talk about “ financial challenges in global capital markets ”. this is an especially relevant topic because, this year, the key challenge for thailand is the challenge of weathering the financial and economic turmoil from the euro crisis. more than one year ago, i had the honor of giving a talk here. some of you who were in attendance may recall that i labeled 2011 “ the year of rebalancing ” for monetary policy. why “ rebalancing? ” because we were steadily raising interest rates toward normal territory amid global and domestic economic recovery. well, that was one year ago. one year can be a long time, especially for financial markets. and, indeed, things have changed a great deal since then. we had the flood ; and the euro crisis. interest rate hiking was put on hold and rebalancing postponed amid post - flood recovery and reconstruction and especially amid global uncertainty due to the euro. now we project global economic recovery to be weaker than believed since the financial crisis in 2008. so if last year was the “ year of rebalancing ” what is this year? for monetary policy, this year is a year of risk and reassessment. by risk i refer to the possibility that the euro crisis may spread to asia and thailand. and by reassessment, i refer to how