APAC and North America lead other regions in economic growth in the first quarter of 2018.
By Larry Basinait
Deploying a global workforce and ensuring access to the best talent is a crucial component of success for many enterprises. For multinational HR departments, global labour market data is an invaluable tool that can be used to inform critical decisions around the best countries and regions in which to grow. PeopleScout, a global provider of RPO, MSP, and total workforce solutions, has partnered with HRO Today to produce quarterly reports that compile current international labour market figures, including measures such as national Gross Domestic Product (GDP), unemployment rates, and important trends from the world’s leading economies by country and region. This data reveals actionable information about the quality and availability of the talent pool, working conditions, and recruitment opportunities.
To truly understand unemployment rates, it is necessary to collect a variety of market information about the overall economic environment from which they derive. For that reason, this report also analyses measures that include economic forecasts and other factors that offer insight into a given country’s economic circumstances.
In the first quarter of 2018, economic thought leaders describe the global economy as experiencing a cyclical recovery, reflecting a rebound in investment, manufacturing activity, and trade. This improvement comes against the backdrop of favourable global financing conditions, generally accommodative policies, rising confidence, and stabilised commodity prices. Global GDP growth is estimated to have picked up from 2.4 per cent in 2016 to 3.0 per cent in 2017, above the June 2017 forecast of 2.7 per cent. The improvement in growth has been geographically broad, with growth rates rising in more than half of the world’s economies. And according to The World Bank’s new Global Economic Prospects report, global growth is projected to continue, rising to 3.1 per cent in 2018.
According to the Bureau of Economic Analysis, real GDP increased by 2.3 per cent in the first quarter of 2018, though the rate of increase was down from 2.9 per cent in the fourth quarter of 2017. The increase in GDP for the first quarter reflected increases in business investment, consumer spending, exports, inventory investment, and imports. In March, the U.S. unemployment rate held steady at 4.1 per cent—the same level it’s been for six consecutive months. The current rate is below 5.0 per cent, which is considered by most economists to be the rate at which the U.S. is “fully employed.”
Canada has a population of 37 million, just over 10 per cent of the size of the U.S. The Canadian unemployment rate fell 0.1 percentage points to 5.8 per cent. In addition, Canada’s GDP growth in the first quarter is estimated at 1.6 per cent, marking the third consecutive quarter with growth below 2.0 per cent. A weaker than expected growth rate, as reported by the National Bank of Canada, in the start of this year has led to a revision of the 2018 growth estimate to only 2.2 per cent.
Asia Pacific (APAC)
The economies of East and South Asia (ESA) continued to remain robust in the first quarter of 2018. The economies in this sub-grouping account for over four-fifths of the region’s nominal GDP. A preliminary estimate predicts that the regions’ economies expanded by an aggregated 6.3 per cent annually in the first quarter, matching the results reported in the fourth quarter of 2017. Whilst the region is enjoying enviable growth momentum, risks are looming. China and the U.S. are in talks to reach a deal that avoids a full-blown trade war between the two countries. These trade issues could create uncertainty and erode investors’ confidence in the region, adding downward pressure on regional growth.
China has by far the largest economy in APAC with a GDP of more than $14 trillion, and is nearly three times larger than the second biggest economy, Japan, which has a GDP of $5.2 trillion. In the first quarter of 2018, unemployment in these top two regional players decreased from already low rates, with China reporting 3.9 per cent unemployment and Japan a remarkable 2.5 per cent.
Hong Kong expanded at the fastest pace in nearly seven years in the first quarter and economists expect growth of 3.3 per cent for all of 2018. Unemployment in Hong Kong is currently at 2.9 per cent, holding steady since the fourth quarter of 2017.
Europe, the Middle East, and Africa (EMEA)
The Eurozone economy experienced slowing growth in the first quarter of 2018, starting the year off with disappointing results after a stellar 2017. According to a preliminary estimate released by Eurostat, the GDP for the region increased to a seasonally-adjusted 0.4 per cent from the previous quarter, which was below the 0.7 per cent rise in the fourth quarter of 2017 and marked the slowest growth since the third quarter of 2016. The reading was broadly in line with market analysts’ expectations.
Unemployment rates in the EMEA region increased in one-third of the countries examined in this report, which includes all the major players in the region. Unemployment in Germany decreased by 0.3 per cent to 3.5 per cent in the first quarter of 2018. The United Kingdom is now the second largest economy in EMEA, edging out France, according the latest estimates from the International Monetary Fund.
However GDP growth was confirmed at a mere 0.1 per cent in the first quarter—a multi-year low—due to slower private consumption growth and contractions in business investment and exports. The unemployment rate held at 4.2 per cent in the first quarter of the year. Growth in the U.K. GDP is forecast at 1.4 per cent for 2018, dampened by continued Brexit uncertainty and slowing export growth after the boost provided last year by the weaker pound.
Predictive models for economic growth are generally slower in Latin America than other regions, but available data suggest that the region’s economy slowed at the start of 2018. Regional GDP growth is expected to be approximately 1.7 per cent in the first quarter, below the fourth quarter of 2017’s nearly four-year high of 2.0 per cent. Whilst regional growth has notably improved since a tough 2015 and 2016, economic slack and vulnerabilities still exist in many economies, making recovery geographically uneven.
One of the economies that struggled in 2018’s first quarter is one the largest in the region: Brazil. A stream of data on the Brazilian economy suggests that the recovery is weak. Retail sales decelerated and unemployment rose in the first quarter, boding poorly for private consumption. Moreover, recent figures for the industrial sector have also been disappointing.
Mexico is the second largest economy in the region and reported some fairly positive growth compared to historic norms. Despite a 0.2 per cent increase in unemployment to 3.4 per cent, the Mexican GDP advanced 1.1 per cent in the first three months of 2018. It was the strongest expansion since the third quarter of 2016, mainly boosted by gains in services and the manufacturing industry whilst the agricultural sector grew more slowly.
Read the full results of the survey here.