Despite economic turmoil largely caused by COVID-19, the overallÂ worldwide employment environment in the final quarter of 2019 wasÂ stable.
By Larry Basinait
Deploying a global workforce and ensuring accessÂ to the best talent is a crucial component of successÂ for all multinational enterprises. Global labor marketÂ intelligence is an invaluable tool for these HRÂ departments and can be used to inform critical decisionsÂ around the best countries and regions in which to grow.
To truly understand unemployment rates, it is necessaryÂ to collect several categories of market informationÂ about the overall economic environment from whichÂ they derive. For that reason, this report also analyzesÂ measures that include GDP, economic forecasts, andÂ other factors that offer insight into a given countryâsÂ economic circumstances.
In 2019, global economic growth continued to decelerate,Â stemming from trade wars and weak investment growthÂ which impacted nearly every region of the world. TheÂ 2019 economy was highly disrupted by âPhase OneâÂ of the United States-China trade negotiations, passedÂ in December 2019, but the World Bank estimates thatÂ those disruptions may not continue into 2020. TheÂ widespread global challenges affected not only economicÂ growth but also key indicators of economic activity,Â such as manufacturing, which softened to levels that areÂ approaching those of the 2008 financial crisis. Overall,Â global growth decreased from 3.0 percent in 2018 to 2.4Â percent in 2019.
Despite the slowdown in economic growth, the globalÂ labor market remained robust as the unemploymentÂ rate in 2019 remained consistent with 2018 levelsÂ at 4.9 percent. The World Bank reports that highÂ income countries experienced the largest drop in theirÂ unemployment rate from last year, decreasing by 0.2Â percentage points to 5.0 percent.
United States and Canada
In the U.S., job creation remained robust, with 184,000Â jobs created on average per month in the fourth quarter.Â In December, the share of women in the workforceÂ outnumbered men for the first time since The GreatÂ Recession (2007-2009). Consumer optimism remainedÂ relatively high, as reflected in the quarterly average ofÂ the Consumer Confidence Index, which currently standsÂ at 126.6. However, wages increased by only 2.9 percentÂ year-over-year in December, which is the lowest growthÂ rate since July of 2018, according to the Bureau of LaborÂ Statistics.
In the fourth quarter, the U.S. unemployment rateÂ dropped to 3.5 percent in 2019, a 0.4 percent decreaseÂ from 2018. Historically, unemployment rates at 5.0Â percent or lower are considered by many economists toÂ be at or near full employment.
In 2019, all of the major stock indices increasedÂ substantially. The Dow Jones industrials increased byÂ 22.3 percent, the S&P 500 increased by 28.9 percent,Â and the Nasdaq Composite rose by 35.2 percent. DespiteÂ the ongoing trade war between U.S. and China, stocksÂ surged on high consumer sentiment and the FederalÂ Reserve cutting interest rates, according to CNBC.
The Canadian unemployment rate in the fourth quarterÂ of 2019 remained consistent with the prior year at 5.6Â percent. The Canadian economy ended on a weak noteÂ following a rail strike, weakening demand, and a ruptureÂ in the Keystone pipeline. In response, the National BankÂ of Canada reports the Canadian government proposedÂ legislation to lower taxes for nearly 20 million people inÂ order to boost growth and pay off record high householdÂ debt.
Asia Pacific (APAC)
According to FocusEconomics, growth in the East andÂ South Asia (ESA) region slowed in 2019 compared toÂ 2018 and is expected to slow further still in 2020. TradeÂ tensions rattled most of the export-driven markets,Â causing growth to slump for the year. However, inÂ December, a âPhase Oneâ trade negotiation agreementÂ between the United States and China was reached,Â stabilizing GDP growth in the fourth quarter. ThisÂ agreement, along with a dovish stance on monetaryÂ policy taken by central banks, should help cushion theÂ economic slowdown in 2020.
China has by far the largest economy in the region withÂ a GDP of $13.4 trillion, and is nearly three times largerÂ than the second biggest economy in the region, Japan.Â Industrial production in December was particularlyÂ strong, growing by 6.9 percent on a year-over-year basis,Â the largest year-over-year increase since February of 2019,Â according to FocusEconomics. The unemployment rate inÂ China decreased by 0.2 percent since 2018 to 3.6 percent.
Europe, the Middle East, and Africa (EMEA)
The EMEA region covers three continents and includesÂ 116 different countries which vary greatly in GDP andÂ population. Twenty-seven countries in EMEA are trackedÂ in this quarterly analysis. There were mostly positiveÂ results in the quarter, with unemployment rates in theÂ overall EMEA region declining year-over-year in 18 ofÂ the 27 countries. The country with the biggest declineÂ in unemployment rate on a year-over-year basis wasÂ Greece, where the unemployment rate declined by 2.0Â percentage points to 16.5 percent. Conversely, SouthÂ Africaâs unemployment rate increased the most on a year-over-year basis, up 2.0 percentage points to 29.1 percent.
The United Kingdom has the second largest economyÂ in Europe at $2.8 trillion dollars. In the fourth quarter,Â Brexit uncertainty weighed on the UK economy asÂ manufacturing and services output weakened. DespiteÂ the weak economic data, the unemployment rateÂ dropped slightly from 4.0 percent in the fourth quarterÂ of 2018 to 3.8 percent in the fourth quarter of 2019. InÂ 2020, the economy is expected to grow slightly, boostedÂ by the expansionary fiscal stance of the UK government.Â However, FocusEconomics reports that trade talks withÂ the European Union could pose as a downside risk.
The Middle East and North Africa region is expected toÂ recover in 2020 following a weak 2019. Slowing economicÂ decline in Iran and an expected recovery in oil outputÂ could help prospects in 2020, reports FocusEconomics.Â Egypt, the largest country in the in the region, had theÂ largest drop in unemployment since last year, down 1.1Â percent to 7.8 percent. No country in the region hadÂ an unemployment rate increase since 2018, with threeÂ countries reporting consistent unemployment rates andÂ three countries reporting an unemployment rate decrease.
In the fourth quarter of 2019, Latin Americaâs largestÂ economy, Brazil, reported a drop in its unemploymentÂ rate, down 0.6 percent from 2018 to 11.0 percent, theÂ lowest level since March of 2016. Economic activityÂ increased within the quarter, boosted by greaterÂ domestic demand led by growth in consumer spending.Â Nonetheless, exports declined as demand from ChinaÂ and Argentina softened. In 2020, FocusEconomics citesÂ that growth is set to hit a five-year high as high economicÂ sentiment and accommodative monetary policy boostÂ consumer spending and investment.
Mexico is the second largest country in the region,Â both by GDP and population. Economic growth slowedÂ in the fourth quarter as the manufacturing and theÂ construction industry slumped from a weak third quarter.
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