North America and APAC continue to show strong economicÂ growth.
By Larry Basinait
Deploying a global workforce and ensuring access to theÂ best talent is a crucial component of success for manyÂ enterprises. Global labor market data is an invaluableÂ tool for multinational HR departments and can be usedÂ to inform critical decisions around the best countriesÂ and regions in which to grow. PeopleScout, a globalÂ provider of RPO, MSP, and total workforce solutions, hasÂ partnered with HRO Today to produce quarterly reportsÂ that compile current international labor market figures,Â including measures such as national Gross DomesticÂ Product (GDP), unemployment rates, and importantÂ trends from the worldâs leading economies by countryÂ and region. This data reveals actionable informationÂ about the quality and availability of the talent pool,Â working conditions, and recruitment opportunities.
This quarter, economists describe the global economyÂ as experiencing a cyclical recovery, reflecting aÂ rebound in investment, manufacturing activity, andÂ trade. This improvement comes against the backdropÂ of favorable global financing conditions, generallyÂ accommodative policies, rising confidence, and stabilizedÂ commodity prices. The improvement in growth has beenÂ geographically broad, with growth rates rising in moreÂ than half of the worldâs economies. Global growth isÂ projected to edge up to 3.1 percent in 2018.
While the fundamentals remain good for the worldÂ economy, there is some degree of caution fromÂ employers looking forward. As the largest economy, theÂ United States is pursuing a policy of trade re-negotiationsÂ that could lead to the imposition of tariffs by the U.S.Â and against the U.S. Even a small deceleration of tradeÂ flows could have negative repercussions on world GDPÂ growth and raise the likelihood of financial stress andÂ defaults. This slowdown could result in higher worldwideÂ unemployment rates.
According to the Bureau of Economic Analysis, real GDPÂ in the U.S. increased by a substantial 4.1 percent in theÂ second quarter of 2018, up considerably from 2.2 percentÂ in the first quarter of 2018. The increase in real GDPÂ in the second quarter reflected positive contributionsÂ from personal consumption expenditures (PCE), exports,Â nonresidential fixed investment, federal governmentÂ spending, and increased state and local governmentÂ spending.
In June, the U.S. unemployment rate was 4.0 percent,Â down slightly from the the end of the first quarterâs markÂ of 4.1 percent. Unemployment rates at 5.0 percent orÂ just below are considered by many economists to be atÂ or near full employment. Full employment means thatÂ unemployment has fallen to the lowest possible level thatÂ will not cause inflation.
The Canadian unemployment rate increased slightly byÂ 0.2 percentage points in June to 6.0 percent, which isÂ still near record lows for the country. Canadaâs economyÂ appears to have held up reasonably well through theÂ first half of the year, despite the slowdown in CanadianÂ consumer spending in the first quarter. Higher interestÂ rates and new mortgage lending rules continue to affectÂ consumers in the second quarter.
The economies of East and South Asia (ESA) continuedÂ to remain robust in the second quarter of 2018. AÂ preliminary GDP growth estimate for the region showsÂ that ESA countries expanded at an aggregated rate of 6.3Â percent in the second quarter, very consistent with theÂ reported growth from the prior two quarters.
Looking forward, however, economic growth in theÂ region is projected to slow. The second quarterâs positiveÂ export growth performance in the region was due to theÂ front-loading of production and shipping ahead of theÂ implementation of possible trade tariffs between ChinaÂ and the United States in July. Therefore, the positiveÂ export news may not reflect an accurate picture ofÂ economic growth.
China has by far the largest economy in the region withÂ a GDP of more than $14 trillion, and is nearly three timesÂ larger than the second biggest economy, Japan, whichÂ has a GDP of $5.2 trillion. In the second quarter of 2018,Â unemployment in these top two regional players againÂ decreased from already low rates, with China reportingÂ 3.8 percent unemployment and Japan a remarkable 2.4Â percent.
Europe, the Middle East, and Africa (EMEA)
The Eurozoneâs slower growth rates than other regions atÂ the start of this year carried over into the regionâs secondÂ quarter results. In the second quarter of 2018, GDPÂ expanded 0.4 percent over the previous period, belowÂ the level of 0.7 percent growth seen throughout most ofÂ 2017. The sluggish pace was likely driven by weak exportsÂ and subdued domestic demand amid lower confidence,Â higher inflation, and reduced global trade. However, theÂ growth rate was still at a positive level overall and theÂ economyâs fundamentals remain solid, reflected by anÂ improving labor market.
Unemployment rates in the overall EMEA region declinedÂ in 24 of the 27 countries examined in this report,Â with all of the largest economies posting improvedÂ unemployment statistics. In Germany, the largestÂ European economy, unemployment decreased by 0.1Â percent to 3.4 percent in the second quarter of 2018.Â The economy accelerated in the second quarter and isÂ expected to continue growing robustly in the second halfÂ of the year.
Available data suggests that Latin Americaâs economicÂ momentum held up in the second quarter, despite politicalÂ turbulence in key economies and an uncertain economicÂ backdrop. Regional GDP (excluding Venezuela) is expectedÂ to have expanded 2.0 percent annually in the secondÂ quarter, a notch above the first quarterâs 1.9 percentÂ increase.
Weak economic data continued to plague Brazil in theÂ second quarter. Economic activity showed the largestÂ contraction on record in May, and retail sales plunged inÂ the same month while the manufacturing output fell inÂ June. Economists estimate the economy will grow only 1.7Â percent this year, down from prior forecasts. However,Â despite a poor quarter, unemployment edged down 0.7Â percent to 12.4 percent.