Job Market to Worsen Worldwide in First Quarter

Unemployment, which has plagued all developed economies, may get little help from employers early next year. This problem will cascade into GDP growth. It presents one more hurdle to a global economic recovery, one which refuses to go away and has spread to fast-growing economies.

According to the first quarter 2012 Manpower Employment Outlook Survey, job seekers can expect a slower first-quarter hiring pace than in the fourth quarter of 2011 in most of the world’s labor markets.

As might be expected, the greatest problems face Greece, Italy and Hungary. Greece and Italy continue to be in the grip of recessions, and austerity programs will make employment situations worse because they pull stimulus out of national budgets.

The most outstanding data in the survey involves China. Manpower reports:

[W]e see employer hiring plans in China slow considerably from this time last year, due to government measures to cool the economy and declining demand from its biggest export market — Europe.

This trouble, a by-product of the drop in China’s PMI and factory activity, has cooled inflation. However, the government in the People’s Republic has initiated new stimulus, primarily through the interest rates charged by banks. China risks rekindling inflation, but the government considers it the lesser of two evils. China cannot maintain its place in the global financial world if its economy stumbles.

And the difference between China and Europe starkly demonstrates the firepower the rich Chinese central government has. GDP growth, which has averaged more than 9% for five years, has put China in a position that allows it to ramp up factory activity. The one barrier the People’s Republic faces is whether there will be demand for those factory goods among its trade partners.

The Manpower survey points out that the sharpest reduction in employment prospects will be in Europe, which has no means to rectify the problem. China does have one, but it cannot last if demand from outside its borders does not resume.

Douglas A. McIntyre