Global Economy Watch – July 2014

Economic update: US employment figures back to former glory while Germany continues to fly solo

GDP has been recovering at a modest pace in most advanced economies. But is this momentum pulling through to the employment numbers? Employment figures are an important metric for businesses to monitor as they correlate strongly with household consumption which, in turn, is a key driver of company revenues.

US has more jobs now than before the crisis Figure 2 shows that the US recovery reached a key milestone in April as the economy managed to regain all of the jobs lost since the fourth quarter of 2008. We expect this picture to continue to improve as US GDP grows at around 2-3% per annum in 2014-15.

Germany flying solo

In the Eurozone, the employment picture remained mixed. Germany sits at one end of the spectrum having created more than 2 million jobs. At the other end are other Eurozone countries where around 6.7 million jobs have been lost, mostly driven by the peripheral nations. Greece, for example, has lost around 1.1 million jobs since the onset of the crisis. This pattern suggests that, for every (net) job created in Germany since the crisis began, around 3.2 jobs have been lost in the rest of the Eurozone.

Germany's labour market seems disconnected from the rest of the Eurozone

Fig 2: Germany's labour market seems disconnected from the rest of the Eurozone

Fig 2: Germany's labour market seems disconnected from the rest of the Eurozone

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