Joblessness in US spreading to globe
Güncelleme Tarihi:
Bloomberg
Oluşturulma Tarihi: Aralık 02, 2008 00:00
WASHINGTON - With its rising consumer demand, the United States used to export jobs, but today it is exporting unemployment. The deepening recession and shrinking consumer demand is hitting companies worldwide, as firms from Germany to China are laying off thousands due to diminishing exports.
The U.S. once exported jobs. Now, it is exporting unemployment.
America’s deepening recession, which has cost 1.2 million jobs so far this year, is taking a heavy toll overseas. Shrinking consumer demand for imports and less need for outsourcing by U.S. companies are idling workers at Germany’s Porsche and Chinese businesses that make toys for Mattel.
Economists say global unemployment may increase to a two-decade high as trade and investment ties that have developed during 20 years of globalization magnify the impact of the U.S. contraction.
"In the same way that we were supporting economic activity when we were growing rapidly, the recession in the U.S. is going to be a drag on the global economy and is going to reduce employment in our trading partners," says Lewis Alexander, chief economist at Citigroup.
The U.S. Department of Labor may report Dec. 5 that the jobless rate jumped in November to a 15-year high of 6.8 percent and employers reduced payrolls by 320,000, according to a Bloomberg survey. That would bring job losses for 2008 to 1.5 million.
Spillover effects
"This is by no means simply a U.S. story," says David Hensley, director of global economic coordination at JPMorgan Chase & Co.
Worldwide, the jobless rate may rise above 7 percent by 2010 after remaining between 5 percent and 7 percent for two decades, says Kathleen Stephansen, chief global economist for Credit Suisse Holdings USA.
"The global pie is shrinking rapidly, and when that happens, there is simply not enough business to keep everyone employed," she says.
Unemployment in Germany, the world’s largest exporter, may start to creep higher after declining for 32 consecutive months, the longest slide since reunification in 1990.
"Improvements in the German labor market will come to an end in 2009 at the latest," Michael Huether, head of the Cologne-based Institut der Deutschen Wirtschaft, a business-sponsored economic institute, told reporters in Berlin Nov. 24.
Germany’s BASF last month announced plans to idle 80 factories around the globe after customers in the auto, construction and textile industries reduced orders. The world’s largest chemical company, which gets a fifth of its revenue from North America, plans to eliminate more than 1,000 jobs and reduce work hours for 20,000 employees, about one-fifth of its labor force.
Heidelberger Druckmaschinen, the world’s largest printing-press maker, plans to cut as many as 2,500 jobs, or 13 percent of its workforce, to offset declining demand. The Heidelberg-based company gets about half its sales from outside Europe, including 16 percent from North America.
Volkswagen and Porsche said last week they are each temporarily suspending production at their largest plants in coming weeks. Porsche said in a Nov. 26 statement that sales of its trademark 911 sports car in the U.S., the model’s largest market, "can hardly be reliably calculated."
Euro region joblessness
Unemployment in the 15-nation euro region rose to 7.7 percent in October from a low of 7.2 percent in February. It will reach 8.3 percent next year, the International Monetary Fund says.
The Organization for Economic Cooperation and Development, which includes the world’s richest economies, said in a report last week that it expects the number of people out of work in its 30 member nations will rise to 42 million in 2010 from 34 million now as "the financial turmoil that erupted in the United States" has "rapidly spread to the rest of the world."
Europe and Japan "are at the beginning stages of what we think will be a severe labor-market adjustment," says JPMorgan’s Hensley.
In Japan, the slump is hurting part-time and contract employees, a growing class of workers who don’t benefit from lifetime-employment contracts.
Toyota Motor will cut half its 6,000 temporary workers by the end of March in response to the global decline, which drove U.S. sales for Asia’s largest auto company down 23 percent in October. Electronics-maker Sharp said it is considering cutting temporary workers at a plant that makes parts for digital cameras and televisions.
Japan’s jobless rate will jump to 4.4 percent in 2009 from 4 percent, the OECD forecasts. Japanese unemployment peaked at 5.5 percent in 2003, when the country was emerging from its last recession.
Also feeling the fallout from the U.S. downturn are manufacturers in low-cost countries such as China. Smart Union Group Holdings, a toymaker that supplies Mattel and Hasbro, shut last month, putting 7,000 people out of work. Half the nation’s toy exporters have closed this year.
America’s deepening recession, which has cost 1.2 million jobs so far this year, is taking a heavy toll overseas. Shrinking consumer demand for imports and less need for outsourcing by U.S. companies are idling workers at Germany’s Porsche and Chinese businesses that make toys for Mattel.
Economists say global unemployment may increase to a two-decade high as trade and investment ties that have developed during 20 years of globalization magnify the impact of the U.S. contraction.
"In the same way that we were supporting economic activity when we were growing rapidly, the recession in the U.S. is going to be a drag on the global economy and is going to reduce employment in our trading partners," says Lewis Alexander, chief economist at Citigroup.
The U.S. Department of Labor may report Dec. 5 that the jobless rate jumped in November to a 15-year high of 6.8 percent and employers reduced payrolls by 320,000, according to a Bloomberg survey. That would bring job losses for 2008 to 1.5 million.
Spillover effects
"This is by no means simply a U.S. story," says David Hensley, director of global economic coordination at JPMorgan Chase & Co.
Worldwide, the jobless rate may rise above 7 percent by 2010 after remaining between 5 percent and 7 percent for two decades, says Kathleen Stephansen, chief global economist for Credit Suisse Holdings USA.
"The global pie is shrinking rapidly, and when that happens, there is simply not enough business to keep everyone employed," she says.
Unemployment in Germany, the world’s largest exporter, may start to creep higher after declining for 32 consecutive months, the longest slide since reunification in 1990.
"Improvements in the German labor market will come to an end in 2009 at the latest," Michael Huether, head of the Cologne-based Institut der Deutschen Wirtschaft, a business-sponsored economic institute, told reporters in Berlin Nov. 24.
Germany’s BASF last month announced plans to idle 80 factories around the globe after customers in the auto, construction and textile industries reduced orders. The world’s largest chemical company, which gets a fifth of its revenue from North America, plans to eliminate more than 1,000 jobs and reduce work hours for 20,000 employees, about one-fifth of its labor force.
Heidelberger Druckmaschinen, the world’s largest printing-press maker, plans to cut as many as 2,500 jobs, or 13 percent of its workforce, to offset declining demand. The Heidelberg-based company gets about half its sales from outside Europe, including 16 percent from North America.
Volkswagen and Porsche said last week they are each temporarily suspending production at their largest plants in coming weeks. Porsche said in a Nov. 26 statement that sales of its trademark 911 sports car in the U.S., the model’s largest market, "can hardly be reliably calculated."
Euro region joblessness
Unemployment in the 15-nation euro region rose to 7.7 percent in October from a low of 7.2 percent in February. It will reach 8.3 percent next year, the International Monetary Fund says.
The Organization for Economic Cooperation and Development, which includes the world’s richest economies, said in a report last week that it expects the number of people out of work in its 30 member nations will rise to 42 million in 2010 from 34 million now as "the financial turmoil that erupted in the United States" has "rapidly spread to the rest of the world."
Europe and Japan "are at the beginning stages of what we think will be a severe labor-market adjustment," says JPMorgan’s Hensley.
In Japan, the slump is hurting part-time and contract employees, a growing class of workers who don’t benefit from lifetime-employment contracts.
Toyota Motor will cut half its 6,000 temporary workers by the end of March in response to the global decline, which drove U.S. sales for Asia’s largest auto company down 23 percent in October. Electronics-maker Sharp said it is considering cutting temporary workers at a plant that makes parts for digital cameras and televisions.
Japan’s jobless rate will jump to 4.4 percent in 2009 from 4 percent, the OECD forecasts. Japanese unemployment peaked at 5.5 percent in 2003, when the country was emerging from its last recession.
Also feeling the fallout from the U.S. downturn are manufacturers in low-cost countries such as China. Smart Union Group Holdings, a toymaker that supplies Mattel and Hasbro, shut last month, putting 7,000 people out of work. Half the nation’s toy exporters have closed this year.