Unemployment Rates for US Trade Countries
Jobless Rate Increases Lead to Global Import & Export Decreases
Sep 23, 2008
One of the key indicators to help evaluate economic risks in a prospective trade country, the unemployment rate tells a story about a nation’s stability and therefore its desirability as a place to sell exports or buy imports.
In August 2008, America’s unemployment rate rose to 6.1%. That statistic represents a 29.8% gain from the 4.7% unemployment rate in effect just 12 months earlier.
While America’s current unemployment numbers don’t approach jobless rates of over 25% experienced during the Great Depression, the U.S. government has formulated a US$700 billion rescue plan to mitigate further damage to the weakening global economy.
This analysis presents the latest unemployment data for America’s top 15 trade partners.
Current Unemployment Rates for US Trade Partners
Listed below are the countries with which the U.S. does the most international trade. These nations are presented in descending order based on how much business they do with America, starting with the USA’s number one trade partner Canada.
- Canada … 5.3% unemployment rate as of July 2008
- China … 6.1%
- Mexico … 3.9%
- Japan … 4%
- Germany … 7.5%
- United Kingdom … 5.8%
- South Korea … 2.9%
- France … 7.6%
- Taiwan … 3.9%
- Netherlands … 2.5%
- Italy … 6.5%
- Venezuela … 9.1%
- Brazil … 9.8%
- Saudi Arabia … 13%
- Malaysia … 3.1%.
Most Stable Countries with which America Does Business
The top three countries with the lowest unemployment rates – Netherlands, South Korea and Malaysia – generated 5.7% of total American exports and imports during 2007.
Taiwan, Mexico and Japan all have unemployment rates at or below 4%. These three countries account for about 20% of overall U.S. exports plus imports.
Canada and the UK both have jobless rates below the current American benchmark of 6.1%, and are responsible for 21% of total U.S. trade.
American Trade Partners with Highest Unemployment Rates
Saudi Arabia’s double-digit unemployment rate should serve as a red flag for export products that depend on consumer demand, particularly if that rate should rise sharply. To put things in perspective, however, Saudi Arabia is a politically important trade partner for the U.S. and generates 1.5% of overall American trade.
Two resource-rich and fast-growing South American economies, Brazil and Venezuela, have unemployment rates approaching 10%.
European countries including France, Germany and Italy are also wrestling with chronically high unemployment levels, although France has done the best job recently in containing any increases in joblessness.
Some publications report China’s unemployment as low as 4% with a footnote that rural communities have a much higher rate. The CIA World Factbook 2008 estimates unemployment in the People’s Republic at 6.1% - ironically, the same unemployment statistic for America in August 2008 that is currently causing so much concern on global markets.
Conclusions about Worldwide Unemployment Rates
Just over 50% of American trade is with trade partners that have unemployment rates at or higher than the current U.S. benchmark of 6.1%.
If America’s unemployment rate is allowed to persist or increase, trade partners including Saudi Arabia, Brazil, Venezuela and China will be hit hard with a quadruple-whammy. Not only will these global trading nations suffer a decrease in demand from American consumers, more expensive exports from U.S. businesses and higher tariffs and taxes on their imports, the resulting unemployment increases in their home economies will lead to even more instability throughout the international trade marketplace during the months and years ahead.
Most international trade analysts agree that the American government is doing the right thing by trying to mitigate a possible world trade calamity as quickly as possible.
References
This article presents independent calculations and insights based on data drawn from the U.S. Department of Labor – Bureau of Labor Statistics and Division of Foreign Labor Statistics (at September 5, 2008) and the Central Intelligence Agency’s World Factbook 2008.
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