GEI for lawyers: unemployment, PMI and legal risk — a practical guide

1. What is McKinsey’s Global Economics Intelligence (GEI)?

McKinsey’s Global Economics Intelligence (GEI) is a monthly package of macroeconomic data and commentary on the world economy. Each release combines an executive summary of global trends and risks with detailed charts for major economies such as the euro area, the United States, the United Kingdom, China and others.

In practice, GEI brings together indicators from sources like Eurostat, the OECD, national statistical offices and private surveys. It tracks, among other things:

• GDP growth and recession risks

• labour‑market conditions (employment, unemployment, participation)

• inflation and interest rates

• retail sales and consumer demand

• industrial production, new orders and construction

• purchasing managers’ indices (PMI) for manufacturing and services

• trade volumes and current‑account balances

GEI is written for senior executives and investors, but the underlying indicators are equally relevant for in‑house lawyers, compliance officers and HR legal teams. Macro data does not decide individual cases, yet it changes the frequency, scale and type of legal issues that will land on your desk over the next quarters.

2. A concrete example: eurozone unemployment at a ten‑year low

A good illustration of how GEI works is McKinsey’s article on eurozone unemployment in late 2018. In that piece, McKinsey highlighted that the euro‑area unemployment rate fell to 7.9% in November 2018, the lowest level since 2008, based on Eurostat’s seasonally adjusted data.

The same analysis noted:

• the EU‑28 unemployment rate was around 6.6–6.7%, the lowest since the EU series began in 2000;

• country differences remained large: about 3.3% in Germany, compared to 9–14% in France, Italy and Spain;

• GDP growth in the eurozone was a modest 0.2% quarter‑on‑quarter in Q4 2018, and forward‑looking PMIs were declining but still above 50, indicating continued near‑term expansion.

For an economist, this is a story about “post‑crisis labour‑market recovery amid weak growth and external risks”. For a legal or compliance team, this is a story about:

• labour‑law exposure in countries with very high unemployment (Spain, Italy);

• competition for talent and non‑compete / IP protection in tight labour markets (Germany, some eastern EU states);

• contract‑and‑supply‑chain risk in an environment where industrial orders and external trade are sensitive to protectionism.

The rest of this guide explains how to systematically translate such macro signals into legal risk management.

3. Core indicators in GEI and why lawyers should care

3.1 Unemployment and employment indicators

What the indicator measures

Unemployment is the share of the labour force without work but actively seeking a job and available to start, according to definitions used by Eurostat, the OECD and national labour‑force surveys. (OECD)

GEI typically shows:

• overall unemployment

• sometimes youth unemployment

• employment growth and participation rates.

Why it matters legally

• Rising unemployment

  • higher likelihood of restructurings, redundancies and plant closures;

  • more wrongful‑dismissal claims, disputes over selection criteria and social plans;

  • more pressure on collective bargaining and works‑council processes.

• Falling unemployment

  • tighter competition for talent, especially in specialist roles;

  • greater risk of aggressive poaching and enforcement of non‑compete / non‑solicitation provisions;

  • stronger focus on anti‑discrimination, equal opportunities and flexible work arrangements.

Questions for in‑house counsel

• Do our standard employment agreements clearly define grounds and procedures for termination, notice periods and severance?

• Are our post‑termination restrictions and IP clauses enforceable and proportionate in key jurisdictions?

• Where unemployment is structurally high, do we have country‑specific playbooks for collective redundancy and consultation requirements?

3.2 Purchasing Managers’ Index (PMI) and new orders

What the indicator measures

Purchasing Managers’ Indices (PMI) are diffusion indices derived from monthly surveys of purchasing managers. A headline PMI reading:

• ranges from 0 to 100;

• above 50 indicates expansion compared with the previous month;

• below 50 indicates contraction. (S&P Global)

GEI tracks manufacturing and services PMIs for major economies.

Why it matters legally

• PMI below 50 for several months

  • heightened risk that suppliers or customers will delay performance, request renegotiation or default;

  • more frequent invocation of force majeure, “hardship” clauses or doctrines of commercial impracticability;

  • need to monitor counterparties for early signs of insolvency or restructuring.

• PMI well above 50

  • rapid growth can strain capacity and quality controls;

  • more disputes over service levels, delivery times and performance guarantees;

  • expansion into new markets with unfamiliar regulatory regimes.

Questions for in‑house counsel

• Do our templates contain clear force‑majeure and hardship clauses, including notice requirements and consequences (suspension, renegotiation, termination)?

• How often do we review financial covenants, security and step‑in rights in key supplier and customer contracts?

• Are service‑level agreements (SLAs) flexible enough to be adjusted if demand surges or collapses?

3.3 Retail sales and consumer demand

GEI regularly summarises trends in retail sales and consumer spending, often alongside consumer‑confidence indicators. In the eurozone example, retail sales were still growing year‑on‑year despite slow GDP growth and external uncertainty.

Why it matters legally

• Strong or accelerating retail sales

  • more marketing campaigns, discounts, loyalty programmes and bundled offers;

  • higher exposure to consumer‑protection rules on fair advertising, pricing transparency and unfair commercial practices;

  • increased processing of customer data for targeting and analytics (data‑protection risk).

• Weak or falling retail sales

  • higher rates of returns, complaints and chargebacks;

  • pressure on sales teams to use aggressive tactics that may cross legal boundaries;

  • potential store closures and restructuring in retail networks.

Questions for in‑house counsel

• Do we have standard terms and conditions for promotions, loyalty points and refunds that are compliant in each jurisdiction?

• How are claims and complaints tracked and escalated, and do we see spikes in particular markets when macro demand weakens?

• Are marketing and product teams trained on advertising and consumer‑protection rules?

3.4 Construction output and investment

GEI includes indicators such as construction activity, dwelling permits and infrastructure investment, which are sensitive to interest rates and business confidence.

Why it matters legally

• Rising construction activity

  • more EPC and subcontracting agreements;

  • increased occupational safety and health (OSH) exposure;

  • more performance guarantees, bonds and insurance policies.

• Falling or volatile activity

  • higher risk of project suspensions or cancellations;

  • claims for delays, cost overruns and change‑order disputes;

  • renegotiations of price, scope or timetable due to inflation and supply‑chain issues.

Questions for in‑house counsel

• Do our construction and project templates clearly allocate design, construction and site‑condition risks?

• Are OSH obligations, reporting lines and training clearly reflected in policies and contracts?

• Do we have pre‑drafted termination and settlement agreements for winding down projects?

3.5 External trade, protectionism and sanctions

GEI tracks trade growth, tariff changes and episodes of protectionism, noting how new trade barriers or sanctions affect flows of goods and services.

In the eurozone unemployment article, McKinsey pointed out that external trade was a major uncertainty, with concerns about a “new wave of global protectionism”.

Why it matters legally

• Trade tensions and sanctions

  • need to update sanctions and export‑control policies;

  • higher volume of counterparty screening (KYC/AML, ownership checks, end‑use/end‑user controls);

  • re‑drafting contracts to include sanctions clauses and export‑control warranties.

• New tariffs and non‑tariff barriers

  • renegotiation of pricing and delivery terms;

  • restructuring of supply chains and distribution networks;

  • possible claims under investment treaties or trade agreements for affected investors (in specific cases, with specialist advice).

Questions for in‑house counsel

• Do we have an up‑to‑date sanctions and export‑control framework, including screening, escalation and documentation?

• Are our contracts explicit about compliance with applicable trade laws, and do they give us termination rights if a counterparty becomes sanctioned?

• How do we coordinate with tax, customs and logistics teams when GEI signals rising trade barriers in certain corridors?

4. Scenario analysis: using GEI to prioritise legal work

4.1 “Low unemployment, weak growth”

From the 2018 eurozone example:

• GDP growth in Q4 was about 0.2%, repeating a weak Q3;

• unemployment hit a decade‑low 7.9% in the euro area and 6.6% in the EU‑28;

• PMIs were declining but remained just above 50, hinting at expansion with downside risks;

• external trade was under pressure from global protectionism, while domestic demand and retail sales were relatively resilient.

How might an in‑house legal team react?

• HR & employment

  • tighten non‑compete, confidentiality and IP clauses for key staff in tight labour markets;

  • review remote‑work and flexible‑work policies if competition for talent is regional rather than local.

• Commercial contracts

  • stress‑test force‑majeure and hardship clauses for downside scenarios if PMIs slip below 50;

  • ensure key customers and suppliers are subject to timely performance reviews and escalation processes.

• Compliance & trade

  • update sanctions and trade clauses in long‑term contracts where GEI suggests growing protectionism;

  • document risk assessments to show regulators that macro‑level signals were considered.

4.2 “Same company, different countries”

The same GEI snapshot showed large differences in unemployment between eurozone countries — from about 3.3% in Germany to roughly 14% in Spain, with France and Italy in the middle.

A legal team responsible for operations in all four states might:

• Germany (very low unemployment)

  • focus on retention mechanisms (bonuses, equity plans, career‑development clauses);

  • pay extra attention to IP assignment and non‑solicitation provisions for engineers and sales staff.

• Spain (very high unemployment)

  • maintain ready‑to‑use playbooks for collective redundancies and consultations;

  • ensure documentation around selection criteria, social measures and redeployment efforts is robust;

  • review litigation strategy for labour courts that may be more employee‑friendly in a high‑unemployment context.

GEI does not replace country‑specific legal advice, but it helps prioritise where to invest scarce legal resources.

5. A monthly GEI reading ritual for legal and compliance teams

You do not need to become a macroeconomist to get value from GEI. A simple 15–20‑minute routine can be enough:

1. Open the latest GEI executive summary and the regional section for your key markets.

2. Scan five indicators: unemployment, PMI, retail sales, construction output, external trade / sanctions. Note whether each is clearly improving, deteriorating or stable.

3. For each indicator, ask:

   • Which areas of law does this touch for us? (employment, contracts, consumer, trade, regulatory)

   • Does it change the frequency or severity of certain risks?

4. Update your risk register with 3–5 macro‑sensitive risks (e.g., “supply‑chain disruption in country X if PMI < 50 for three months”).

5. Define concrete actions for the next month, such as:

   • review termination clauses for top‑20 suppliers;

   • update redundancy templates;

   • refresh sanctions clause in all new cross‑border agreements.

6. Communicate key findings to HR, procurement and business leadership in one short page or slide.

Over time, this habit turns GEI from an abstract macro report into a practical early‑warning system for legal and compliance work.

6. Digital tools and automation (including AI‑assisted platforms)

Once you start using GEI systematically, the bottleneck is rarely “understanding the indicator”. The bottleneck is scaling the legal work that follows: contract reviews, template updates, drafting dozens of similar notices or internal guidelines.

Here, digital tools — including AI‑assisted platforms such as AI Lawyer — can help by:

• scanning large portfolios of contracts for specific clauses (force majeure, hardship, sanctions, non‑compete) and flagging gaps;

• generating first drafts of standardised letters and notices (e.g., restructuring communications, change‑of‑terms letters, contract amendment proposals);

• turning lengthy regulatory texts into structured checklists and internal policies;

• powering internal FAQ bots for HR or operations teams, so routine questions about contracts or labour law do not overwhelm legal.

These tools do not decide which risks matter — GEI and legal judgement do. But once you have decided on the response, they can make execution faster and more consistent across jurisdictions.

7. Methodology and sources

This guide is based on publicly available information, in particular:

• McKinsey’s Global Economics Intelligence executive summaries and subscription page, which describe GEI as a monthly package of macroeconomic data and analysis for major economies.

• McKinsey’s article “Eurozone unemployment falls to a ten‑year low”, which summarises the 2018 euro‑area labour‑market situation and related macro indicators. (McKinsey & Company)

• Eurostat and related releases on euro‑area and EU‑28 unemployment rates around November 2018. (European Commission)

• OECD and Eurostat explanations of unemployment‑rate methodology. (OECD)

• S&P Global and other explanations of the Purchasing Managers’ Index (PMI), including the meaning of the 50‑point threshold between expansion and contraction. (S&P Global)

All numbers are used illustratively and may have been rounded.

8. Legal disclaimer

This article is intended for general information and education of legal and compliance professionals. It does not constitute legal advice, economic advice or a recommendation to take or refrain from any particular action.

Before relying on GEI or any other macroeconomic indicator for concrete decisions — especially decisions involving employees, customers, suppliers or regulators — consult qualified legal counsel in the relevant jurisdiction and, where appropriate, economic experts.