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A broad stabilisation in the jobs market is gradually becoming established
Marginal decline in numbers at work in third quarter but underlying trend broadly flat.
• Sluggish economic growth means bottoming out process in jobs market could be lengthy
• Underlying rise in private sector employment may help consumer sentiment and consumer spending.
• Jobs picture still varies widely across sectors of economy
Irish employment data for the third quarter of 2012 suggest a broad stabilisation in the jobs market is gradually becoming established. As is the case with economic activity, this bottoming out process is uneven and likely to prove extended. However, it marks a significant departure from the sharp job losses seen through most of the period since early 2008.
Numbers at work in the Irish economy in the third quarter of 2012 were 0.2% lower than a year earlier and 0.3% lower than in the second quarter of 2012. In both instances, changes of this magnitude are so small as to be within the margin of statistical error. In addition, the year on year changes were influenced significantly by the impact of the public sector redundancy/early retirement scheme. So, it is probably fair to suggest that these data are consistent with a broadly flat picture in the Irish jobs market of late.
While both employment and unemployment appear to be stabilising, Irish job market conditions remain relatively weak with fulltime employment down by some 15K and part-time unemployment rising by 11K in the past year. Moreover, while the unemployment rate has declined marginally through most of 2012 to stand at 14.8% in the third quarter and provisionally at 14.7% in October, the number of long term unemployed has continued to rise albeit at a slower pace. Again, these results are entirely consistent with the marginally positive growth rate in GDP envisaged in 2012. The current growth rate may be sufficient to halt a decline in numbers at work but it is weaker than is necessary to markedly reduce unemployment.
Within the headline data, it should be noted that employment in the public sector is down around 16K in the past year of which about 9K might be attributable to the influence of the redundancy/early retirement scheme that closed in the first quarter of 2012. This implies that private sector employment has risen in the past year about 12K or about 0.8%.
As is the case with most indicators of economic activity, today’s jobs market data show significant differences in the performance of various economic sectors. In the past twelve months, numbers at work increased in nine of the 14 sectors highlighted in the CSO release and fell in the remaining five.
While consideration needs to be taken of differences in pay and in job security, signs of a marginal improvement in private sector employment might be consistent with slightly better consumer sentiment and spending data through 2012. The impact on spending and sentiment of a drop in employment resulting from early retirements from the public sector are likely to be less negative than the fallout from the sort of layoffs seen in the private sector in recent years. As such, the trend in sentiment and spending may owe something to tentative signs of a balancing in the Irish jobs market in terms of hiring and firing thus far in 2012. However significant sectoral variation and elevated unemployment would seem to preclude any dramatic upturn in confidence or consumer outlays in the near future.
Some pick-up in economic growth in 2013 should be sufficient to deliver a marginal increase in numbers at work in the Irish economy in 2013, the first increase since 2007. However, a testing global backdrop and the continuing impact of austerity on domestic economic activity mean an associated drop in the unemployment rate is likely to be modest—possibly to around 14.3% from 14.8% in 2012.
Today’s job data release also includes revisions to incorporate the implication of a larger than expected population recorded in Census 2011. As the jobs data are survey based, estimates of the total workforce have been grossed up in line with the new population data. As these revisions go back to 2006, they don’t lead to any substantial change in year on year comparisons. However, the level of employment in mid 2012 is some 48K higher than previously stated. The census-related revisions also imply a higher level of unemployment—about 14.5k higher in mid 2012. Furthermore, because the population increase is particularly notable in the 20-24 age group—a group with a comparatively high unemployment rate, this translates into marginally higher historic unemployment rates between 2007 and early 2012. For 2011, the unemployment rate rises to 14.6% from 14.4% and for the second quarter of 2012, the number is revised from 14.7% to 15.0%. However, as noted above, there has been a gradual decline in the unemployment rate, reflecting a slight improvement in the underlying trend. So, the third quarter figure is slightly lower at 14.8% and this improving trend also means the preliminary October number is lower again at 14.7%.