It's your Mortgage Day!
Jobs growth slows to 2.0% y/y in Q2 2019 from 3.7% previously
Scale of slowdown looks exaggerated and likely reflects statistical rather than ‘real’ changes in Irish economic conditions
Average jobs growth in first half of 2019 at 2.8% little changed from 2018 increase of 2.9%
We expect some slowing in employment gains as 2019 progresses on Brexit uncertainty
Irish population grows at 1.3% in 2019—six times the pace across the EU 28 as a whole
Population growth favourably balanced between net migration and strong ‘natural’ increase
The latest batch of statistics on employment and population growth suggest, on balance, the Irish economy is still recording increases that are exceptionally positive by comparison to other European countries—numbers at work in the second quarter of 2019 are up 2.0% y/y, twice the pace of the rest of the EU while the population is up 1.3%, more than six times as fast as the EU 28 average.
Rapid economic and demographic changes are not without some downside as difficulties in areas such as housing and health testify. Rapid changes also make it notably more difficult to measure the precise speed at which the Irish economy is travelling as does the open nature of the economy. Our sense is thatdifficulties in this regard mean today’s data likely understate at least modestly both the positive momentum in the jobs market in the second quarter of 2019 and the rate of net inward migration.
Also released today were population estimates for Ireland for 2019. They show population growth of 1.3%, which is just over six times the 0.2% increase in the EU 28. As the diagram below illustrates, Ireland is on an exceptional trajectory in terms of population growth. It should be noted that Ireland’s population growth is the third fastest in the EU after Malta (+3.8%) and Luxembourg (+2.0%). However, both of those countries figures are swollen by rapid net inward migration. In contrast, Irish population growth of 64.5k in 2019 is broadly balanced between net inward migration of 33.7k and a 30.8k ‘natural’ increase (births less deaths). In this context, Ireland continues to have the highest birth rate and the lowest death rate in the EU-28 while the EU-28 as a whole is now seeing deaths exceed births.
At the margin, we find it slightly surprising that the sustained health of the Irish economy, reported labour shortages in a number of areas some measure of Brexit-related influences didn’t prompt a pick-up in net migration into Ireland in 2019. While the drop from 34k to 33.7k effectively means an unchanged reading, this represents something of a change in trend after a consistent improvement each year stretching back to 2012.
It could be that housing costs are acting as a deterrent or it might even be the case that high housing costs are compromising the capacity of what is effectively a household-based survey to adequately capture less formal and possibly more temporary living arrangements of those newly arrived or newly returned. Broadly similar complications resulted in the 2016 census revealing a larger population and a higher historic level of net inward migration than had been thought to be the case.
This non-exhaustive information is based on short-term forecasts for expected developments in the economy and financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalised investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a judgment as of the date of the report and are subject to change without notice.