Irish Monthly Unemployment (October 2018)

• Seasonally-adjusted number of unemployed at 126,400, a monthly drop of 3,400
• Unemployment rate drops to 5.3%, lowest rate since February 2008
• Jobless rate almost three percentage points below the Eurozone average of 8.1%
• However, youth unemployment rate remains elevated at 12.0%
• Average overall unemployment rate of 5.6% now forecast for 2018, down from 6.7% in 2017

Unemployment rate falls to 5.3%

According to the latest monthly figures published by the Central Statistics Office (CSO) this morning, there was a seasonally-adjusted total out of work of 126,400 in October, down 3,400 from the revised total of 129,800 (129,400) in September.

With the sharp monthly drop in the numbers out of work in October, the seasonally-adjusted unemployment rate fell to 5.3% from 5.4% in September. The October jobless rate was the lowest since February 2008 and an almost eleven percentage point improvement from the peak of 16.0% hit in January/February 2012 during the financial crisis. Furthermore, Ireland’s jobless rate is close on three percentage points below the current Eurozone average of 8.1%.

Although emigration has been a factor to some degree in keeping unemployment down since the financial crisis, the labour market has improved dramatically over the past few years, reflecting the strengthening of the economic recovery. Indeed, the latest migration estimates showed net inward migration of 34,000 in the year to April 2018 as against net inward migration of 19,800 in 2017, and the highest net inflow since 2008.

Employment rose in ten of the fourteen economic sectors on an annual basis in the second quarter of 2018. The greatest rates of increase were posted in the Construction (+13.9% or 17,800) and the Accommodation and food service activities (+10.8% or 17,300) sectors.

While there has been a sharp drop in the headline unemployment rate, the adjusted jobless rate for persons aged 15-24 years (youth unemployment) remains elevated despite falling to 12.0% this month from 12.9% in September. Although the rate has dropped from 16.5% in October 2016, it is still a lot higher than desirable. Significant progress has been made on this front in recent years, but a lot more needs to be done. In our view, Government initiatives in terms of training and education need to focus on this age group in particular.

The rise in employment appears far from over. The latest Labour Force Survey figures showed that the participation rate stood at 62.3% in the second quarter, compared with a pre-recession peak of 66.7%. Greater participation should slow down the fall in the jobless rate. There was an average net jobs rise of 61,900 in 2017. As regards 2018, another positive year for the labour market is envisaged, with the net jobs gain forecast at 68,000. Meanwhile, the average unemployment rate is, based on these latest CSO numbers, now projected at 5.6%, down from 6.7% in 2017.

Monthly Unemployment (Source: CSO)
Month Seasonally-Adjusted Unemployed Absolute
Change
Month Absolute Change Year Jobless Rate % Youth
Jobless Rate %
2017 October 155,800 -800 -24,100 6.6 13.9
2018 August 134,600 -4,900 -20,800 5.6 13.9
2018 September 129,800 -4,800 -26,800 5.4 12.9
2018 October 126,400 -3,400 -29,400 5.3 12.0

Alan McQuaid (31/10/18)
Economist