Unemployment rate forecast to average 10% next year

Ireland’s unemployment rate could fall to 10% next year, on the back of continuous declines in people signing on the dole.

Latest Live Register data, published yesterday by the CSO, showed that the standardised unemployment rate eased to 11.1% in September, from 11.2% in August. The eurozone average is 11.5%. In total, 370,050 people signed on for unemployment benefit last month; down from 374,800 in August.

“The unemployment rate remains the key indicator as far as the economy is concerned and steady progress is being made in terms of bringing it down,” said Alan McQuaid, chief economist with Merrion Stockbrokers.

Merrion expects the rate of unemployment to continue to fall in the final quarter of 2014, droppingto 10.8% by the close of the year.

“As regards the average rate for this year, we are looking for a figure of 11.4%, down from 13.1% in 2013. Assuming the economy continues to grow strongly in 2015, an average jobless rate of close to 10% is envisaged for next year,” Mr McQuaid added.

Earlier this year, employers’ representative, Ibec forecast an unemployment rate of 10.9% for 2014, dropping to 9.6% by the end of 2015. The last time the rate was in single digit percentages was 2009.

David McNamara, of Davy Stockbrokers, said yesterday’s CSO figures point to an acceleration in employment in the third quarter, but said the numbers of long-term unemployed (which comprise 48% of the total live register) remains “stickier” than short-term flows.

“While the pace of decline in long-term claimants has also begun to pick up in recent months, the numbers illustrate the still considerable skills mis-match in the economy at present,” Mr McNamara said.

Small firms’ lobby group, Isme, said that business costs must be reduced before any meaningful job growth can be created.

“The budget is the Government’s chance to introduce effective measures to help SMEs to grow,” said Isme chief Mark Fielding.

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