Jobless, consumer confidence figures revised upward by Davy

Employment has increased for the whole year for the first time since 2008, according to the Quarterly National Household survey released this week.

The positive news prompted Davy stockbrokers’ chief economist Conall MacCoille to revise upwards their forecast for jobs and consumer spending in 2013.

The unemployment rate fell to 14.2% in the fourth quarter and looks set to drop further this year, official data from the Central Statistics Office showed on Wednesday, in a positive sign that signals the green shoots of a recovery may be winning the battle against the icy frost of austerity.

While robust exports have helped Ireland avoid following much of the eurozone into recession, the domestic side of the economy has struggled due to high unemployment and relentless austerity as the country tackles its financial crisis.

Mr MacCoille said agriculture had performed better than they had expected and that as a result they will be revising upwards both their consumer spending estimates and employment growth.

“Overall, the Q3 and Q4 labour market data show that aggregate employment fell by 0.6% in 2012, shallower than the 1.1% decline we had assumed in our October forecasts. This largely reflects stronger-than-expected employment growth in agriculture. Also, full-time employment has continued to contract. Nonetheless, today’s release gives us confidence in our previous forecast that employment will grow by 0.3% in 2013 despite public sector job cuts. We would expect to revise up our forecast for employment growth in 2013 a little after today’s release and hence the outlook for consumer spending.”

The figures showed that employment fell in eight of the 14 sectors measured over the year. The largest increases were in the agriculture and communication industries.

Total employment fell by 0.6% in 2012, but was split between a 0.4% rise in private sector employment and a 4.3% decline in public sector jobs.

The headline unemployment rate, which hit a crisis-high of 15% in the January-March period last year, fell to a more than two-year low after the number of people employed rose by 6,500 to the end of December on a seasonally adjusted basis.

“It’s encouraging. it’s a good start to the year, but it’s not a game changer,” said Eoin Fahy, an economist at Kleinwort Benson Investors in Dublin.

“It chimes with a number of other indicators that have shown a modest improvement in the economy. I don’t think on its own it is going to lead economists to run to upgrade their growth forecasts.”

Economists earlier this month forecast that it would be the end of this year before the unemployment rate would fall to 14.2%.

The rate had stood at a provisional 14.8% in the previous quarter but was revised down to 14.6%.

It could have risen as high as 20% had Ireland’s emigration rate not increased at the same time, the IMF, one of the country’s bailout lenders, estimated last year.

Separate data suggested the jobless rate would fall further.Data measuring unemployment benefit showed those claiming benefits fell by 1,400 in February to a seasonally adjusted 428,800, the eighth straight monthly fall, putting the estimated standardised unemployment rate at 14.1%.

Ireland’s plans for reducing a government debt set to peak above 120% of gross domestic product this year depend on the domestic economy improving from next year and GDP growth accelerating to above 2% in 2015 from an expected 0.9% this year. Long-term unemployment, measuring those out of work for a year or more, accounted for 59.9% of total unemployment at the end of December compared with 62.5% a year earlier. In its most recent forecasts, the Government saw the unemployment rate falling to 14.6% this year and 14.1% by the end of 2014.