Jobless rate slowing, but it’s still on the right track
It has become an even more important source of information on the economy as the National Accounts no longer provide reliable estimates for GDP/GNP and, thus, growth.
The QNHS for the second quarter of the year was released by the CSO last week.
The figures suggest that the economy is continuing to perform very strongly. Employment rose by 20,000, or 1%, in the quarter.
It follows a rise of 16,000 in the opening quarter of the year. In annual terms, there was an increase of 56,000, or 2.9%, in employment in the year to the second quarter of 2016.
Encouragingly, most of the job growth over the past year was in full-time employment, which rose by 45,000, with a gain of 11,000 in part-time employment.
The job gains were broad-based, with employment rising in 12 of the 14 sectors in the CSO survey.
Construction saw the largest gain, with jobs growth of 11,000, or 8.7%, in the year, while both the hospitality sector and industry saw employment rise by 9,000. There were also good job gains in sectors such as IT, retail and transport.
Employment in the public sector is also now on the rise, increasing by 8,500 in the past year, excluding temporary census workers.
It fell sharply during the period of austerity between 2009 and 2014.
All regions of the country have seen job growth over the past couple of years, although not surprisingly, the biggest jump has been in the eastern part of the country, most notably Dublin.
The capital has seen employment rise by 41,000 in the past two years, accounting for over a third of the increase in jobs in this period.
Employment has now increased for 15 consecutive quarters from its low point of 1.83m reached in 2012.
Furthermore, it has also risen above the two-million mark for the first time since 2009, hitting 2.015m in the second quarter.
However, it still has some way to go to reach the level of 2.15m attained at the end of 2007, just before the severe downturn hit the economy.
The steady rise in employment, combined with emigration, have resulted in a sharp fall in unemployment in recent years.
The jobless rate averaged 8.4% in the second quarter, down from 9.6% a year earlier.
It compares with a peak rate of 15.1% reached in early 2012.
There was some disappointment, though, that the unemployment rate was unchanged from its level in the first quarter.
However, it is not unusual to see the decline in unemployment stall for a quarter before resuming its downtrend. This has happened in each of the last three years.
We also note that the monthly Live Register remains in marked decline. It is a good indicator of the underlying trend in unemployment.
The Live Register fell by 11,500 in the second quarter, with a further sharp decline in July.
Thus, we expect the marked downtrend in unemployment will resume in the second half of the year.
However, it is also probably fair to say that the downtrend in unemployment is starting to slow somewhat as a result of two positive developments — a turnaround in migration flows, and more people joining the labour force and looking for work.
Population estimates were also released by the CSO last week.
These showed that Ireland experienced net inward migration, albeit on a small scale, in the year to April 2016 for the first time since 2009.
Meanwhile, the participation rate in the labour force saw a significant rise in quarter two.
The effect of both these factors was a marked rise in the labour force in the second quarter. It expanded by 1.5% on year earlier levels, up from an annual growth rate of 0.6% in the previous four quarters.
Naturally, the rate of decline in unemployment will slow as the labour force picks up.
However, we would still expect the jobless rate to have fallen comfortably below 8% by the end of the year.
Oliver Mangan is chief economist with AIB.
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