This would appear to be washing through to Ireland. All the evidence is that the Irish economy finished 2016 on a very strong note and has sustained this momentum in early 2017, despite the concerns about Brexit and weakness of sterling.
Data on the Irish labour market for the fourth quarter of 2016, published last week by the CSO, were staggeringly strong and reminiscent of figures from the Celtic Tiger era. They rounded off a very strong year for the Irish jobs market. Employment rose 16,700 over the previous quarter to give an increase of 65,000 over the year as a whole, a rise of 3.3%.
This is a good deal stronger than the rise of 44,000, or 2.3%, recorded during 2015. Full-time employment actually increased by 72,000 last year, while there was a fall of 7,000 in part-time employment. This suggests that workers are moving from part-time to full-time employment as the economy strengthens.
Furthermore, the job gains in 2016 were spread across all sectors of the labour market and all regions of the country. Employment increased in all fourteen economic sectors in the CSO survey. Construction saw the biggest gain, with employment rising by 11,600, or 9.2%, on year earlier levels, while employment in industry rose by 10,700.
Employment in professional/scientific/technical activities increased by almost 7,000, with a rise of 5,000 jobs in hospitality and 4,000 in the healthcare sector.
The growth in jobs in Dublin — at 3.2% — was in line with the rest of the country, indicating that employment growth is no longer Dublin-centric. There was strong growth in jobs in the West, Mid-West and South-East, in particular.
Almost 50,000 of the increase in employment was accounted for by Irish nationals, with a rise of just over 15,000 in jobs for non-Irish nationals.
Somewhat surprisingly, then, the strong job growth of the past two years has yet to trigger a sharp pick-up in immigration by non-Irish nationals.
Furthermore, we have yet to see a marked rise in participation rates in the labour force by Irish nationals. As a result, the labour force grew by a modest 25,000 during last year, or 1.2%, well below the rate of growth in employment.
Hence, the strong job growth is making major inroads into the level of unemployment, which fell by 40,000 to 151,700 over the course of last year. The jobless rate had dropped to 6.9% by December, down from 8.9% at the end of 2015. This is the lowest rate since mid-2008. It fell further to 6.8% in January. On the basis of these trends, the unemployment rate will drop below 6% over the course of 2017.
The robust labour market data point to a very strong performance by the Irish economy last year and suggest that it has entered 2017 with a good deal of momentum. This is borne out by other recent data. Consumer confidence rose strongly in January, while PMI survey data for the same month show high levels of activity in the services and manufacturing sectors, as well as an ongoing recovery in construction.
Tax receipts were also very strong in the month, while car sales continued to rise. Although there was a dip in new car sales, this was more than offset by much higher imports of second-hand cars from the UK.
There is little sign, then, that uncertainty around Brexit and the sharp fall in the value of sterling is having much of an impact on the Irish economy, which continues to power ahead.
Brexit, though, remains a serious event risk for the economy. Much will depend on the nature of the exit deal reached between the UK and the EU.
Oliver Mangan is chief economist at AIB