Unemployment ticks up slightly to 4.9%

Economist Jim Power recently wrote that tight labour markets continue to pressurise services sector inflation.

Unemployment ticked up slightly again in December but the overall labour market remained tight going into the new year.

The unemployment rate rose to 4.9% in December, a slight rise from 4.8% in November, according to new figures from the Central Statistics Office (CSO).

Ireland has been close to full employment for several months, with the rate lingering close to 5%.

Last year, the employment reached its highest point since current records began 25 years ago and it set to remain close to this level.

The Central Bank recently predicted unemployment is set to rise slightly this year but remain below 5% out to 2026.

“This is despite warnings that the economy is shifting to a slower growth path amid higher interest rates and a slowdown in global economic activity,” said Pawel Adrjan, director of economic research for Europe and Asia at global job site Indeed.

Full employment is often recognised as an indicator of economic resilience, however some have also argued that persistent high employment in an inflationary environment could put pressure on businesses.

Economist Jim Power recently wrote that tight labour markets continue to pressurise services sector inflation.

Mr Adrjan echoed this sentiment, stating that “employees may seek pay rises or potentially seek to move to higher-paid roles” as cost pressures persist.

“ECB policymakers will be closely monitoring pay growth figures in case this continues to feed inflation,” he said.