Employment jumps but costs could cool further growth

Ireland's employment rate maintains momentum while inflation continues to fall.

New figures showed employment levels jumped annually by 3.4% to reach 2.7 million people, according to the Central Statistics Office (CSO).

However, high costs continue to linger, which may put pressure on businesses operating in the current tight labour market.

Today’s results show that the number of people in employment rose by 3.4% to just over 2.7 million in the year to Quarter 4, with the employment rate for males at 78.3% compared with 69.8% for females. The unemployment rate was unchanged at 4.2%.https://t.co/I33h3hSTBj#LFS pic.twitter.com/rv9YADc90h

— 🎄Central Statistics Office Ireland (@CSOIreland) February 22, 2024

“Recruitment and retention challenges will continue to be an issue for many businesses, and, along with some inflation catch-up, points to further wage increases,” said EY Ireland chief economist Loretta O’Sullivan.

Economist Simon Barry said the latest Labour Force Survey indicated a cooling period was on the horizon for the Irish jobs market, although after an “exceptionally strong performance”. 

Ireland's employment rate maintains momentum while inflation continues to fall. The eurozone annual inflation rate was 2.8% last month, dropping slightly from 2.9% a month earlier and declining 8.6% in annual terms, according to the European Commission. Irish inflation fell to 4.1%.

However, separate figures from the CSO showed wholesale price inflation climbed 1.4% despite easing inflation following a series of aggressive interest rate hikes, and data shows pockets of underlying inflation pressures in many goods, despite falling energy costs.

There was an increase of 12.3% in the price of wholesale electricity, but it was more than 38.4% lower than the same time a year earlier.

Producer prices for food products overall declined 9.8% annually but fish was among the items that increased, rising 5.9%. The most noticeable decrease was in dairy producer prices, which plunged 28%.

Meanwhile, chemical products increased 22.7% in price compared to the start of 2023, and there was also a 10.3% rise in the cost of beverages.

The figures also showed a slight fall in factory gate prices for construction materials, which is expected to help boost housebuilding activity.

Construction materials inflation dropped by 0.6% the last year, which “should ultimately reduce the cost of building homes and, in turn, help stop house prices accelerating”, said Ian Lawlor, managing director of Lotus Investment Group.

The price of reinforced metal is down 22.5% in annual terms, while cement prices are up 6%.

However, this is an improvement on February last year, when annual inflation for cement stood at 24%.

Mr Lawlor warned that “even if construction material inflation is easing, rising labour costs remains a key challenge for those building houses".