Seasonal factors and Celtic Tiger baby boom behind rise in unemployment figures 

Bank of Ireland said the percentage of young people out of work may be distorting official unemployment figures

The CSO said during October, the unemployment rate stood at 5%, down from a revised rate of 5.1% in September, but up from the 4.2% recorded in October last year.

The closure of universities and schools, the Celtic Tiger baby boom and a surge in the percentage of young people out of work may be distorting official unemployment figures, Bank of Ireland has said.

Last week, the Central Statistics Office (CSO) made several revisions to its monthly unemployment figures, which shows that from July, the unemployment rate has been at or above 5%, the highest recorded since January 2022.

The CSO said during October, the unemployment rate stood at 5%, down from a revised rate of 5.1% in September, but up from the 4.2% recorded in October last year. When the CSO originally reported the September data, it said the unemployment rate was 4.7%.

Addressing the rise, Bank of Ireland said the bigger picture is that Ireland’s rapid 3% pace of job creation is slowing to a more sustainable level as bottlenecks and labour shortages are being increasingly felt.

The lender said seasonal factors may be influencing these movements, with the third quarter of the year typically seeing temporary increases in unemployment due to school and university closures, with this year’s spike appears concentrated among younger workers.

Youth unemployment, that being unemployment experienced by people between 15 and 25 years old, surged from 11.2% in June to 13.4% in October, accounting for roughly 40% of the rise in the aggregate unemployment rate. 

Demographic trends, including a larger cohort of school leavers following the Celtic Tiger-era baby boom, in which the number of births rose from 61,400 in 2005, to a peak of 77,200 in 2010, are now seeking employment, which may also be contributing.

Discussing the latest update, Conall Mac Coille, Chief Economist, Bank of Ireland said: “The CSO data indicates unemployment has increased from 121,000 to 147,000 over the past twelve months. However, it is striking that the number of Live Register jobless claims has been flat over the same period, up just 1% over the past twelve months."

"This is still close to the lowest level since 2007.”

Bank of Ireland chief economist said it was striking that the number of Live Register jobless claims has been flat over the same period, up just 1% over the past twelve months

The CSO's estimate of employee numbers, based off income tax returns, indicated jobs growth had slowed to 1.7% in August to 2.56m.

"Employment growth is slowing from exceptional 3% rates to a more sustainable, consistent pace," Bank of Ireland said.

"Nonetheless, the recent rise in the unemployment rate to 5% likely overstates the extent of the true slowdown in the labour market."