Sharp drop in private sector vacancies

VACANCIES in the private sector fell from 10% to 7% in April, the lowest since August 2005 when the figures were first monitored.

Further declines in the industry, retail and services sectors, were to blame for the sharp dip.

Compared with this time last year, job vacancies in the economy have fallen 9% according to the FÁS /ESRI Employment and Vacancies Survey.

The dip bears out the pessimistic view on the economy from the Economic and Social Research Institute which has constantly revised the growth outlook for 2008 downwards over the past 12 months.

In March, the ESRI warned there will be no increase in employment in Ireland this year and economic growth at 1.6% will hit a 20-year low.

Those negative projections are being borne out by the latest vacancies survey with firms reporting industry vacancies down 4% to 13%, ending the upward trend that started in January of this year.

In services firms, reporting vacancies stood at 10%. against 25% in April last year while the number of firms reporting vacancies in the retail sector fell marginally.

While the figures suggest the economy will slow dramatically in 2008, a recent NCB Stockbrokers report suggested that pessimism on the economy may be overdone.

The economy has averaged GDP growth in excess of 6.5% per annum over the past 10 years.

The consensus forecast for this year would appear to be about 2%, with some forecasts well below that level.

“Have conditions changed so dramatically in such a short space of time? The economy grew on average by 5.3% in 2007 and the fourth quarter registered 3.5% year-on-year growth, though we would not place too much emphasis on the pace in individual quarters,” said NCB.

The bearish arguments focus on data so far this year showing continued weakness in housing, rising unemployment, weak PMI data and softening of tax revenues. On this analysis, weak consumption growth is expected to slow economic growth further.

“In our view, this interpretation of developments is too negative. The potential growth rate of the economy we still estimate to be between 5% and 6% in the years to 2010”.

In a mid-term review due tomorrow, the ESRI is expected to argue the economy, while facing a tough period ahead will get back to solid growth once the latest global slowdown is reversed.

It is expected to say the economy has the potential to get back to trend growth which has been previously estimated at between 4% and 5%.

The ESRI has previously said it believes the fundamentals of the economy are sound and that it has the capacity to deliver solid growth going forward.


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