The latest Irish Household Survey, covering the second quarter of 2015, shows that the labour market continues to tighten and that job creation has accelerated again. Employment ( on a seasonally adjusted basis) bottomed in the autumn of 2012 and picked up strongly in the following year, averaging an increase of 15k a quarter, but then slowed sharply in the first half of 2014, with only 4k net jobs created. Employment growth did pick up in the second six months, with a rise of 24k, and 2015 has seen a further acceleration: the numbers in work rose by over 15k in q1 and by 19k in q2, the latter the strongest quarterly increase since early 2007. Employment has therefore grown by some 57k over the past year, or 3%, and by 130k from the cycle low, although still nearly 200k below the pre-crash high.
Virtually all sectors of the economy have generated additional jobs over the past year. The largest increase was in Construction ( 20k) , followed by Manufacturing (10k) with Financial services (6k) also showing notable growth. Education and Administration saw marginal falls, as did the Accommodation sector, perhaps surprisingly given the strength of tourism, although the decline followed a very strong rise in 2013.
The plunge in Irish employment from 2008-2012 also precipitated a sharp decline in the labour force, fuelled by net emigration and a decline in the participation rate. That trend appears to be ending, with the rise in employment now prompting a rise in participation , particularly from those over 45, and a rebound in the labour force, which grew by 9k in the second quarter and by 14k on an annual basis.
The recovery in the Irish economy is also impacting migrant flows. The number of emigrants is still high , at 80k in the year to April from 81k the previous year, but immigration picked up, rising to 69k from 61k. As a result net emigration slowed further, to under 12k from 21k in 2014 and a peak of 34k in 2012. The number of Irish nationals leaving fell to 35k from 41k, and to a net 23k (i.e. adjusting for Irish nationals returning). Only 10k of total emigrants classed themselves as unemployed with the majority having jobs, implying the decision to leave may have more to do with the rewards of employment in Ireland or quality of life issues. Yet Ireland continues to attract migrants, with most now coming from outside the EU and leaving a job abroad.
The pick up in the labour force in q2 also resulted in a slowdown in the pace at which unemployment fell, to 7k , leaving a total of 207k. That decline was greater than indicated by the monthly data, which has been revised, as has the unemployment rate , which averaged 9.6% in the quarter from a peak of 15.1% in 2012. The unemployment rate for July is now put at 9.5%. This is below what the EU deem to be full employment in Ireland, which seems unlikely but if true, would imply some upward pressure on wages, which are staring to rise, albeit modestly in the aggregate. The unemployment rate in Dublin is lower still, at 8.8%, which again would point to the prospect of some wage pressure in the capital.
Overall, a clear picture of strong job growth, falling net migration and a tightening labour market and one consistent with the pace of growth in domestic demand recorded in the national accounts.