CSO figures at odds with booming financial sector

With Dublin’s financial sector seemingly booming, analysts were left scratching their heads by new figures from the Central Statistics Office (CSO) on Tuesday showing a decline in the number of people employed in financial, insurance and property activities within the Irish economy.

The agency's latest Labour Force Survey found employment in this sector fell by 6.7 per cent, or 7,300, to 101,300 in the third quarter of 2018.

To put this in context, it was the third-biggest year-on-year decline since the crash – the other two being recorded in 2010 when the economy was in full meltdown mode.

This time around, however, the decline is entirely at odds with the wider economic climate which suggests the financial sector here is benefiting strongly from increased lending, greater regulatory requirements, growth in international financial services activities and a Brexit-related flow of jobs from London.

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No leprechaun in the job numbers

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In contrast to the CSO numbers, the latest Morgan McKinley Employment Monitor suggests 34 per cent of jobs created in the economy last month related to financial services.

“It looks like a statistical anomaly to me,” KBC economist Austin Hughes said. “I think there is a problem in the manner in which the survey is capturing employment trends in this specific sector,” he said.

Barometer of trends

Last year, the CSO replaced the Quarterly National Household Survey as the main barometer of trends in the labour market with the Labour Force Survey.

However, it has cautioned that the new survey involves a new sample and changes to the original questionnaire, which may have resulted in changes “in the levels of some series”.

The CSO’s Brian Ring admitted the findings in relation to the financial sector appear at odds with the economic climate in Dublin in particular. The shift might be a function of the CSO’s sampling, he said, noting the financial sector was clustered around certain areas and had a high margin of error.

Goodbody economist Dermot O’Leary said he would be wary of drawing any conclusions from the numbers. “It’s not a trend, it’s probably just a once-off,” he said.

Separately the survey showed the jobless rate for women in the Republic had surpassed that for men for the first time since the crash.

The change was almost certainly driven by the renewed boom in construction, which is still a male-dominated sector.

Women vs men

The survey put the jobless rate for women in the third quarter of 2018 at 6.1 per cent. That compares to 5.9 per cent for men.

The last time the female unemployment rate exceeded the male rate was back in the second quarter of 2007, just prior to the financial crisis.

The rapid decrease in unemployment over the past few years has coincided with a strong pick-up in construction employment, driven by an expansion in output in both the residential and non-residential sectors.

The latest figures show employment in construction grew by nearly 14 per cent, or 17,900, in the past year. That makes it the fastest-growing sector of the Irish economy in terms of job creation.

In total, just over 146,000 people are now employed in the construction sector here. This is significantly up on recent years but still well below the boom-time peak of over 233,000.

Men were disproportionately hit by the collapse in construction after the crash, compared to women. It appears they are now benefiting disproportionately from its recovery.