Unemployment rises again as labour market shows signs of softening

The State’s unemployment rate rose again in November, suggesting the labour market is softening in the face of a slowdown internationally and as households and businesses absorb the impact of higher interest rates.

Central Statistics Office (CSO) figures show the seasonally-adjusted unemployment rate for November was 4.8 per cent, up from 4.7 per cent in October, and a low of 4.1 per cent earlier in the year.

The 4.8 per cent rate for November, which is still low by historic standards, corresponded to 132,700 individuals and an annual increase of 12,600, the CSO said.

The rate of youth unemployment rose to 12.8 per cent in November, up from a revised rate of 12.6 per cent the previous month.

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The seasonally-adjusted number of males classified as unemployed rose to 72,300 in November, compared with 72,200 in October, while the seasonally-adjusted number of women unemployed increased by 800 people over the month to 60,400.

“The unemployment figures are reflective of an economic picture that suggests a loss of pace after a year of strong momentum that has powered the economy through a series of headwinds from high inflation and nervous consumers,” said Andrew Webb, chief economist at Grant Thornton Ireland.

“In a week where tax revenues have surprised on the upside, providing the exchequer with a boost after a few months of weaker returns, the good economic mood music will be tempered slightly by these unemployment figures edging up,” he said. “It is important to bear in mind that, although higher, a 4.8 per cent unemployment rate is a very positive outcome. Heading into next year, when the economy is expected to grow more slowly, unemployment figures will become an even more important indicator of our economic health,” Mr Webb said.

The latest unemployment numbers come on the back of exchequer returns for November, published on Tuesday by the Department of Finance, which pointed to another strong year for the public finances, with corporation tax, income tax and VAT all up on last year.

Several recent reports, including one from employers’ group Ibec, have, however, warned that the economy is entering a period of much slower growth, with lower levels of spending and investment. The reports cautioned that the impact of higher interest rates has yet to fully play out and will dampen activity in the short term. Already tighter financial conditions have triggered a slowdown in Ireland’s export markets. Exports have fallen by 6 per cent so far this year.

CSO national accounts last week showed the Irish economy contracted by 1.9 per cent in the third quarter in GDP (gross domestic product) terms on the back of a continuing fall-off in exports. In terms of modified domestic demand, the CSO’s preferred indicator for the domestic economy, growth in the third quarter was flat.

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