Unemployment lifts marginally in August but remains at two-decade low of 4.3%

Unemployment rose marginally to 4.3 per cent in August, up from 4.2 per cent previously, but remained at a two-decade low as economic activity rebounds in the wake of Covid. The headline rate was down from 5.5 per cent a year ago.

The Central Statistics Office (CSO) said there were 117,200 people classified as unemployed in August on a seasonally adjusted basis compared with 114,300 the previous month. Despite the monthly upturn, there was an annual decrease of 23,500 in the jobless number.

The lifting of Covid-related restrictions has triggered a rapid turnaround in unemployment, which had risen to record levels at the height of the pandemic. Economists believe an unemployment rate of 4 per cent in the Republic is tantamount to full employment. The latest figures come despite inflationary pressures and the ongoing war in Ukraine, which are expected to slow headline growth.

The fear is that households faced with higher energy bills will be forced to cut back on spending elsewhere, prompting a slowdown in domestic consumption, the main driving force behind growth and employment. One of the first strong signals of this could be seen in the CSO’s retail sales data on Monday, which indicated that the volume of retail sales fell 1.6 per cent in July and were down 8.1 per cent in the year to July.

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The latest unemployment figures show the headline jobless rate for males was unchanged at 4.1 per cent in August, down from 5.5 per cent in August 2021 while the rate for women was 4.5 per cent, up marginally from 4.4 per cent the previous month.

The youth unemployment rate also rose in August, lifting to 11.6 per cent from a revised rate of 11.1 per cent in July.

“Whilst the rate of unemployment slightly increased in August to 4.3 per cent, the broad trend remains positive, and the labour market is proving resilient in the face of an inflation rate that hit a near four-decade high of 9.1 per cent in July,” Jack Kennedy, economist at global recruitment site Indeed, said.

“The strong employment data is consistent with the recent Labour Force Survey figures showing 2.55 million people in active employment at the end of Q2 2022, up 8 per cent on a year ago. Whilst the jobs environment looks broadly positive, staff shortages and hiring difficulties are a challenge for employers,” he said.

“There are currently around 58,000 job postings on Indeed Ireland, but considerable variation in the way different occupational categories have seen job postings recover since the pandemic. Some occupations are booming while others lag. Social science, therapy, medical information and pharmacy job postings are well above pre-pandemic levels, but others such as chemical engineering, real estate and legal have been slower to recover,” he said.

“High vacancies in certain sectors and overall low unemployment rates will continue to afford workers opportunities to move jobs and seek higher wages. With employees facing higher energy bills this winter the pressure employer group Ibec has warned that businesses won’t be able to cover the full cost of living increase through higher pay packets,” he added.