Irish jobless rate hits eight-year low while euro zone growth stalls

Positive employment numbers here contrast with lacklustre data for euro area as a whole

Figures suggest number of workers classified as unemployed fell by 2,900 last month

Figures suggest number of workers classified as unemployed fell by 2,900 last month

 

Ireland’s jobless rate hit a new eight-year low of 8.6 per cent last month as conditions in the wider economy continue to improve. However, the pick-up in employment here constrasted with lacklustre growth numbers from the euro area as a whole where fears about the global economy and a possible Brexit weighed on demand.

The latest round of Purchasing Managers Indexes (PMIs) will make glum reading for European Central Bank policymakers, coming just weeks after they unleashed another package of measures to spur growth and inflation in the currency bloc.

The ECB targets inflation just below 2 per cent, but data showed last week it was -0.1 per cent in March.

Producer prices also fell more than expected in February and the pace of their monthly decline increased, excluding volatile energy prices.

There are few signs the latest round of stimulus has had much impact on growth either.

Markit’s final composite PMI for the bloc, the main barometer of growth in the region, barely improved last month on February’s 13-month low of 53.0, nudging up to 53.1.

That was above the 50-mark that divides growth from contraction but down from an earlier flash estimate of 53.7.

Growth in Ireland’s services strengthened in March, a survey showed on Tuesday, but new business from abroad expanded at the slowest pace in almost four years as weaker sterling affected some exporters.

Investec’s PMI of activity in Ireland’s services sector rose to 62.8 in March, however, from 62.1 in February and back towards the 64.0 it reached at the start of the year

The index, which covers businesses from banks to hotels, has risen for more than three years of unbroken growth.

However, the sub-index measuring new export business, which in November was at a 12-month high, slipped to 54.0 from 57.1 the previous month, its lowest level since May 2012, when Ireland was in the middle of a three-year international bailout.

The latest jobless figures here show the number of workers classified as unemployed fell by 2,900 to 187,700 in March, reflecting an annual decrease of 23,400.

This brought the headline rate down to 8.6 per cent, the lowest rate recorded since December 2008, and down from 8.8 per cent in February and 9.8 per cent 12 months ago.

Having had one of the highest jobless rates in Europe only a few years ago, Ireland’s unemployment rate is now well below the euro zone average of 10.3 per cent.

“It is hugely encouraging that the numbers of people unemployed continue to fall steadily, particularly as given that traditionally it becomes more difficult to convert increased job-creation into reduced unemployment,” Minister for Jobs Richard Bruton said.

Separate figures from Central Statistics Office (CSO) showed manufacturing output fell 12.4 per cent in February amid concerns about the strength of the global economy, particularly China’s underlying health. The latest figures show production on an annual basis rose by 1.3 per cent.

The “modern” sector, comprising high-tech and pharma companies - the main drivers of the State’s export trade, showed a monthly decrease of 17.9 per cent in July.

The CSO, however, cautioned that volatility of the production and turnover indices for the sector reflected the changes from month to month in production patterns, product mix, sales, pricing and stock building or reduction.

Additional reporting Reuters/Bloomberg