Fall in construction employment

Employment in the construction sector fell between March and May, dropping on a quarterly basis for the first time in four years, according to new figures from the Central Statistics Office.

However the CSO's quarterly national household survey points to a healthy overall jobs market, with employment increasing by an annual rate of 3.9 per cent in the second quarter of the year.

This marked an increase on the 3.8 per cent increase recorded in the December-February quarter and meant that employment increased by 78,400 in the 12 months to the end of May.

There was a net seasonally adjusted increase of 21,500 jobs in the March-May quarter, as the financial services, hotels and restaurants and wholesale and retail sectors pushed up the number of people employed.

Despite the growth in jobs numbers, which economic commentators yesterday described as impressive, the annual unemployment rate increased to 4.6 per cent in the second quarter, up from 4.4 per cent in the first quarter.

The unemployment rate rose because the available labour force increased by 85,800 to 2,194,100 workers over the year. Net inward migration drove the expansion and led to 64,000 people joining the labour force during the 12 months.

The number of jobs in the construction sector is still growing at a year-on-year rate of 6.7 per cent, which meant there were 17,600 more people employed in the sector at the end of May 2007 than in May 2006.

For the first time in more than three years, however, the sector did not account for the largest proportion of the jobs gains.

The Construction Industry Federation said the figures continued to show the broad-based strength of the industry. "The continued growth in employment demonstrates clearly the capacity of the construction industry to meet the needs of the economy," said CIF director general Liam Kelleher.

Davy economist Rossa White said the 0.5 per cent quarter-on-quarter decline in construction employment from 282,100 to 280,300 people was the start of a trend of greater declines in the sector. A sharp drop in the number of houses being built is expected to lead to lay-offs in the second half of the year.

Goodbody Stockbrokers said it expected the number of people employed in the construction sector would fall by up to 10 per cent by the end of 2008.

The financial services sector accounted for the largest proportion of the jobs gains in the March-May quarter and is enjoying a 7.6 per cent annual rise in employment.

Growth in those employed in hotels and restaurants surged to their highest annual rate in four years, increasing by 7.3 per cent. Davy said it expected the number of people claiming unemployment benefits would rise in August by at least 2,000 as a result of the slowdown in the construction sector.

There were 59,100 men and 39,600 women unemployed in the second quarter of 2007.