Slowdown in building blamed for increase in jobless

A slowdown in the construction sector and a loss of competitiveness were blamed for a higher than expected rise in the number of people claiming unemployment benefits last month.

The number of people on the live register has reached its highest point in almost three years, rising to 163,400 in June. This was an increase of 3,600 on the month before, according to figures published by the Central Statistics Office (CSO).

Over the past three months, the number of people on the live register has climbed by 5,900 - the largest jump in four years.

Unemployment is now running at a projected rate of 4.6 per cent, up from a rate of 4.4 per cent earlier this year.

Davy Stockbrokers yesterday forecast that the unemployment rate would hit 5 per cent by the end of 2007, as lower levels of housing activity feed through into job losses.Goodbody Stockbrokers chief economist Dermot O'Leary said the jobless rate this year would be 4.8 per cent. He is forecasting a rate of 5.5 per cent for 2008, as construction wanes.

The Irish Business and Employers Confederation (Ibec) said the rise in the live register last month was much greater than had been expected. "The scale of the June increase confirms that the Irish labour market is experiencing some deterioration," said its chief economist Fergal O'Brien.

But he added that Ibec remained confident that the Irish economy would perform strongly in 2007, despite the pressure on the construction sector. "There is still plenty of evidence of unfilled vacancies and a buoyant jobs market in most other sectors of the economy."

Fine Gael employment spokesman Phil Hogan said the "soaring" numbers of people signing on was evidence that Ireland's competitiveness was plummeting. Stealth taxes and the Government's failure to open up sheltered sectors of the economy to competition have added significantly to the cost of doing business here, he added.

The labour market is likely to weaken further as builders who are laid off during the summer find they are not taken back in August, according to Labour Party TD Ciarán Lynch.

The live register is not designed to measure unemployment as it also includes part-time, seasonal and casual workers who are entitled to either jobseekers' benefit or allowance.

Unemployment is measured under the Quarterly National Household Survey. The CSO is due to publish the survey for the period March to May next month. The most recent seasonally adjusted figures, for December to February, showed that there were 96,200 people unemployed.