Unemployment falls to 4.4% as 53,000 new jobs boost economy

The jobs market is returning towards buoyancy levels last seen in 2000, according to new figures released by the Central Statistics Office (CSO) yesterday.

The new Quarterly National Household Survey results show that almost 53,000 jobs were created in the 12 months to the end of February.

This meant that the number of people at work grew by 2.9 per cent over the year, compared to annual growth of just 1.7 per cent at the same point of 2003.

The employment growth, which offers new evidence of an acceleration in economic activity, was reflected in continuing declines in jobless numbers.

The CSO said yesterday that unemployment stood at 4.4 per cent of the labour force at the end of February. This marked a drop from 4.5 per cent in the previous quarter, and from 4.6 per cent in February last year.

The number of unemployed dropped for the first time since the second quarter of 2001.

Economists welcomed the latest signs of a strengthening economy, but some were cautious on the potential side-effects of the pick-up in employment.

Mr Austin Hughes of IIB Bank said that the move towards full employment could act as a "restraining factor" on the economy, particularly as levels of spare capacity in the jobs market fall back. This development, which could, in theory, lead to higher wages, is likely to have placed some pressure on the national pay talks as they continued last night. This situation will have been underlined by the recent rise in inflation.

In general, Mr Hughes cautioned against unjustified excitement at the latest jobs numbers, suggesting that a drive for productivity gains would limit employment growth this year. He has predicted average employment gains of 34,000 for 2004, and has raised his forecast for gross national product (GNP) growth slightly from 3.3 to 3.75 per cent.

A breakdown of the jobs numbers shows that 85 per cent of the jobs created in the year to February were full-time positions. This compares to about 60 per cent at the same point last year.

CSO director Mr Gerry O'Hanlon highlighted this factor as a particularly positive sign for the employment market. He also pointed to evidence that the average number of hours worked, which fell back last year, was again on the increase.

Sectoral indicators within the survey show that construction accounted for a quarter of the net new jobs created over the year, providing 13,500 new positions.

At the other end of the spectrum was manufacturing, where competitive and other pressures knocked 8,400 existing positions out of the jobs market.

Jobs were also lost, albeit to a much smaller extent, in the public administration and defence sector.

The decline of 300 positions in this area is almost certainly linked to a public-sector recruitment freeze, with Davy pointing out that private services employment growth surpassed public services growth for the first time in four years.

The freeze was not in evidence in the health sector, where job numbers expanded by 9,400.

Financial and other business services firms created 8,300 new jobs in the year.

This came as the overall labour force expanded by 50,800, with demographic factors accounting for about 70 per cent of this. Mr O'Hanlon said about 20,000 of this new "demographic" were "new migrants".

He acknowledged that a greater need for such migrants could be "inferred" from the latest numbers.