Latest figures indicate worst of recession may be over

THERE WAS strong evidence yesterday that the Irish economy may be bottoming out, as new data on unemployment and tax receipts indicated that the worst of the recession may have passed.

The number of people who joined the dole queues in August was the lowest in 14 months, according to figures from the Central Statistics Office (CSO), while the Government managed to claw back some of the shortfall in tax revenues by collecting a higher-than- expected tax yield last month.

However, the rate of unemployment is still moving upwards and is expected to keep rising in the months ahead.

Yesterday, the CSO said it estimated that unemployment had reached a rate of 12.4 per cent in August, up from 12.2 per cent in July, as 5,400 people joined the seasonally adjusted Live Register of job seeker’s benefit or allowance claimants.

The monthly increases in the Live Register have slowed each month since the dole queues swelled by a record 33,000 claimants in January, and some economists now believe the Government’s unemployment forecasts are too pessimistic.

But Opposition parties, business groups and organisations representing the unemployed attacked the Government for failing to implement measures that would help reduce the high level of unemployment.

Labour Party leader Eamon Gilmore said it was “truly shocking” that there were 440,000 people on the Live Register – a number that has increased by 286,000 since the last general election. The Irish National Organisation of the Unemployed (INOU) and small business group Isme both expressed concerns that the Government’s employment subsidy scheme was not doing enough to ease the jobs crisis.

The subdued but more stable state of the labour market was reflected in Exchequer returns data for the month of August, which showed that the Government is now 2 per cent, or €427 million, behind its targets for tax receipts. This compares with a 3 per cent, or €575 million, shortfall that existed at the end of July.

Last month’s tax take was better than expected because of higher corporation tax receipts, although this may be partly due to a changing of the payment date calendar for this tax.

In what was perhaps the clearest “green shoot of recovery” in the economy to emerge yesterday, the tax take in August alone was higher than it was in the month of August 2008 – the first time this year that tax receipts have been higher than in the corresponding month last year.

However, the exchequer deficit widened to €18.7 billion in August and remains more than double the size of the deficit of a year ago.