Source: Goodbody

The Irish Quarterly National Household Survey Q4 2008, published today by the CSO, shows an annual decrease in employment of 86,900 or 4.1%. It  was the biggest fall since at least 1975.

Employment falls by 4.1%

In the fourth quarter of 2008 there were 2,052,000 persons in employment, an annual decrease of 86,900 or 4.1%. The largest annual decrease in employment since the labour force survey was first undertaken in 1975. This compares with an annual decrease in employment of 1.2% in the previous quarter and growth of 3.2% in the year to the fourth quarter of 2007.

The overall employment rate among persons aged 15-64 fell to 65.8%, down from 69.0% in Q4 2007. This brings the employment rate back to a level comparable to that last recorded in the first half of 2004. 

Full-time employment declines by almost 94,000 over the year

Full-time employment fell by 93,900 on an annual basis with declines in both male   (-76,600) and female (-17,300) full-time employment. The largest decreases in full-time employment occurred in the Construction (-48,800), Other production industries (-15,500) and Wholesale and retail trade (-14,000) sectors.

Number of unemployed increases to over 170,000

There were 117,800 males and 52,900 females unemployed in the fourth quarter of 2008, bringing the total number of unemployed up to 170,600, an increase of 69,600 (+68.9%) in the year. The number of unemployed males increased by 54,200, with female unemployment increasing by 15,400.

On a seasonally adjusted basis, the male and female unemployment rates stood at 9.2% and 5.4% respectively. The overall seasonally adjusted rate was 7.7% in Q4 2008, up from 6.4% in Q3.

Goodbody Chief Economist Dermot O'Leary commented:

Overtaken by more recent events...- The rapid deterioration in the Irish labour market is starkly illustrated in today’s Quarterly National Household Survey. Unfortunately, the data are already somewhat dated given that they relate to the September-October 2008 time period, with the Live Register confirming that conditions have deteriorated even further since then.

...but confirm the employment collapse in Q4 2008 - Nevertheless, the QNHS data reveal that employment declined by 4.1% yoy in Q4, the largest annual decline since the data was first collected in 1975. The quarterly (seasonally-adjusted) contraction of 2.1% was almost double the decline seen in the previous two quarters, indicating that, similar to a host of other economic data releases from both Ireland and around the world, the economic environment took an unprecedented dive in the final quarter of 2008.

Construction and services hit most - Construction employment declined by 7.6% qoq (sa), with numbers employed in the sector now down by 18% from the peak. The services sectors also continue to suffer, with the numbers employed in hotels and restaurants falling by 3.2% qoq (sa) and wholesale and retail declining by 2.3% qoq (sa). The public sector dominated areas of health, education and public admin still managed to grow by 2.2% yoy in Q4, while private sector employment fell 5.8% yoy.

Unemployment rate rises to 7.7% - The unemployment rate rose to 7.7% in Q4, up from 6.4% in Q3. While labour force growth has already gone into negative territory, due to a drop in participation rates and increased migration flows, it is not enough to offset the dramatic fall in employment levels. Our estimates suggest that the unemployment rate will hit 12% later this year and rise further to c.15% in 2010. Of course, this will depend on the state of labour markets in other parts of the world, but, for the moment, there are few places to hide.

Major factor in consumption decline - We already downwardly revised our forecasts for the Irish labour market in last week’s Economic Commentary and these data unfortunately back up these fears. In fact, we have already gone beyond crisis proportions. The employment decline is the major contributory factor to the expected 7% decline in consumption in 2009, but as we noted, short-term economic growth projections are becoming less important as the focus is now on returning the public finances to a more sustainable path.

Source: Goodbody

Davy Research Chief Economist Rossa White commented:

Employment drops 2%; unemployment rate hits 7.7% - likely to exceed 12% by end-2009

Employment fell 2% quarter-on-quarter, as unemployment rate hits 7.7%

• Employment fell 2% in September-November compared with the previous three-month period. Yet the labour force did not adjust quite so quickly: it fell only 0.7%. As a result, the unemployment rate reached 7.7%.
• That 2% drop in the fourth quarter eclipsed the 1.1% declines in both the second and third quarters.
• Worryingly, part-time working is rising slightly. The entire decline in employment related to full-time jobs.

Construction and private services worst affected while public service employment increased

• The worst affected areas are building and those service sectors related to construction and the global financial crisis. Construction employment slid 7.6% quarter-on-quarter, followed by hotels and restaurants (-3.2%), retail/wholesale (-2.3%) and financial/business services (-1.9%).
• No pain-sharing is evident in the data: private sector employment dropped 97,400 over the last 12 months while public employment increased by 10,000.

Employment to drop another 8%+ by end-2009 while the unemployment rate is likely to breach 12%

• We expect employment to drop by another 8.3% between now and the final survey of 2009. In the September-November 2009 household survey, the unemployment rate is likely to breach 12%.
• Unemployment may rise more slowly in 2010, although we expect the rate to reach 14% by Q4.