Goodbody economist Deirdre Ryan commented:

Live Register data for the month of September have just been released. This is one of the timelier indicators of labour market developments in the Irish economy and the trends over recent months have pointed to a considerable moderation in the rate of unemployment increase. The latest data show the number on the Register increased by just 600 in September, the smallest absolute increase in 17 months (+5,400 in August, +10,500 in July). On an annual basis the rate of increase in the Register moderated further to 75% yoy, (+82% yoy in August, +87% yoy in July ), the slowest pace of increase seen in the year to date. Encouragingly also, there was no further increase in the unemployment rate in September, which remained at 12.6%. This is the first month since November 2007 that the unemployment rate, as measured by the Live Register has not increased on a monthly basis. In terms of the quarterly increase, the 16,500 increase in the Register was less than 40% of the 42,000 increase seen in Q2 and is a fraction of the 77,000 increase seen in the first quarter of the year. The deterioration in Ireland's labour market has certainly stabilised.

Drop in the number of males signing on...

The Live Register is also broken down by gender. Increasing male unemployment has been responsible for the bulk of the increase in the numbers signing on (they accounted for c2/3 of the annual increase in the year to September). However, today’s data show a decrease in the number of males on the Register, with a drop of 400 in September. This is the first time since February 2007 that the number of males signing on has not risen in the month. On an annual basis the number of males on the Live Register is still up by 78% yoy although these latest trends point to the fact that some of these males are choosing to exit the labour force. The drop in the number of males was led by the under 25 age category. In September the number of males aged 25 signing on fell 1,200. (the number of males aged 25 and over on the Register increased by 800 in September).

...is likely due to emigration

It is likely that some of these discontinuing claimants are returning migrants. Although the breakdown by nationality of the Live Register is not released until Friday, in each of the last four months the number of Accession state nationals on the Register has fallen, with the overall total down 1,650 from the peak. In August there were 43,000 persons from the Accession states on the Register or 9.8% of the total. This has eased over recent months when in March they accounted for 11.7% of those on the Register. It is likely that Friday’s data will show this trend has continued. Its becoming increasingly clear that Irelands immigrants were economic migrants who are now returning to their home countries in larger numbers given the deterioration in the labour market here.

...with this being the central reason behind the reduction in unemployment forecast

The moderation in the rate of unemployment increase as well as the reduction in the labour force that is occurring through emigration, were the main reasons we reduced our unemployment forecasts following the release of the QNHS for Q2 last week. We now expect unemployment to peak at a rate of 14.5%, although this is not set to occur until late next year. For 2009, unemployment is forecast to end the year at 13.3%. We have mentioned the more timely data indicators, such as today’s Live Register, as being indicative of turning points in the economy. After the haemorrhaging of jobs that occurred in the opening months of the year, these data indicate that the labour market is on a more stable footing than was the case in earlier months.

Simon Barry, chief economist, Ulster Bank commented:

Another better-than-expected Live Register reading as the monthly increase of just 600 is the lowest in 17 months…

The monthly Live Register (LR) numbers have consistently been better than expected in recent months. The latest numbers for September represent a continuation of that pattern. The monthly rise in the total signing on this month (on a seasonally adjusted basis) was a mere 600 – the lowest increase since the 500 rise recorded in April ’08.

There has been a striking improvement in the trends on the LR over the course of this year. From the worst month on record in January (31,400), there has been a steady improvement in every month since then, with the average rise in the third quarter of 5,500 representing the best quarter since Q4 07.

The breakdown of the numbers reveals that the number of males signing on actually fell in September. The decline of 400 recorded this month was the first fall in over two and a half years. There was an increase in the number of females added this month, but the rise of 1,000 was the lowest monthly rise since April last year. While the LR data don’t provide any insights into how labour market conditions across different sectors of the economy are evolving, these numbers hint at a stabilisation of employment in the male-dominated construction sector.

Improvement also evident on the unemployment rate, which didn’t rise this month – the first time that has happened since December ‘07

The monthly LR release also contains an estimate of the unemployment rate, and there were further grounds for encouragement on this front too. The estimated jobless rate was 12.6% in September, which following an upward revision in the August data, means that September was the first month since December 07 that didn’t see an increase. Again, the trend improvement here is notable. Back in the early months of the year, the jobless rate was rising at an average pace of 0.8 percentage points per month.

This has important forward-looking implications in terms of where unemployment is likely to peak. The much better trends of late now offer important evidence that the peak in the unemployment rate will likely be considerably lower than feared and will be reached earlier than previously anticipated. Forecasts of a peak of 16.5% or more now, thankfully, look way too pessimistic. In terms of our own view, we had been anticipating a peak of a little over 15% next year. Based on the latest trends, something at or perhaps below 14% now looks to be on the cards.

The total on the LR is now set to average close to 400,000 this year, way lower than the 440,000 assumed in the April budget, providing much-needed relief to the public finances

From a policy perspective, these developments are certainly very welcome indeed. The April Budget anticipated an average level of unemployment this year and next of 12.6% and 15.5% respectively. This year now looks likely to come in below 12%, for example, as the numbers on the Live Register are set to significantly undershoot the 440,000 average level assumed in the April budget. We are presently on course to averaging around 400,000. 40,000 fewer workers on the LR would result in annual savings of between €400million and €800 million to the Exchequer position, so this will provide much needed relief to the Government finances.

Following signs of stabilisation in the last week’s Quarterly National Accounts and Quarterly National Household Survey, the latest LR data offer further encouragement that the Irish economy is in the process of bottoming out. The pace of deterioration in labour market conditions has eased dramatically relative to what was happening at the beginning of the year. The peak in the unemployment rate now looks set to occur earlier, and at a lower level than previously expected. Though today’s numbers don’t provide direct evidence, rising emigration is now likely playing an increasingly prominent role in the process of adjustment in the Irish labour market.