Unemployment rate falls to 11.8% in March

The CSO has today released Live Register data for March.

At a headline level, the data show a continuation of the favourable trends that we have been highlighting for some time, with the seasonally adjusted number of people on the Register (396,900) falling (-1,800 m/m) for the 21st month in a row, while the standardised unemployment rate has fallen by 0.1ppt m/m to 11.8%, its lowest level since April 2009.

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The number of people on the Register has fallen by 11.6% (-52,000) since the peak (August 2011) and by 7.0% (-30,000) in the past year. This improvement in the Live Register partly reflects the return to positive net job creation in the economy. The Q4 2013 QNHS, released on 27 February, showed that total employment rose 3.3% in the year to Q4 2013. The employment component of the Investec Manufacturing and Services PMIs for Ireland suggest that this positive momentum has been sustained into the New Year.

However, this is not the sole driver of the improvement in the Live Register. We note tell-tale signs that emigration remains a factor, with the number of people aged under 25 on the Register falling 11.5% in the year to March 2014 while the number of people aged over 25 on the Register declined by a more modest 7.3% over the same period. The ratio of over-25s to under-25s on the Register now stands at 5.50:1, a new high since the Irish downturn began. For context, this ratio stood at 4.08:1 back in January 2007.

Despite the improvement in the headline figures, we note that the problem of long-term unemployment remains acute. In March 2014 45.8% of all claimants were long-term claimants. Tackling this issue remains a major priority for policymakers.

The release also provides an update on the number of people enrolled on Activation Programmes, which are targeted primarily at the long-term unemployed. There were 85,119 people availing of these programmes in February 2014, which is an increase of 1,698 or 2.0% from the previous year. Persons on Activation Programmes are not counted as part of the Live Register.

In terms of takeaways from the above, while the ongoing improvement in the labour market is clearly very welcome, it is clear that much remains to be done. While the Irish standardised unemployment rate is now inside the Eurozone (whose unemployment rate was 11.9% in February) for the first time since late 2008, that is not much by way of consolation for those awaiting a return to work. Philip O’Sullivan, Investec.