Jobs holding firm as building slump bites
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THE building slump knocked further holes in the public finances and employment last month, but the rest of the economy is showing itself to be surprisingly resilient.
The numbers signing on the Live Register actually fell in April and estimated unemployment remained steady at 5.5pc.
Government Exchequer returns for last month showed that tax revenues fell further behind target, and were €730m shy of expectations.
But most of the shortfall is still related to building and property, with house completions running around 10,000 below Budget Day projections.
However, economists expect problems in the world economy, along with rising euro, to take their toll on the rest of the economy as the year goes on.
There was relief that the shock 6,000 rise in female unemployment claimants in March fell by 2,000 last month. It had been feared the March figures showed big problems outside the building industry, but it appears that Easter falling that month affected the numbers temporarily signing on.
Nevertheless, the April figure still left female claimants up 4,000, or 5.5pc, over the two months.
The 2,100 rise in the number of male claimants was the lowest since December, leading to hopes that the worst of the building layoffs might be over. "There is little doubt that the labour market outside of housing has softened, but not as badly as it looked in March," said Rossa White economist at Davy Research.
"We expect unemployment to hit 6pc by year-end and peak at 6.5pc in 2009."
The fall in claimants contrasted with redundancy figures which were up 50pc on April last year and 27pc in the first four months of 2008. Manufacturing, construction and services have been the sectors most affected.
The employers' organisation, IBEC, said immigrants leaving the country might be helping the Register figures. "It is likely that some immigrants who have been out of work for a few months returned home or moved elsewhere in the EU. The response of our large immigrant workforce will have a significant impact on where our unemployment rate is heading this year," senior economist Fergal O'Brien said.
IBEC also said the shortfall on the government finances could be €2bn this year, as other taxes follow property-related ones down. Exchequer returns show capital gains tax, charged on sales of assets such as property, was €333m below target, while the shortfall on VAT, paid on new houses, was €276m.
Other figures yesterday showed house prices fell by 9pc in the past year, which also means less tax for the Exchequer. That fall has cut €27,500 off the value of an average home. The price decline for first-time buyer houses was greater at 10pc, as potential buyers have been squeezed by higherinterest rates.
A 10pc drop in first-time buyer house prices will see some 40,000 new buyers go into negative equity, where the size of the mortgage is greater than the value of the home, according to Davy Stockbrokers.
- Brendan Keenan Group Business Editor
