Tuesday 17 September 2019

Jobs growth slows amid Brexit fears and world trade wars

 

(stock picture)
(stock picture)

Anne-Marie Walsh and Cormac McQuinn

Jobs growth is forecast to slow in the coming months as new figures indicate employers could be getting Brexit jitters.

At first glance, the latest official employment figures are further testimony to the economic success story of the last few years, with the numbers at work continuing to climb in the 12 months to June.

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But there are signs of a slowdown.

Employment suffered its first quarterly fall in seven years - albeit by less than 1pc - and has recorded its slowest yearly growth in six years.

The numbers at work fell by 20,900 in the second three months of this year compared to the first three.

It still rose year on year - but at a slower rate.

Employment increased by 2pc, or 45,000 people, in the 12 months to the end of June, bringing the total number at work to 2.3 million.

Although more than respectable, it is the slowest growth since the start of 2013.

It compared with a hike of 3.7pc, or 81,200 extra people at work, in the 12 months to March, and a hike of 3.4pc, or 74,100, in the year to June last year.

Finance Minister Paschal Donohoe dismissed suggestions that Brexit may be a factor in the slowdown but acknowledged it is having an impact on other areas of the economy.

"If you look at the half overall in the numbers you have summarised they show annual employment growth overall of over 40,000 jobs in our country," he said.

"They show more people at work than we've ever had before and, indeed, they show more people moving to Ireland to work in our economy.

"So for all of those reasons the trend in quarter two… I don't see reflecting Brexit points for now.

"But I would acknowledge... that there is a growing reserve in consumer sentiment and investment point of view regarding the effect that Brexit might have on the economy both now and in the future.

There were mixed views on whether the UK's impending exit from the EU is already impacting employment.

Economist Alan McQuaid said he believes employment has peaked and there will be slower growth in the second half of the year.

"I think there's no doubt that the PMI manufacturing data is definitely telling you that things are starting to take a turn for the worse because of a combination of the global economic effect of Trump and tariffs, and Brexit doesn't help us either," he said.

Dermot O'Leary, at Goodbody, said the quarter-on-quarter fall in employment may or may not be a"turning point" but is "something to be wary of" in terms of Brexit.

Impact

"While one should not get carried away with one quarter, it does suggest that a combination of slower construction growth, Brexit uncertainty and wider global trade concerns is having some impact on the very open Irish economy," he said.

Professor of economics at DCU Business School Edgar Morgenroth said the CSO data has become less predictable since the crisis.

"There seem to be unusual jumps here and there," he said.

"Overall it is too early to say that it is a Brexit effect, and it is likely that a combination of factors are at play including Brexit, a slowdown in other major trading partners (principally due to trade uncertainty and especially the US-China trade war), as well as the Irish economy being at full employment."

He said if the slowdown in jobs growth was due to Brexit one would have expected the Border region to show up as worst affected.

"But the data shows unemployment in the Border being the lowest among all the regions," he said.

Irish Independent

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