Wednesday 23 October 2019

Unemployment 'as good as it gets' as Brexit to undo downward gains

Rise on cards: Unemployment could go above 5.5pc after Brexit. Photo: PA
Rise on cards: Unemployment could go above 5.5pc after Brexit. Photo: PA

Anne-Marie Walsh

Unemployment levels are now as "good as it gets" as economists predict that the downward trend in joblessness of the last decade is about to end.

New figures reveal the unemployment rate is now back to where it was on the eve of the economic crash.

It stood at 5.3pc of the labour force last month - the same as it was in January 2008.

There are now 126,900 people out of work as the number unemployed fell by another 600 between August and September.

Economists welcomed the drop, but predicted the labour market may have reached a turning point just as it nears full employment.

"We are not far from full employment, and the labour market, especially around Dublin, is particularly tight," said chief economist at Grant Thornton Ireland Andrew Webb. "This might be as good as it gets in this cycle as labour market performance will come under significant pressure from a no-deal Brexit, which looks like the most likely path."

He said that, depending on how messy Brexit is, he would not be surprised to see unemployment rates rise above 5.5pc, undoing the employment gains of the past year.

"Looking into the medium term, a no-deal Brexit could impact tens of thousands of jobs," he added.

He said most definitions of full employment would mean the unemployment rate was about 0.5pc to 1pc lower than its current 5.3pc level.

The Central Statistics Office recorded lower monthly rates this summer - of 4.4pc - but has since revised the figures upwards.

Its most recent figures show that since 2008, the lowest unemployment rate was 5pc in February and March this year. Since then, it has risen slightly.

It remained the same during August and September at 5.3pc, according to the figures published yesterday.

Since 2008, there had been a steady increase in the unemployment rate to a peak of 16pc at the height of the recession.

Pawel Adrjan, economist at job site Indeed, noted that unemployment was flat against the backdrop of Brexit and US-China trade wars.

He said the impact of a hard Brexit remains a considerable downside risk, with rural Ireland considerably more exposed than Dublin.

"Counties with a strong reliance on agriculture - including Tipperary, Wexford and Kilkenny - are also heavily exposed, given the shock to food exports to the UK that a no-deal Brexit could mean," he said.

Irish Independent

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