Employment growing by 1,300 a week

21 Nov 2018

Employment growing by 1,300 a week

The latest Labour Force Survey release from the CSO shows that total employment in Ireland was +3.0% y/y in Q318. On a seasonally adjusted basis, total employment is now a record 2.3m, 21% above the trough that was hit during the recession (in Q311) and 1.2% above the pre-recession peak.

Somewhat surprisingly, the annual increase in employment was driven more by part-time work (+5.1% y/y) than full-time positions (+2.5% y/y), but we would note that those describing themselves as ‘part-time, not underemployed’ was the driver of growth in the former (+8.3% y/y), as those reporting themselves as being ‘part time, underemployed’ fell by 3.7% in the past year. 

Elsewhere, we note that the report shows broad-based growth in employment, with 10 of the 14 segments posting an annual increase in headcount. Unsurprisingly, the largest job creation was seen in areas such as Construction (+14.0% y/y, reflecting expanded output); Accommodation & Food Service (+10.0% y/y, reflecting buoyant spending by domestic customers and visitors from overseas); Public Admin & Defence (+8.8% y/y, due to a loosening of the government purse strings); Transportation & Storage (+7.9% y/y, driven by the export boom); and ICT (+6.1% y/y, a reflection of buoyant foreign direct investment). 

The areas that posted a decline were Agriculture, Forestry & Fishing (-5.7% y/y); Industry (-1.6% y/y); Retail (-1.1% y/y) and Financial Services (-6.6% y/y). While a number of those areas are seeing structural pressures, we suspect that the readings for Agriculture and Financial Services may be distorted by sampling issues. The report also provides an updated picture on unemployment. The seasonally adjusted unemployment rate is now estimated at 5.5% in October, 20bps higher than the flash estimate, but still -110bps in the past 12 months. 

Irish REITs: Crane count reaches a new high

The latest Dublin Crane Count, produced by The Irish Times in conjunction with Savills, shows a new peak for the series. At the start of November the newspaper’s monthly Census counted 102 cranes on the Dublin skyline, +13 m/m and nine above the previous (September 2018) peak of 93. The number of machines over the city has now trebled since the inaugural count in February 2016. There were 45 cranes on Dublin’s north side (October: 34), reflecting a ramp-up in construction activity in the city’s North Docklands. The number of cranes on the south side increased slightly to 57 from 55 in the previous month. 

Brexit Update

Developments on Brexit have been relatively quiet over the last 24 hours, but there are a couple of points worth noting. Firstly, PM May is off to Brussels today and is meeting Jean Claude Juncker this afternoon (reportedly at 16:30), where they are set to hold discussions before this Sunday’s EU Summit.  Ahead of the Summit Spain has been voicing concerns over the issue of Gibraltar and has threatened to vote against the draft Withdrawal Treaty unless its concerns are addressed. Reports several weeks ago had suggested that a deal had been reached over Gibraltar. 

However Spanish PM Pedro Sanchez has faced domestic criticism for being too soft on the issue, which is likely to have led to Spain’s recent objection. However we would expect these differences over Gibraltar to be overcome. Secondly, there is still no word on when the full political declaration will be published, with there seemingly being some wrangling over its length.  Lastly, Tory rebel momentum in trying to oust PM May is waning further, with Jacob Rees Mogg yesterday conceding that efforts to reach the required 48 letters to force a confidence vote had stalled. 

UK Public Finances

September marked the latest point in a consistent run of better than expected data on the public finances - a deficit of £4.1bn undershot the equivalent 2017 number by £0.8bn. Indeed at the halfway point in the financial year, borrowing was running £10.7bn below that in the equivalent period in 2017/18. This trend finally received recognition by the OBR in last month's Budget when it slashed its forecast for 2018/19 by £11.6bn to £25.5bn. As for the forthcoming data due this morning, we see the improving trend continuing. October is usually a higher than average month for the deficit. Indeed borrowing in October last year was recorded at £7.2bn. But there seem to be no obvious factors which are set to interrupt this trend with tax receipts growth running above (current) spending by a margin of 2-3%. Accordingly we are pencilling in a PSNBx of £6.3bn and concur with the OBR's analysis that borrowing will come in close to £25.5bn, a little over 1% of GDP.

Market Orders – Take advantage of volatility 

Sterling has continued to slide over the past week as PM Theresa May faces sustained pressure following the release of the Brexit draft agreement. Market orders are an excellent tool to take advantage of volatility, particularly as we move closer to the EU Summit which is set to take place this Sunday. Wish to know more, please call the treasury team.

Economic Forecast

09.30 UK Public Sector Finances
12.30 US MBA Mortgage Applications 
15.15 US BoE’s Carney speaks