20 Nov 2019

Irish Economy: Employment +2.4% y/y in Q3

Given the difficulties interpreting some of the country’s macro data, employment figures are one of the most tangible measures of economic performance in Ireland. 

With this in mind, the latest data from the CSO are encouraging – the pace of employment growth in Ireland picked up to 2.4% in Q319, from 2.0% in Q219. 


This increase in the growth rate was particularly welcome given that the Q2 figure had been somewhat of a disappointment and the slowest rate of annual increase since Q113. The total number employed was 53,700 higher than in the same period of last year and there are now 2.33m people at work in the country, a remarkable 25% increase since 2012 and 3.3% higher than the previous peak in 2007. Unemployment fell by 15,800 (11%) in the year and the unemployment rate stood at 4.9% in Q3. Helped by a growing population, and net immigration in particular, the labour force expanded by 37,900 (1.6%) in the same period.


We tend to be cautious on the data showing sectoral employment splits, however the employment growth has been generally broad based with a couple of exceptions. The greatest increases (in percentage terms) over the past year have been in the Financial, Public and Education sectors, while the Agriculture and Accommodation/Food Service sectors have shown decreases in employment numbers over the past year.


Although the pace of employment growth is expected to slow given the reducing spare capacity in the economy, the latest data show that there is still plenty of positive momentum in the labour market. As we get closer to full employment (although it is unclear what exactly constitutes full employment), wage growth pressures may start to build and, in this regard, we await the publication of Earnings and Labour Costs data for Q3 on Monday.


Irish Economy: NTMA cancels €500m of floating rate bonds


Ireland’s NTMA yesterday announced the cancellation of another €500m of the Irish 2051 Floating Rate Treasury Bond, following the purchase of the bonds from the Central Bank of Ireland.


These bonds are linked to the controversial IBRC transaction in 2013 and, following a series of repurchases and cancellations, just €9bn of the €25bn of bonds issued as part of the “Prom Note” deal remain outstanding and all of these are bonds are held by the Central Bank. Although the effective servicing cost of the IBRC-related bonds is immaterial as the Central Bank repatriates most of its profits to the Exchequer, the repurchases serve to improve the optics of Ireland’s headline debt metrics.


TV Debate fails to ignite election campaign


All eyes were on the live TV debate last night, as Prime Minister Boris Johnson and opposition Labour Party leader Jeremy Corbyn squared off. The outcome was deemed to be a ‘no score’ bore.  A snap poll released immediately after a pre-election debate showed a “dead heat”, YouGov said on Tuesday. A total of 51% of respondents said Johnson performed best overall, whilst 49% said Corbyn was stronger, according to figures which excluded those who said they did not know. 


Prime Minister Boris Johnson had doubled down on his Brexit promises, saying only he could take Britain out of the European Union quickly in the testy leadership debate, while Jeremy Corbyn promised the end of austerity and a second referendum. GBP response was muted with little change across most crosses.


Philip Lane on Europe economic pain


The Eurozone economy will not fall into a recession, although it is growing less than expected and there will be a recovery in the next year or two, the European Central Bank’s chief economist Philip Lane said in an interview on Wednesday. “The economy is growing less quickly than what we hoped. The dynamic is disappointing but not negative. We expect a recovery in the next year or two,” Lane told Italian daily la Repubblica. He said the current inflation rate was unsatisfactory and he expects ECB policy to allow it to grow.


Proposals to reform the Eurozone’s bailout fund are creating a political storm in Italy, where parties and institutions are battling over whether Rome should try to block the reform at the EU level. A draft of the reform was agreed by Eurozone finance ministers in June and is due to be finalised by leaders next month, but senior Italian officials, including its central bank chief, have warned some measures are financially dangerous. Elsewhere in Europe, Germany’s manufacturing production is expected to decline 4% this year, with exports edging up just half a percentage point, because of to weaker foreign demand, the BDI industry association said on Tuesday


Crude Oil prices fall 2.50% overnight


Crude oil fell more than 2.5% yesterday on concerns about excess global crude supply and limited progress toward resolving the US-China trade dispute. Oil prices have risen around 15% this year supported by a pact within Opec+ to cut oil production by 1.2 million barrels per day. Russia is unlikely to agree to deepen cuts in oil output at a meeting with fellow exporters in early December, but could commit to extend existing curbs to support Saudi Arabia.


Markets were rattled further overnight when a Chinese government source was quoted by CNBC as saying there was gloom in Beijing about prospects for a trade deal. The long-running dispute has hit economic growth prospects.