16 Jan 2018 | 01.00 pm
CSO Rolls Out New Labour Force Survey
State's Statistics Office admits previous labour force data was incorrect
16 Jan 2018 | 01.00 pm
The Central Statistics Office has issued results from the new Labour Force Survey in respect of Q3 2017. The new LFS replaces the Quarterly National Household Survey (QNHS), which had been estimating employment and unemployment trends since 1997.
The CSO explained that estimates in the Labour Force Survey will be more accurate than the survey it replaces. After changing methodology, unemployment estimates in previous QNHS survey has been revised upwards.
For example the CSO had previously estimated the unadjusted unemployment rate in Q2 2017 at 6.5%. This has now been revised upwards to 6.9%. For Q3 2017, in the new LFS release, the seasonally adjusted unemployment rate is estimated at 6.7%.
The CSO’s most recently published employment estimate, for Q2 2017, was 2,063,000. After factoring in Census 2016 data, this figure has been increased by the CSO by 75,400 to 2,138,400. When the adjustment for the new LFS methodology is applied too, the employment estimate figure increases by a further 42,800 to 2,181,200. In short, the CSO has owned up that three months ago it was underestimating the number of people in employment by 118,200.
Using the new LFS methodology, the CSO has backdated all its previous labour force estimates used in the QNHS. Taking account of those revisions, the CSO estimates that the number of people in employment in Q3 2017 was 48,100 more than a year earlier.
In a separate release, the CSO said that the seasonally adjusted unemployment rate in December 2017 was 6.2% compared with 7.5% a year earlier. The CSO estimates the SA number of people unemployed is currently 146,700 people. The Live Register of claimants of unemployment payments in December was 241,300.
COMMENT FROM AUSTIN HUGHES, ECONOMIST, KBC BANK
Today’s data also show the pace of jobs growth has eased significantly in recent quarters. There is a marked shift to full-time employment which is up 114k or 6.9%, while part-time employment is down 13.1% or 48k. This may be indicative of the recovery moving to a more ‘mature’ phase as well as a sustained improvement in domestic spending of late.
In some areas, such as industry, slower employment growth may reflect increased competitive pressures related to Sterling weakness as well as a more cautious attitude to hiring because of Brexit or other sources of market uncertainty.
The slower jobs growth of late is at odds with stronger GDP growth of late and relatively solid readings from most other Irish indicators. As such, we don’t see it heralding any step-down in broader economic conditions.
While slower hiring could reflect skill shortages in some specific areas, other evidence suggests this is not broadly based. Today’s data show the pace of jobs growth varies widely across economic sectors suggesting no ‘macro’ capacity constraints, while the small upward revision to the unemployment rate also implies slightly greater capacity in the labour market.
In addition today’s data show employment growth among Irish nationals increased by 1.7% whereas the number of non-Irish nationals at work increased 5.3%, highlighting ready access to a significant pool of overseas labour.
In circumstances where the Irish economy and jobs market are going through a strong period, it may seem surprising that unemployment is being revised up, even if relatively modestly. This may be explained by the fact that revisions relate disproportionately to younger age groups. These revisions suggest the potential growth capacity of the Irish economy may be marginally greater than previously thought.
The data shows numbers at work in Ireland are some 2% below the Q4 2007 peak. This represents a remarkable recovery. However, numbers at work in the Euro area and US are both around are both some 5% higher than ten years ago whereas UK employment is some 8% higher. This implies that if Ireland had followed a less volatile economic path, the number at work here could be between 150k and 220k higher.
COMMENT FROM SIMON BARRY, ECONOMIST, ULSTER BANK
• The pace of jobs growth does look to be on a moderating trend, with the current rate of expansion some way slower than the extremely rapid 3.8% pace recorded a year earlier.
• Data revisions form an important part of today’s figures. The revisions also alter our understanding of Irish employment dynamics over the downturn and recovery. The downturn was more severe than previously estimated, while the cumulative pick up over the recovery has been greater (16.3% uplift to Q2 vs 12.6% prev.) leaving total employment on net closer to pre-crisis levels than previously estimated, now just 2% short of peak vs. 4.5% per previous estimates for Q2.
• Note that this stronger recovery is evident in more rapid growth of employment in recent years e.g. now recorded at a truly exceptional 3.7% in 2016, up from the previous estimate of 2.9%. So the emerging moderation in jobs growth over the past couple of quarters needs to be seen in the context of this, now even stronger, prior performance.
• It is important to note also that the headline employment figures are understating the underlying pace of jobs growth: record growth in full-time employment means that, at 4.2% y/y in Q3, Full-Time Equivalent jobs growth continues to look very robust indeed both in absolute terms and relative to the headline growth rate of 2.2%.
• Other detail within the figures shows that the three main economic sectors continue to experience positive annual jobs growth. Annual growth in construction employment firmed slightly (to 6.9% or 8,300) while there was a further modest easing in jobs growth in both the broad services sector (to 2.4% or 39,200) and in industry (to 1.4% or 4,000) with the softer trend in the latter somewhat disappointing given the ongoing global upswing in the factory sector; y/y employment growth in the agriculture/primary sector was negative for a third consecutive quarter (-4.5% or -5,300 in Q3), though it’s not fully clear how much of this reflects statistical noise rather than underlying weakness.
• The more detailed breakdown confirms that jobs growth remains broadly based, albeit not quite so as in 2016: 10 sub-sectors recorded positive annual growth in Q3: education (up 8.9% or 13,200), construction (up 6.9%, or 8,300) and IT (up 7.1% or 7,800) and were again particular sources of strength. Three sectors saw negative employment growth over the last year, including the primary/agriculture, professional and scientific services and other services.
• Employment continues to expand both within and outside the Greater Dublin Area (GDA) though the pace of growth has eased in each case; growth in the ex-GDA region (2.8%) outperformed the GDA (1.6%) for the 4th consecutive quarter, as the pace of growth in the GDA eased to its slowest in over four years (though some caution is required in interpreting the regional figures which may be subject to some statistical quirks related to the introduction of the new LFS).
• Regional unemployment rate trends confirm that labour markets within and outside the GDA continue to show improvement, though there is considerable variation across the country; the Midlands and Mid-West are lagging behind at over 8%, with Dublin and the Mid-East leading the way at c. 6.25%.
• With jobs growth at a very solid 2.8% y/y over the first three quarters of 2017, we continue to take encouragement from the still-healthy underlying trends in the Irish labour market. Such trends reflect the strength and breadth of underlying growth in the economy more generally as evidenced in the strong readings in a variety of other data points of late which have included the PMI surveys, retail sales, housing supply and household income – all of which highlight that the Irish economy looks to be carrying considerable momentum into the early part of 2018.