Unemployment remains anchored at two-decade low of 4.4%

Unemployment in the Irish economy remained at near two-decade low of 4.4 per cent in January despite the inflation crisis, suggesting conditions in the labour market remain tight.

The headline figure was down from almost 5 per cent in January last year. Central Statistics Office (CSO) data, published on Wednesday, indicated there were 118,300 people classified as unemployed last month compared with 119,100 in December.

The CSO said there was a decrease of 10,300 in the seasonally adjusted number of unemployed people in January when compared with a year earlier.

While consumer spending and investment have slowed in the face of inflationary pressures, the Irish labour market remains resilient. An unemployment rate of 4 per cent here is considered to equate to full employment.

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The stronger-than-expected employment and growth figures emanating from Ireland and Europe will strengthen the resolve of European Central Bank policymakers to continue pushing up interest rates. The fear previously was that a series of rate hikes would trigger a recession but that has dissipated.

“Ireland’s labour market started the year on broadly the same note as it ended last year amid an unstable macroeconomic outlook,” said Jack Kennedy, economist with recruitment website Indeed. “Although there was a slight decrease in the number of people unemployed, the overall unemployment rate remained unchanged at 4.4 per cent,” he noted.

“With January traditionally being a popular month to start job-searching, the labour market remains tight and recruitment conditions continue to be challenging for many employers,” he said.

Indeed’s data continues to show employers actively hiring, with the level of Irish job postings on Indeed up 64 per cent as of the end of January compared to February 2020.

“Staff shortages remain one of the most pressing issues for many employers. Targeting unemployed young people and long-term unemployed could be part of the solution to a tight labour market,” he said.

Lindsay Bell from Grant Thornton Ireland said: “The beginning of the new year brings with it a mix of quiet optimism and underlying concern as to what the year ahead will hold.

“Optimism that the damaging inflation that caused so much pain to households and businesses alike in the previous year will continue to dissipate, and concern that the up-to-now resilient Irish labour market may start to show the impact of weaker consumer and business sentiment,” he said.

“The January figures continue to highlight the strength of the Irish labour market despite ongoing domestic and global pressures,” he said.