THE NUMBER of people out of work continues to climb rapidly according to new figures to be released this morning. They will show the number signing on for unemployment benefit rose to 196,500 in April, representing an increase of 42,000 over the last 12 months.
Today's unemployment numbers follow data published yesterday showing that manufacturing businesses are shedding workers at record rates and the prediction by one of the largest banks, Ulster Bank, that the economy will grow by only 0.5 per cent this year.
The Government is also due to release the exchequer returns for the first four months of the year this afternoon, which are expected to show that the rapidly slowing economy is being reflected in a shortfall in tax receipts.
The live register number, which will be released by the the Central Statistics Office today, is some 26,000 more than the Government's forecast monthly average for this year of 170,000.
Unemployment has now reached 5.6 per cent of the workforce, up 0.1 per cent on the 10- year high figure of 5.5 per cent for March of this year. Government sources speculated that the relatively small month on month increase may indicate that the rate of job losses is starting to moderate.
However, data released yesterday showed that the slump in the job intensive manufacturing sector continues. The sector is contracting at a record rate and activity levels have hit their lowest point in 10 years.
The purchasing managers' index (PMI) published by NCB Stockbrokers - which measures the health of the sector - showed a new record low in its reading of 44.7 in April.
The index measures output, new orders, export orders, employment, stock levels and prices and any reading below the 50 mark indicates contraction. The PMI has been below 50 for the last five months.
According to the latest survey, output and new orders declined at record rates last month, falling markedly due to weakening domestic and export demand. The reduced workloads prompted many firms to "markedly" reduce their workforce last month and April was the fifth consecutive month that manufacturing employment contracted.
NCB senior economist Eunan King said the data was reflecting external factors such as weakness in the UK and the US.
Government sources said last night that the live register figure for May may show some improvement thanks to better job opportunities in the tourism, farming and construction sectors arising from the summer weather.
The apparent slowdown in the rate of increase in unemployment may be of some benefit to the Government in the current social partnership talks where it may be argued that the worst fears of the trade unions are not being realised.
But yet another large financial institution cut its economic forecasts yesterday. Ulster Bank said it now expects the Irish economy to grow by only 0.5 per cent, when previously it had predicted growth of 2 per cent.
However, it forecast a modest recovery next year, with the economy expanding by 2.2 per cent in 2009.
Growth of only 0.5 per cent would represent the weakest performance by the economy since 1986 and a very dramatic slow-down from the 5.3 per cent growth recorded last year.
"The outlook for the Irish economy remains favourable in the medium term, albeit that growth is set to slow sharply this year," said Pat McArdle, chief economist at Ulster Bank. "House prices have further to fall in coming months," he added.