Unemployment falls but uncertainty remains about the long-term fallout from Covid
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New unemployment figures have eased concerns that long-term unemployment is set to become a running sore but major uncertainties remain about how long many thousands of people will be out of work despite evidence of a strong economic rebound.
The CSO corrected its figures that it first published and then withdrew last week and the new figures show its two methods of measuring unemployment, the Covid and its seasonally adjusted measures, have both fallen in the month.
The Covid measure, which includes the people requiring the pandemic unemployment payment (PUP), fell to 13.5% in July from 16.2% in June.
It does not include, however, the large numbers, at 344,800, who are on the employment wage subsidy scheme. At the worst of the pandemic lockdown over a year ago, the Covid unemployment measure was close to 30% of the labour force.
The CSO's seasonally adjusted unemployment measure, which excludes PUP recipients, showed a fall to 6.5% from 6.7% in June.
The Covid measure will likely show a sharp fall to reflect the large decline in the number of people on the PUP since the start of August. Department of Social Protection figures last week showed the number of people on the PUP fell by 29,000 to 163,400.
Economists have said it will take some time for unemployment to fall back to 4.8% where it stood on the eve of the pandemic, in February last year.
The Economic and Social Research Institute projected in June that the economy would grow by over 11% this year, while the Department of Finance, in its Summer Economic Statement last month, projected GDP growth of 8.8%. However, the department also sees unemployment averaging 6% in 2024.
Other timely measures of economic activity, including exchequer tax receipts to the end of July, suggest a strong recovery has been underway.
Meanwhile, broker Davy became the latest forecaster to predict the economy, in GDP terms, will post double-digit growth this year. It also sees Irish house prices climbing 8% this year, slightly higher than the average increase projected by estate agents.
New figures also show other eurozone economies are bouncing back. French economic activity almost reached pre-pandemic levels in July as businesses largely shrugged off some renewed restrictions while supply difficulties increasingly constrained production.
Activity was between 1% and 1.5% below normal in July, the highest it has been since the pandemic struck, according to the Bank of France’s monthly survey of 8,500 firms.
While business leaders expect a similar performance in August, the share of companies reporting supply difficulties rose for the third consecutive month to 49% in July. In construction, the measure was stable at 60%.
However, the central bank’s survey underscores how the European economies exiting lockdowns and the worst of the Covid-19 pandemic are increasingly running into difficulties ramping up production.
- Additional reporting Bloomberg