The Irish jobs market expanded at a more moderate pace in the first quarter of 2024, but the data still point to robust growth in the Irish economy.
Employment increased by 0.4% in the first three months of the year compared to the end of 2023, and annual growth slowed to 1.9% from a 3.4% pace at the end of last year.
This is the slowest pace in three years and follows a period of rapid post-covid growth, but total employment in Ireland is now 343,000 above its pre-pandemic level, at 1.7 million people.
At a sectoral level, the out-turn was mixed, with nine sectors seeing annual increases and five sectors falling.
The biggest increases in employment were in the professional, scientific, and technical sector which jumped by around 15%, while agriculture increased by 6.4% and construction rose 5.5%.
The weakest out-turn was in industry which declined by 3.3% year-on-year, reflecting a more challenging business environment in that sector, signalled in recent AIB Manufacturing Purchasing Managers Index surveys.
Overall then, jobs growth has slowed somewhat over the past year to a narrower base of sectors.
Unemployment remains exceptionally low, falling to 4.3% in the first three months of 2024 from 4.5% in the final months of last year with other measures of labour market “slack” pointing to very tight employment market conditions.
Long-term unemployment fell further, as did those working part-time who could not find full-time work. Indeed, the key driver of jobs growth during the quarter was people moving into full-time work, underpinned by continued strong population growth.
However, it should also be noted that the potential labour force rose sharply by 28% in annual terms, indicating that a supply of workers could respond to alleviate potential capacity constraints in the labour market, if required.
This week’s Central Statistics Office (CSO) earnings and labour cost statistics will give a fuller picture of the labour market, with employer demand likely to have cooled further in recent months from the exceptional post-pandemic highs.
This has been signalled in industry surveys, such as postings on job site Indeed which suggest growth has eased in recent months.
In any case, with employment continuing to rise, unemployment exceptionally low, and the recent expansion of the potential labour force, it is clear that the jobs market should continue to underpin solid growth in the Irish economy this year.
- David McNamara is chief economist at AIB.
