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Irish Examiner
2 days ago
- Business
- Irish Examiner
Analysis: The jump in the unemployment rate may be a warning light for the economy
By all measures, the Irish labour market has been remarkably resilient. For well over three years, the economy has been operating at near full employment, all the while weathering surging inflation, rising interest rates, and a resulting cost-of-living crisis. Throughout all of this, the unemployment rate remained consistently low. Between January and June this year, the monthly rate remained very steady between 4.5% and 4.6%. However, a sudden jump to 4.9% in July spooked economists, with some already sounding a note of warning over what this could mean for the economy. The last time the unemployment rate was this high was March 2022 as the country came out of the pandemic. In the grand scheme of things, this is a small jump in unemployment with just 8,600 fewer people employed, compared to June, out of a total workforce of just over 2.9m. The worry, however, is that this might just be a sign of things to come. Chief economist at Grant Thornton, Andrew Webb, said the increase was a 'warning light on the economic dashboard' adding that 'rising global uncertainty and the growing risk of tariffs are making firms more cautious'. Given the rising trade tensions and dimming global economic outlook, which have persisted ever since US President Donald Trump was sworn back in, a number of economic institutions have already forecast that the economy is to slow over the coming years and for the unemployment rate to go up. The problem? The July unemployment reading was even higher than expected. During its latest quarterly bulletin, the Central Bank of Ireland forecast the unemployment rate for all of 2025 to stand at 4.5% before increasing to 4.8% next year. The Economic Social and Research Institute (ESRI) forecast the rate to remain just over 4% this year and next year. On its own, one month's unemployment rate wouldn't be enough to cause panic - especially considering that the rate remains low by historical standards - but the issue is that Ireland and the rest of the EU are now entering a new dynamic with its main trading partner which is expected to slow down growth and hurt firms on either side of the Atlantic. Late last month, EU Commission President Ursula von der Leyen met with Mr Trump to finalise a trade deal in which the US president set a tariff on EU goods entering the US at 15% - up from the 10% which had been in place for months. There was some sense of relief in Government circles as well as the wider business community because while a 15% tariff on EU goods is a bad deal, it was probably the best on offer from the often mercurial Mr Trump who could have followed through with his initial threat to impose a 30% rate. The argument was that at least the agreement provided some stability for many Irish exporters but the tariffs are still expected to hit the jobs market. Firms facing reduced demand for their products in the US will look to cut costs or pause hiring decisions until things improve. The Department of Finance estimates that the 15% tariff will result in up to 70,000 fewer jobs being created over the next five years. However, recently, that promise of stability evaporated, creating potentially another headache for the Government and a hurdle for the economy. Last week, Mr Trump said US tariffs on pharmaceuticals could reach as high as 250% and he is planning on levying a 100% tariff on semiconductors. The pharmaceutical sector, and to a lesser extent the semiconductor sector, are critical pieces of the Irish economy, providing significant employment as well as accounting for much of the country's exports. The threat of tariffs that high alone might be enough to deter these companies from investing further in Ireland, leading to fewer jobs being created, and firms may even seek to move jobs elsewhere. The result of all of these challenges and continuing uncertainty is that businesses are likely to be more cautious with their investment and hiring decisions, and the higher unemployment rate may be a sign of this already taking place. Should the unemployment rate continue to rise, the economy will start to slow, leaving the Government with a headache to deal with. The summer economic statement last month outlined an overall budget package of €9.4bn for next year, of which €1.5bn is set to be tax measures and €7.9bn will be additional spending. The sudden jump in July's unemployment rate could be a blip in the data, but if this downward trend continues, don't be surprised if the Government takes a more conservative approach to the budget later this year, where spending increases may be pared back and tax promises dialled down.
Extra.ie
5 days ago
- Business
- Extra.ie
Surge in youth unemployment could signal warning light on economic dashboard
The recent spike in youth unemployment could be a bad omen for the country's finances, a leading economist has warned. Andrew Webb of Grant Thornton Ireland said figures showing that 12.2% of young people are unemployed may be a sign of businesses taking extra precautions due to uncertainty over tariffs from the US. Mr Webb also said that the Government must 'take this signal seriously' now – or the trend could become more problematic for the economy. Andrew Webb of Grant Thornton Ireland. Pic: File The comments come as US President Donald Trump's so-called Liberation Day tariffs took effect across the globe yesterday, with European exports to the US, including goods from Ireland, now subject to additional tariffs of 15%. Figures released by the Central Statistics Office yesterday show that 143,100 people were unemployed last month, an increase of 12,700 compared with July 2024. The rate of unemployment in July 2025 was 4.9%, up from 4.5% in the same month last year. Unemployment also rose on a month-by-month basis, with the rate of joblessness at 4.6% in June this year. A growing number of young people without jobs is seemingly driving the overall increase. US President Donald Trump. Pic:The monthly unemployment rate for people aged between 15-24 – also known as the youth unemployment rate – was 12.2% last month, up from 11.3% in June. This compares to a rate of 3.8% among individuals aged 25 to 74, up from the revised rate of 3.6% in June. Historical data from the CSO database shows that youth unemployment tends to spike in times of economic crisis. Just over 32% of people aged 15 to 24 were unemployed following the financial crash in March 2012, the highest volume since records began in 1998. The rate consistently fell to a low of 10.9% in November 2019 before shooting back up to 20% in the wake of COVID-19. Youth unemployment has held steady between 9% and 11% since January 2022, but the figure has crept above 11% since the election of Mr Trump in November 2024. The youth unemployment rate has increased since June. Pic: Getty Images The spike to 12.2% last month has now been raised as a cause for concern, as has the increase in overall unemployment. Mr Webb said that the uptick in joblessness 'is a warning light on the economic dashboard'. 'After three months of rate stability, this sharp increase, especially the spike in youth unemployment to 12.2%, suggests that business confidence may be softening,' the Grant Thornton chief economist said. 'Rising global uncertainty and the growing risk of tariffs are making firms more cautious. That hesitation is now showing up in the jobs data. Ireland's labour market remains strong by historical standards, but policymakers should take this signal seriously. If ignored, today's flicker could become a more persistent fault.' 'If ignored, today's flicker could become a more persistent fault,' Mr Webb said. Pic: Getty A 2014 paper from the Nevin Institute, which was written in the post-crash years when youth unemployment was over 20%, notes: 'Unemployment is harder to eradicate among younger age groups and harder still the longer it lasts.' Speaking to Dan O'Brien, chief economist of the Institute of International and European Affairs, said that it is normal for youth unemployment levels to be much higher than overall joblessness levels in Ireland, as the majority of young people stay in education. However, he went on to describe the uptick in overall unemployment last month as 'particularly hefty', describing the increase as 'bigger than usual', adding: 'I would not go as far as to say it marks the beginning of an economic downturn, but I think given the level of geopolitical uncertainty, it is something to watch out for.' It comes as US levies on more than 90 countries around the world came into effect overnight, with Ireland subject to the 15% rate imposed on the EU. Brazil has been slapped with the highest country-specific tariff at 50%, while Syria is now subject to tariffs of 41%. Switzerland was hit with a levy of 39% just last week, after negotiations broke down. Tánaiste Simon Harris said yesterday he is 'eager' to see further progress on trade talks around certain sectors, including the drinks industry, which is currently in limbo. As Minister for Foreign Affairs and Trade, Mr Harris said he was in contact with EU Trade Commissioner Maros Sefcovic, who he said is 'expecting the joint statement between the United States and the EU shortly'. The Tánaiste added: 'I think it's quite peculiar, quite frankly, that that hasn't yet arrived and been published, considering the tariffs are now in place.' The Fine Gael leader also said it is 'absolutely essential' to maximise the number of areas that can apply zero-for-zero tariffs. 'Whilst there are some areas that have already been agreed as exempt from tariffs, I'm very eager to see more progress made in more areas, including for the drinks industry, which is an important part of the Irish economy,' he said. Mr Harris added: 'From a pharma point of view, my position remains the same, as does the position of the European Union. There is huge potential and scope for the EU and the US to work together in the interests of patients, their economies and the pharma industry.'
Irish Independent
5 days ago
- Business
- Irish Independent
Almost 9,000 people lost their jobs in Ireland last month as uncertainty over tariffs grows
There were 143,100 people registered unemployed last month, compared with 134,500 in June. The seasonally adjusted rate of 4.9pc in July was up from 4.6pc in June, and on an annual basis it was up from the revised rate of 4.5pc in July 2024. There was a particularly noticeable uptick in joblessness numbers within the 15 to 24-year-old age cohort, with the youth unemployment rate of 12.2pc in July up from the 11.3pc recorded in June. Andrew Webb, chief economist at Grant Thornton Ireland, said the rise in the headline rate to 4.9pc is a warning light on the economic dashboard. 'After three months of rate stability, this sharp increase, especially the spike in youth unemployment to 12.2pc, suggests that business confidence may be softening,' he said. 'Rising global uncertainty and the growing risk of tariffs are making firms more cautious. That hesitation is now showing up in the jobs data. Ireland's labour market remains strong by historical standards, but policymakers should take this signal seriously. If ignored, today's flicker could become a more persistent fault.' Tariffs of between 10pc and 50pc were imposed by the US today on dozens of countries, while the White House and European Commission continued negotiations on a joint statement intended to add detail to their headline trade deal. The document will not be legally binding. As US president Donald Trump threatened a 100pc tariff on computer chips, the commission insisted that a 15pc rate will still apply to EU exports. 'We have a commitment for a 15pc across-the-board tariff ceiling,' said commission spokesman Olof Gill. 'That captures all products.' Talks about exempting certain goods are continuing, according to Mr Gill, but European wine and spirits will not escape the 15pc tariff that hits most imports from the EU to America from tomorrow. ADVERTISEMENT With the US accounting for about one third of all Irish exports, the impact of a long-term 15pc tariff is likely to be substantial, particularly as it includes pharma. The drag on economic growth is likely to suppress inflation, as was seen in the decrease to 1.7pc last month, mainly caused by lower prices for clothes. The continuing growth in wages could put upward pressure on prices, however. The Central Bank of Ireland has forecast that Compensation Per Employee will rise by 3.8pc on average from 2025 to 2027. In its most recent Quarterly Bulletin, the bank also pointed out that firms could react to the uncertainty surrounding tariffs by adjusting working hours rather than laying off staff. Average hours worked already remain below pre-pandemic levels across many sectors. The hiring platform Indeed said job postings on its Irish website increased slightly to 11pc in July, but are still down from the 19pc seen at the start of the year. 'This confirms a gradual and ongoing, but by no means worrying, cooling of the labour market,' said Jack Kennedy, a senior economist with Indeed. 'Even though the level of Irish job postings has reduced, the unemployment rate has remained below 5pc with employers still struggling to recruit staff in certain categories. This month marks the 42nd month in a row that the unemployment rate has been below 5pc.'
Irish Independent
5 days ago
- Business
- Irish Independent
Over 12,000 people lost their jobs in Ireland last month
There were 143,100 people registered unemployed last month, compared with 134,500 in June. The seasonally adjusted rate of 4.9pc in July was up from 4.6pc in June, and on an annual basis it was up from the revised rate of 4.5pc in July 2024. There was a particularly noticeable uptick in joblessness numbers within the 15 to 24-year-old age cohort, with the youth unemployment rate of 12.2pc in July up from the 11.3pc recorded in June. Andrew Webb, chief economist at Grant Thornton Ireland, said the rise in the headline rate to 4.9pc is a warning light on the economic dashboard. 'After three months of rate stability, this sharp increase, especially the spike in youth unemployment to 12.2pc, suggests that business confidence may be softening,' he said. 'Rising global uncertainty and the growing risk of tariffs are making firms more cautious. That hesitation is now showing up in the jobs data. Ireland's labour market remains strong by historical standards, but policymakers should take this signal seriously. If ignored, today's flicker could become a more persistent fault.' Tariffs of between 10pc and 50pc were imposed by the US today on dozens of countries, while the White House and European Commission continued negotiations on a joint statement intended to add detail to their headline trade deal. The document will not be legally binding. As President Donald Trump threatened a 100pc tariff on computer chips, the commission insisted that a 15pc rate will still apply to EU exports. 'We have a commitment for a 15pc across-the-board tariff ceiling,' said commission spokesman Olof Gill. 'That captures all products.' Talks about exempting certain goods are continuing, according to Mr Gill, but European wine and spirits will not escape the 15pc tariff that hits most imports from the EU to America from tomorrow. With the US accounting for about one third of all Irish exports, the impact of a long-term 15pc tariff is likely to be substantial, particularly as it includes pharma. The drag on economic growth is likely to suppress inflation, as was seen in the decrease to 1.7pc last month, mainly caused by lower prices for clothes. The continuing growth in wages could put upward pressure on prices, however. The Central Bank of Ireland has forecast that Compensation Per Employee will rise by 3.8pc on average from 2025 to 2027. In its most recent Quarterly Bulletin, the bank also pointed out that firms could react to the uncertainty surrounding tariffs by adjusting working hours rather than laying off staff. Average hours worked already remain below pre-pandemic levels across many sectors. The hiring platform Indeed said job postings on its Irish website increased slightly to 11pc in July, but are still down from the 19pc seen at the start of the year. 'This confirms a gradual and ongoing, but by no means worrying, cooling of the labour market,' said Jack Kennedy, a senior economist with Indeed. 'Even though the level of Irish job postings has reduced, the unemployment rate has remained below 5pc with employers still struggling to recruit staff in certain categories. This month marks the 42nd month in a row that the unemployment rate has been below 5pc.'
Irish Independent
5 days ago
- Business
- Irish Independent
Almost 9,000 people lost their jobs in Ireland last month
There were 143,100 people registered unemployed last month, compared with 134,500 in June. The seasonally adjusted rate of 4.9pc in July was up from 4.6pc in June, and on an annual basis it was up from the revised rate of 4.5pc in July 2024. There was a particularly noticeable uptick in joblessness numbers within the 15 to 24-year-old age cohort, with the youth unemployment rate of 12.2pc in July up from the 11.3pc recorded in June. Andrew Webb, chief economist at Grant Thornton Ireland, said the rise in the headline rate to 4.9pc is a warning light on the economic dashboard. 'After three months of rate stability, this sharp increase, especially the spike in youth unemployment to 12.2pc, suggests that business confidence may be softening,' he said. 'Rising global uncertainty and the growing risk of tariffs are making firms more cautious. That hesitation is now showing up in the jobs data. Ireland's labour market remains strong by historical standards, but policymakers should take this signal seriously. If ignored, today's flicker could become a more persistent fault.' Tariffs of between 10pc and 50pc were imposed by the US today on dozens of countries, while the White House and European Commission continued negotiations on a joint statement intended to add detail to their headline trade deal. The document will not be legally binding. As President Donald Trump threatened a 100pc tariff on computer chips, the commission insisted that a 15pc rate will still apply to EU exports. 'We have a commitment for a 15pc across-the-board tariff ceiling,' said commission spokesman Olof Gill. 'That captures all products.' Talks about exempting certain goods are continuing, according to Mr Gill, but European wine and spirits will not escape the 15pc tariff that hits most imports from the EU to America from tomorrow. With the US accounting for about one third of all Irish exports, the impact of a long-term 15pc tariff is likely to be substantial, particularly as it includes pharma. The drag on economic growth is likely to suppress inflation, as was seen in the decrease to 1.7pc last month, mainly caused by lower prices for clothes. The continuing growth in wages could put upward pressure on prices, however. The Central Bank of Ireland has forecast that Compensation Per Employee will rise by 3.8pc on average from 2025 to 2027. In its most recent Quarterly Bulletin, the bank also pointed out that firms could react to the uncertainty surrounding tariffs by adjusting working hours rather than laying off staff. Average hours worked already remain below pre-pandemic levels across many sectors. The hiring platform Indeed said job postings on its Irish website increased slightly to 11pc in July, but are still down from the 19pc seen at the start of the year. 'This confirms a gradual and ongoing, but by no means worrying, cooling of the labour market,' said Jack Kennedy, a senior economist with Indeed. 'Even though the level of Irish job postings has reduced, the unemployment rate has remained below 5pc with employers still struggling to recruit staff in certain categories. This month marks the 42nd month in a row that the unemployment rate has been below 5pc.'
