July Unemployment and Exchequer Returns

For an economy that’s supposedly in recovery, the unemployment figures seem to be puzzlingly weak. The July Live Register figures show an increase in the standardised unemployment rate from 13.4% in June to 13.7% in July. Slightly less negative were the July exchequer figures: Tax revenues had fallen from being on target in April to 1.6% behind target in June. The July figures reversed that trend to be only 1.4% behind target.

Still, both sets of figures raise a question. We keep hearing about how GDP figures are supposed to be coming in better than the assumptions penciled into the last budget: How is that to be reconciled with tax revenues being behind budget target and the unemployment rate coming in higher?  (The budget assumed a year average unemployment rate of 13.2%, which is the average for the year so far with the figure now moving in the wrong direction.)

Update: I was interested to hear Minister Eamon O’Cuiv explain the increase in the seasonally adjusted unemployment rate on seasonal factors. Sure unemployment always goes up in July, I heard him say on the radio. You’d think the CSO boffins would have factored that in to their calculations …

56 thoughts on “July Unemployment and Exchequer Returns”

  1. Is it not related to using volume statistics for GDP (in 2008 money)? Deflation is goosing those numbers. Deflation is running ahead of forecasts. GDP in current money was still falling at a 4.4% annual rate in Q1.

    Anyway, existing companies selling more bulk chemicals without increasing employment is going to have zero effect on the Irish economy. Any gains in corporation tax are more than offset by reclaims for losses by money losing companies (see the bank interim statements, for example).

  2. If I am an alcoholic on an expensive consumption of 10 bottles of single malt scotch, talisker for example, and I reduce my consumption to 9 bottles of that fine spirit then I AM in recovery!

    Of course people might ask why the hell I am drinking 50 Euro bottles of whiskey when a Lidl alternative is there, but that is where we are!

    Here’s looking at eight bottles!!!

  3. PS, just heard Eamonn Ryan quoted as blaming the rise on seasonal factors. If the quote is accurate, and maybe it is not, then perhaps someone could explain to the Minister the meaning of the phrase “seasonally adjusted”?

  4. Why, Karl, do you perpetuate this farce about GDP growth implying there is a recovery underway? – we don’t collect taxes on the foreign owners’ income (at least not much once the Bermuda subs are created so that we collect 2-3% instead of 12.5% of those corporate profits) that raises our GNP by a massive 25% to reach GDP. The July unemployment and tax numbers make complete sense – GNP fell during 1Q in real terms, and much worse in nominal. There is no evidence of a recovery, just slower decline. If we make that leap, then our budget deficit is around 14% of GNP, one of the highest in the world, and we are no where near solving our problems. It is really time we economists stood up to all this nonsense about recovery, improving deficits, etc. We should start by measuring our capacity to pay properly, i.e. in terms of GNP. Then we would realize that we must make bank creditors take part of the losses at banks, and we need to seek IMF help to finance our budget for a few years while we sort out these enormous problems.

  5. @Paul
    “If we make that leap, then our budget deficit is around 14% of GNP, one of the highest in the world, and we are no where near solving our problems.”

    Would it not be the worst?

  6. @Kevin O’R
    I believe it was Eamonn O’Cuiv? (On RTE radio1 anyway).

    He said the numbers had risen every July for the last ten years. Looking at the Standardised Unemployment Rate in the CSO lreg report ( http://www.cso.ie/releasespublications/documents/labour_market/current/lreg.pdf – Table 3), it is easy to prove the stupidity of Mr. O’Cuiv (I can’t think of any other word for it).
    July 2005 4.5% – no change on previous month
    July 2006 4.5% – no change on previous month
    July 2007 4.5% – no change on previous month

    It is only from July 2008 onwards that July has become a particular blackspot.

    Why this should be is an interesting question. My own suspicion is that retail decides before the summer whether it will survive or not (the summer being generally quiet for retail), with hospitality also deciding based on forward bookings whether it will make any money in its key earning time, but I have no real basis for that.

    Anyway, one interesting thing about the LReg figures are that were 37k fewer JB claimants over a year ago. Will this feed into lower social security costs?

  7. What Have We Learned in 2,064 Years?
    ——————————————-

    “The budget should be balanced, the Treasury should be refilled, public
    debt should be reduced, the arrogance of officialdom should be tempered and
    controlled, and the assistance to foreign lands should be curtailed lest
    Rome become bankrupt. People must again learn to work, instead of living on
    public assistance.”

    – Cicero, 55 BC

    Evidently nothing.!!

  8. @Al
    How many economists does it take to change a light-bulb? Are you sure it’s not working, I thought I saw a flicker there, it’s just waiting for recovery, if external conditions improve and the sun shines forever we won’t need to change it at all…..
    Can we all please agree on one thing – the current approach is not working

  9. @Eureka – did anyone, other than possibly the government say we were going to see a massive recovery this year? This is going to take some time.
    A fundamental alternative to the current approach, other than calling in the IMF, does not exist, so lets stop pretending it does.
    Clearly the government could do some things better, but the basic approach is the only one available.

  10. @Scorpio
    “A fundamental alternative to the current approach….does not exist…”
    I’ve heard many alternatives. Alternatives to NAMA, alternatives to cuts, alternatives to staying in the Euro etc.
    Every week David McWilliams to name but one advocates for the alternatives.
    Nobody can ever state that there are no alternatives – they can only say that they cannot see them

  11. @Eureka – the alternatives you refer to are false alternatives.
    1. NAMA is a fact now, all that can be done there is to make sure they do the best job possible given the decision taht was taken;
    2. The alternative to cuts is bankruptcy;
    3. Leaving the Euro is not going to solve our debt/deficit problem. As Colm McCarthy has pointed out on this site, this would take time anyway (this is the real world and not some kind of D McC cartoon).

    Leaving the Euro might make us more competitive but looking at our trade performance throughout the crisis this does not appear to have been the key problem anyway. The conscious decisions by the current government not to stop the property bubble and to increase the public sector numbers and pay at unprecedented levels meant that few new internationally trading businesses emerged. The only way we will get back to growth is to roll back these changes i.e. shrink the construction sector and the public sector. Pretending that we can keep both of these (and that is implied by those who advocate spending our way out of the crisis) is simply rediculous.

  12. @GeorgeOrwell
    Only alternative=one alternative.
    Leaving the Euro – I too not convinved but it must be part of the debate.
    What do we do with the bank guarantee?? Are there alternatives there?
    What do we do with Anglo – are there alternatives there?
    Here’s the point – economies may be cyclical – human lives are not. An unemployed man doesn’t get a second chance to relive unproductive distressing angst ridden years. A young kid eeking out a living washing glasses in Berlin might never have an upswing to their cycle.
    Just because we cannot see the answer does not mean that there is none. It only means we have to look harder and think smarter

  13. @George
    Never said it was right but said it must be part of the debate.
    What we really need is lattitude from Europe – either debt forgiveness or low interest cash.
    They want the Euro to stay (for the moment), we want it to stay (for the moment) but if we don’t get the help we need then neither of us are happy….. Get it?

  14. `@ Eureka

    “What we really need is lattitude from Europe – either debt forgiveness or low interest cash.”

    Don’t expect the Germans to go easy on us.

    “What do we do with the bank guarantee?? Are there alternatives there?
    What do we do with Anglo – are there alternatives there?”

    Morgan Kelly outlined an alternative in the IT article I posted above:

    “We need to explain that the Irish State has always honoured its debts in the past, and will continue to do so. However, the State is a distinct entity from its banks and, having learned the extent of the banks’ recklessness, we now have no choice but to allow the bank guarantee to lapse and to share the banks’ losses with their bondholders. It must be remembered that when these bonds were issued they had no government guarantee, and the institutions that bought them did so in full knowledge that they could default, and charged an appropriate rate of interest to compensate themselves for this risk.

    Freed of the impossible bank debt, the Irish State could concentrate on the other daunting problems left by its decade-long credit binge: unemployment, lack of competitiveness and indebted households. The banks would be soundly capitalised and able to manage themselves free of political interference.”

  15. I get that terrible 1950s feeling when I listen to o Cuiv but I fear when this is all over we will be in worse shape as people have no concept of surviving on a peasants income and their skills are as far removed from a farming / fishing background as is possible to imagine.

    @Eureka – why is leaving the Euro impossible to imagine ? – reading Micheal Hudsons view of money and debt he gives the impression that when a country exerts its sovereignty it has no obligation to give its creditors the earlier overvalued interest and capital.
    A new punt would revalue all debts in the new denomination and I would imagine would be in the order of 10% value relative to the euro.

    Also given that this site is endowed with a bevy of economists could someone give me the total GNP econimic contraction since the start of this depression in % and total Euro terms as this I find hard to find for some reason.

    Listening to RTE radio now and they are still referring to this little episode as a recession ha ha ha.

  16. Constantin is hacking at the “smart green nanobot” economy over on his blog.
    http://trueeconomics.blogspot.com/2010/08/economics-5810-live-register-up-up.html
    “he trend for jobs destruction in higher value added activities is still running strong.

    This is confirmed by LR new data on occupation breakdown of lost jobs. Per CSO: “All occupational groups showed monthly Live Register increases in July. The largest percentage increase was in the Professional group (+12.3%), while the smallest percentage increase was in the Craft and related group (+0.1%). In the six months to July 2010 all occupational groups showed Live Register increases with the largest percentage increase in Professional (+22.8%), while the next largest increases were in Clerical and secretarial (+15.6%) and Sales (+13.0%). The smallest percentage increase was in the Craft and related group (+0.1%).”

    So for the headline impact of the news – take an average weekly earnings (Q4 2009) at €716.09 (€37,237pa), take the average professional grade weekly earnings at €793.35 (€41,254pa), apply tax rates consistent with these earnings at €3,963-5,610 net tax liability, plus €1,225-1,386 PRSI, plus €1,489-1,650 Health Levy and €745-825 Income levy. Net loss to the Exchequer of tax revenue alone is €7,422-9,471. Employer-side taxes lost are ca €1,250-1,400. Now, add to this the cost of unemployment benefits, loss of Vat on private health insurance, provision of public benefits, such as health etc – you have total cost to the Exchequer of €28,040-30,240 per each new signee.

    So July figures are signaling a hit on the Exchequer balance of ca €257mln over the year – just like that, one month worth of newly unemployed.”

  17. I think we need to prepare for a complete paradigm shift in the nature of globalisation and indeed the possibility that it will rapidly reverse not unlike what happened at the end of the Edwardian era.

    The Irish state that most of us recognize is a product of global banking credit expansion due to a reduction in capital requirements since the ending of the second world war although things did not start happening here until De Valera exited the stage.
    Global corporations and their proxy administrative structures such as the IMF and the EU could only expand and increase their influence in a environment of increased global capital extraction – this appears now to be coming to a end so therefore the remaining savings will be directed to core industrial areas where production will be more efficient now that global labour arbitrage could be a thing of the past.
    This seems to already be happening within the EU making its structures in their present manifestation defunct.
    The Irish government should at least make preparations for a industrial collapse in this country with recruitment to a reserve army to keep the peace in urban areas a urgent priority and the development of market farming around these areas and also retraining in local fishing practises.
    This may sound alarmist but Ireland is more dependent on global capital movements and may suffer more then most if national capital controls become the norm.
    Remember in the worst case scenario the Germans will look after the Germans , the french will look after the french and the ECB / BIS system will save what banks they can.
    In essence we are expendable and nations have been sacrificed in the past during global credit convulsions.
    Ireland needs to prepare for the worst and hope for something better.

  18. Problem with crisis is that you always think it won’t happen to you. And you always think subconsciously that every other casualty is somehow sating the appetite of the beast that ravages the land.
    Economic collapse is a contagious thing. It will affect everybody, public and private sector, young and old, urban rural. No more false divisions.
    I think the plan has to be this:
    1 A government of national unity
    2 The kind of debate we’ve had here going on where it can mean something
    3 A statement of values – our “bottom lines” – we cannot sacrifice everyone and everything for bond-holders
    4 No more guff about smart economies – go back to primary, secondary and tertiary (not even sure I got those right) and build each of them in a painstaking, unsexy, uberpragmatic way with task forces of people in the industries directing policy around them.
    Step one is removing the present cohort who by every measure are unable to govern.

  19. Keith
    “Remember in the worst case scenario the Germans will look after the Germans , the french will look after the french”
    No. The real worst cases in Europe in history is when these two elephants rumble. Then the ants get trampled

  20. @Eureka
    Nothing will happen until the PD/FF agent savants , Labour reps who are the ECBs/ Brussels local division and the Tory element within FG are exposed as traitors who survive on benevolence from distant Rome.

  21. @Karl Whelan

    This is a slight case of deja vu.

    I am sure you recall the following commentary that you wrote on 2 June when the May Live Register was published.

    http://www.irisheconomy.ie/index.php/2010/06/02/may-unemployment-up-to-137/#comments

    May Unemployment up to 13.7%

    By Karl Whelan

    June 2nd, 2010.

    This is disappointing news. The latest Live Register-based measure of the standardised unemployment rate is up to 13.7% having stayed flat at 13.4% over the previous few months. What worries me about these figures is that the Live Register may be underestimating the true trend. The last QNHS figures, for the fourth quarter of last year, showed a jump in unemployment even though the Live Register figures for that period had been flat.

    JTO again:

    So, back then it was:

    disappointing that it jumped grom 13.4% in April to 13.7% in May.

    and now it is:

    disappointing that it jumped from 13.4% in June to 13.7% in July.

    So, how come the figures are identical?

    And, if the unemployment rate was announced to be 13.7% in May, and then the Live Reigister rose by 6,000 in June (which it did), how come the unemployment rate was announced to be 13.4% in June?

    Answer:

    the Live Register doesn’t measure unemployment – the QNHS does.

    The last QNHS was published on June 15.

    In response you wrote the following commentary.

    http://www.irisheconomy.ie/index.php/2010/06/15/quarterly-national-household-survey-for-2010q1/

    Quarterly National Household Survey for 2010:Q1

    By Karl Whelan

    June 15th, 2010.

    The latest QNHS figures have been released. They show the unemployment rate in the first quarter declining from 13.3% in 2009:Q4 to 12.9% in 2010:Q1. This will lead to a downward revision to the monthly Live Register based standardised unemployment rates, which had previously averaged 13.4%.

    When the previous QNHS was released, I had expressed concern that the monthly Live Register figures may have started to underestimate true unemployment as expiry of eligibility for benefits saw people still seeking work falling off the Live Register. These figures show that this doesn’t seem to be a set pattern. The Live Register figures would have implied a small increase in the unemployment rate rather than a decrease.

    JTO again:

    So, in other words, the increase in the unemployment rate that the Live Register seemed to indicate when you commented on it on 2nd June, was not confirmed by the QNHS that was published a fortnight later. I am not in any way criticising your commentary on either occasion. It is simply in the nature of the statistics. Your commentary was accurate in both instances. But, the fact of the matter is that the QNHS is the only reliable measure of unemployment in Ireland. The Live Register often diverges from it. Ideally, it would be much better if the QNHS was done monthly, as it is in many countries, then the Live Register figures would become redundant and we’d have accurate mothly unemployment figures from the QNHS (or MNHS as it would presumably be renamed). But, until that occurs, the only reliable figures for unemployment are the quarterly QNHS figures. The QNHS figures for the unemployment rate since 2008 are:

    Apr-Jun 2008: 5.5%
    Jul-Sep 2008: 6.8%
    Oct-Dec 2008: 8.1%
    Jan-Mar 2009: 10.2%
    Apr-Jun 2009: 11.6%
    Jul-Oct 2009: 12.3%
    Oct-Dec 2009: 13.3%
    Jan-Mar 2010: 12.9%

    So, in other words the last QNHS showed the unemployment rate falling slightly, rather than increasing slightly as the Live Register figures at the time seemed to suggest. Will the same thing happen in the next QNHS? I simply don’t know, but there is a reasonable chance that the next QNHS figures will be better than the recent Live Register figures, just as they were last time. Just looking casually at the differences between the Live Register and the QNHS figures over the past couple of years, it looks as if in Q1 and Q2 the Live Register figures are significantly worse than what the QNHS figures later indicate for the same quarters, but that in Q3 and Q4 the Live Register figures are significantly better than what the QNHS figures later indicate for the same quarters. That would actually fit in quite nicely with your commentaries on 2nd and 15th June. But, this is just from a casual reading of the figures. I’d need to analyse them in more detail to be sure. I may do that at the weekend and post what I find here.

    Regarding the exchequer figures, the picture is a lot clearer than with the conflicting Live Register/QNHS figures. The best way to look at them is the cumulative fall on tax receipts each month in 2010, and compare it with the government’s target. I have kindly calculated these for the benefit of Irisheconomy.ie readers:

    cumulative y-o-y fall in tax revenue to Jan 2010: -17.684%
    cumulative y-o-y fall in tax revenue to Feb 2010: -17.759%
    cumulative y-o-y fall in tax revenue to Mar 2010: -14.079%
    cumulative y-o-y fall in tax revenue to Apr 2010: -10.824%
    cumulative y-o-y fall in tax revenue to May 2010: -10.435%
    cumulative y-o-y fall in tax revenue to Jun 2010: -8.714%
    cumulative y-o-y fall in tax revenue to Jul 2010: -8.215%

    The government target is for the cumulative y-o-y fall in tax revenue to drop to 6% by December 2010. Looking at these figures, there would seem to be a very good chance that it will do better than this, although it is never possible to be certain. The cumulative y-o-y fall has dropped very sharply in the past four months (from -14.079% in March to -8.215% in July). If it continues at this rate over the next five months, it should drop below the 6% government target by December. I am not saying that this will definitely happen. None of us are psychic or able to predict the future. All we can do is analyse trends at any any point in time. And, as is clear from the figures above, the trend of these tax revenue figures in recent months points in the direction of the government hitting or bettering its target for tax revenue in 2010.

    @Brian Lucey

    18 comments in and no poopoohing of negative sentiment by JtO….is this a record?

    We are not all academic economists with lots of free time on our hands.

  22. @Brian
    I feel that France and Germany are a bit like a old Married couple now who may hate each others strange ways but are never the less locked in a financial and emotional embrace.
    The efficient bureaucracy in Paris along with its big state utility sector complements the German practicality and light engineering talent.
    They can’t live without each other.
    Refer wepollock.com excellent recent piece “Pairing a global forecast” where he refers to countries pairing along historical lines such as Austria/Hungry and generally out of necessity such as Japan / USA and others

  23. @Brian Lucey

    18 comments in and no poopoohing of negative sentiment by JtO….is this a record?

    I have allready sent my post in, so hopefully you won’t have long to wait.

    But, it is being held up – it says ‘Your comment is awaiting moderation’.

    Not sure why. It contains nothing defamatory or obscene.

    All I can think of is that it contains two links.

    It seems that posts which contain two or more links are held back while being checked out by the moderators. I appreciate that the moderators need to be careful, but any reason why having two links in a post, rather than one, results in the post being held back? I am not complaining, just curious. It is not as if my links were to porn or terrorist sites. They are just links to two threads opened by Karl Whelan in June, totally innocent links. But, apparently, that is enough to have my post held back while the moderators check it out.

  24. @ Jto

    All of us, including me, are subject to the mysterious “No 2 link” rule. It seems to be something to do with the software — software that I didn’t pick. I don’t think there are any “moderators” checking it out — in fact I’m not sure the 2 link comments show up ever these days.

    I suggest breaking comments with two links into two comments — we’ll all know why!

  25. @Tull

    I can be terse, but unfortunately I then have a habit of engaging in needless profanity.

  26. @Karl Whelan

    All of us, including me, are subject to the mysterious “No 2 link” rule. It seems to be something to do with the software — software that I didn’t pick. I don’t think there are any “moderators” checking it out — in fact I’m not sure the 2 link comments show up ever these days.

    Thank you for that. I wasn’t complaining or suggesting a conspiracy, just puzzled as all I had were two very innocent links to your own threads on unemployment that appeared in June. I understand now. Anyway, I see that my post has just appeared.

  27. Keith,

    more like need less prolixity.

    JTO

    what would we do without you. there you are standing like in the Bearna Baoil holding off the hordes of academic economists on their way back from the Trap (if indeed it is still there). BL was probably down the PAV. Keep up the good work.

  28. @JtO

    “cumulative y-o-y fall in tax revenue to Jan 2010: -17.684%
    cumulative y-o-y fall in tax revenue to Feb 2010: -17.759%
    cumulative y-o-y fall in tax revenue to Mar 2010: -14.079%
    cumulative y-o-y fall in tax revenue to Apr 2010: -10.824%
    cumulative y-o-y fall in tax revenue to May 2010: -10.435%
    cumulative y-o-y fall in tax revenue to Jun 2010: -8.714%
    cumulative y-o-y fall in tax revenue to Jul 2010: -8.215%

    The government target is for the cumulative y-o-y fall in tax revenue to drop to 6% by December 2010. Looking at these figures, there would seem to be a very good chance that it will do better than this, although it is never possible to be certain.”

    The cumulative falls may have dropped but they are still €250m behind where the government thought they would be at this stage.

  29. D_E.

    Is that the best you can come up with. That is arounding error when the deficit is 20bn. Anyay, is expenditure not below plan as well.

  30. @tull
    But €250m is significant when we are looking to make adjustments of €3bn this year.
    Or do you think finding an additional 8% this year would be easy?

    p.s.
    What is with the anger this evening tull?

  31. Jeez – calm down boys.

    Handed my dissertation in today – yee hah.

    Have picked up a 3 month contract for some heavy duty work starting Monday – double yee hah!

    I won’t have to sign on and make the figures even worse!

    @JtO – do you work in PR? Man… you should if you don’t 🙂

  32. D_E

    finding 250m is easy. Cutting 30k on average of expenses per 1000 county councillors saves 30m in a full year or just remove half and save 15m. I sure you could come up with 15-20m in 10 minutes yourself. the pair of us could come up wit the full 250m in an afternoon. I would say we have the skils to do it in a politically astute manner.

  33. @JohntheO
    “So, in other words the last QNHS showed the unemployment rate falling slightly, rather than increasing slightly as the Live Register figures at the time seemed to suggest. Will the same thing happen in the next QNHS?”
    I think you are looking at the wrong statistics, John.

    Between Q4 2009 and Q1 2010
    The labour force fell by 13,700
    The number employed fell by 17,300
    The number unemployed fell by 7,300

    You, being an optimistic fellow, naturally focus on the unemployment figure. Me, being concerned about the number of workers making up the tax base, I’m worried about the number employed.

    Have a look at Table 20 – Indicators of Potential Labour Supply
    http://www.cso.ie/releasespublications/documents/labour_market/current/qnhs.pdf
    S1: Unemployed plus discouraged workers as a
    percentage of the Labour Force plus discouraged
    worker
    This shows the narrowest broad measure of labour underutilisation standing at 13.6%
    The broadest measure (S3 – equivalent to U6 in the US) stands at 17%

    That’s 17% of the population who would like to work or work more. That’s some 10% of the working age population who are not paying tax like they were in 2007. Many of them have exhausted their benefits (or didn’t ever qualify). Their lack of spending is also having a detrimental effect on the recovery.

    Until the S3 number tops out and the labour force stabilises, we are not going to see an improvement in the government’s income figures. We may see some reduction in welfare spending, but that will just reduce money in circulation (the means test for JA is astonishingly tight where there is any income at all in the house).

  34. @Dreaded_Estate

    I haven’t actually predicted that tax revenue will hit or come in above target this year. It might or might not. I have merely noted and analysed the trend so far this year, particularily in the past four months, where the cumulative y-o-y fall has dropped very sharply (from -14.079% in March to -8.215% in July) and said that, if that trend continues for the remaining five months of the year, then it will comfortably hit target, as the target is -6% for the year to Dec 2010. After all, -8.215% is a lot closer to -6% than it is to -14.079%. However, I have no more idea than you whether the trend of recent months will continue for the rest of 2010. I am not psychic or able to foresse the future. I predicted Tyrone 3-16, Dublin 0-8 for the office sweepstake last week. After that trauma, I have concluded it is better just to analyse current trends than to try to predict future trends. The trend of recent months, that I have highlighted above, might continue, or it might suddenly stop, or it might be reversed, or it might accelerate. Who knows? Regarding the profile figures, I am very wary of these. I think it unlikely that economists can predict at budget time the exact amount of tax revenue that will be taken in each month and for each type of tax for the twelve months ahead.

  35. @Yoga/Hoga: yes, Eamon Ó Cuív. My apologies to the other Eamon for accusing him of saying such a stupid thing.

  36. @Karl Whelan

    I was interested to hear Minister Eamon O’Cuiv explain the increase in the seasonally adjusted unemployment rate on seasonal factors. Sure unemployment always goes up in July, I heard him say on the radio. You’d think the CSO boffins would have factored that in to their calculations

    @Kevin O’Rourke

    Just heard Eamonn Ryan quoted as blaming the rise on seasonal factors. If the quote is accurate, and maybe it is not, then perhaps someone could explain to the Minister the meaning of the phrase “seasonally adjusted”?

    Yes, Eamon Ó Cuív. My apologies to the other Eamon for accusing him of saying such a stupid thing.

    JTO again:

    I’d say that it is premature to describe the Minister’s comments as stupid or to dismiss his comments completely. He could be proved right. Or, he could be proved wrong. It is too early to tell. We won’t know one way or the other until the end of the year.

    The kernel of what the Minister was saying is that the increase in the number on the Live Register since April is largely seasonal and, by implication, that the CSO seasonal adjustment is not fully taking this into account.

    The problem is: there is some statistical evidence to back up his claim. It is far from conclusive. As I say, we won’t know until the end of the year.

    Let’s look at the Live Register figures since April 2009:

    Apr 2009: 383,000
    Aug 2009: 424,700
    Dec 2009: 430,300
    Apr 2010: 433,500
    Jul 2010: 452,500

    All the above figures are seasonally-adjusted by the CSO.

    Now, let’s look at the increases in each of these 4-month periods (3 months for the latest period, as it only goes up to July). To repeat, these are the seasonally-adjusted increases.

    increase between Apr 2009 and Aug 2009: +41,700
    increase between Aug 2009 and Dec 2009: +5,600
    increase between Dec 2009 and Apr 2010: +3,200
    increase between Apr 2010 and Jul 2009: +19,000

    So, the striking thing is how much worse the period from April to August is, compared with the other periods. The Live Register rose by a massive 41,700 between Apr 2009 and Aug 2009, then hardly rose at all between Aug 2009 and Apr 2010, but disappoiningly has risen sharply again since April 2010, although at little more than half the rate that occurred between April 2009 and August 2009.

    The question is: is this how the Live Reigister really behaved, or has something gone skewy with the seasonal adjustment. The Minister seems to be implying the latter. As of now, I simply don’t know, but the Minister’s explantion is far from impossible.

    The problem is: the other more reliable measure of unemployment, the QNHS, doesn’t show this pattern of the summer months being much worse than the autumn months. The QNHS figures for the number unemployment in 2009 were:

    Apr-Jun quarter: 256,800
    Jul-Sep quarter: 269,200 – increase on previous quarter: 12,400
    Oct-Dec quarter: 284,700 – increase on previous quarter: 15,500

    So, the Live Register pattern in 2009 of a very large increase in the summer months, followed by virtually no increase in the autumn months, was not followed by the QNHS figures. They showed a far more gradual change. The changes over a long period were pretty similar in both. But, the seasonal variation was strikingly different for the two sets of figures.

    Some statistical explanation should be sought for this. It should not be dismissed as of no consequence. One possible (I must emphasise the word ‘possible’) explantion is that the seasonal adjustment of the summer Live Register figures has gone skewy. That is the explanation implicit in the Minister’s comment. At this stage, I don’t know if he will be proved correct. I might know by the time the December Live Register figures are published in early January. I will wait until then before deciding if his comment is stupid or not.

    If the Minister’s explanation is correct, we would expect to see a pattern similar to that in 2009, with the Live Register figures between August and December being very much better than those between April and August, possibly even seeing much of the increase between April and August reversed. If that were to happen, the Minister would be vindicated in his comment and he would be proven to be far from stupid. If that were not to happen, and the increase in the Live Register numbers between April and August had not been at least partially reversed by December, then the Minister’s explanation for the summer increase (that it was ‘seasonal’)would have been proven to be wrong. But, taking into account the pattern of the Live Register figures in 2009, and the diverging patterns of the Live Register and QNHS figures, it is premature to call his comments stupid at this point in time.

  37. @JohntheO
    By “better” do you mean a lower participation rate? Or more discouraged workers? Or both?

    My prediction? The total number in employment will decline into H2 next year. Beyond that is anyone’s guess.

  38. Here’s how I see it working…. unemployment figures for July are awful… govt says early August there will be an improvement in the autumn…. figures for August are even worse than July… but govt says “ah, but we said there would be an improvement in the autumn, not August”… figures for September and October are better as students all go back/many unemployed go to college + various other reasons and govt ministers are all over RTE taking the credit… after October, situation worsens again and govt says “Ah, but it’s not as bad as August”….. etc. In the meantime, several months have elapsed and we are no nearer getting rid of this shower. It seems to be the FF strategy – keep delaying and delaying and hope something comes up/improves before the election. Or maybe they will just put 50,000 unemployed people on FAS courses in October.

    Seriously… where is there concrete evidence of a working jobs creation strategy, stimulus or whatever else? It is just sit back and hope, hope, hope that a world recovery also lifts Ireland’s little boat on the rise.

    Jobless recoveries all round then.

  39. @ Joseph

    I think congratulations are in order. Happy weekend! When Patrick Hohohan was made governor there were many congratulations, I think you are just as important!

  40. @hoganmahew

    My prediction? The total number in employment will decline into H2 next year. Beyond that is anyone’s guess.

    You are perfectly entitled to your prediction. Yesterday, Davy predicted that employment would rise from 2010 Q4 on, which is just a few weeks away, and NCB predicted that GNP would rise strongly from 2010 Q2 on. In fact, NCB estimated from the available data (rather than simply predicted) that GNP rose in 2010 Q2 and predicted that this would continue in the remaining quarters of 2010 and into 2011. However, you are as entitled to predict as they are, and it is perfectly possible that you, rather than either of them, will be the one to be proved correct.

    But, that wasn’t what my posts were about. They were about the fact that Minister Eamon O’Cuiv said the July increase in the Live Register was ‘seasonal’ and Karl Whelan and Kevin O’Rourke took him to task for saying that. Kevin O’Rourke called it a ‘stupid thing’ to say, while Karl Whelan implied much the same thing, but less directly. My point was, not that Karl Whelan and Kevin O’Rourke were wrong in their comments, but that they were premature. They could be proved corect, but right now that is far from certain. If the the trend in the last QNHS is repeated in subsequent ones this year, and if last year’s Live Register pattern (bad summer figures, much better autumn figures) is repeated this year, then the Mininister’s claim will turn out not to be stupid after all, but actually quite accurate. But, if that doesn’t happen, and this year’s Live Register summer increase is mirrored in the QNHS figures and continues into the autumn, then Karl Whelan and Kevin O’Rourke will have been vindicated in describing the Minister’s comments as stupid.

  41. @JohntheO
    Yes, I think NCB and Davys are wrong. Their track record is not stellar. I fail to see how their “estimate” and my “prediction” differ. In the first and rather semantic case, what’s the difference between an estimate of a future likelihood and a prediction?

    In the second, they are talking about GNP growth without revealing if they are talking about volume or value. If they are talking about volume, it is likely to grow given continuing deflation. It will fall in current prices for most of the rest of the year.

    Finally, they are not talking about the size of the workforce, as far as I can see, just the employment rate. This is as grossly misleading as a debt to GDP indicator. It says more about how the statistics are gathered than about the economic situation. As I say above, S3 is a figure we should be looking at very closely to establish the health of the employment market. If we could add in detailed hourly wages and working week by NACE category, we’d have some credible measure to analyse the employment market nationally.

  42. Anacedotaly whether you rely on Live Register or QNHS statistics I am certain that unemployment is on the increase. The entire SME sector is demoralised by Government Policy which is to let the economy to drop to the bottom. This does not worry them one iota as their livelihoods and pensions are guaranteed. What really annoys me is that economists have no alternative solutions to get the National Economy moving again. This country will pay dearly for putting SMEs out to dry like this. Reserves and potential cost savings have now run out in SMEs and the only way forward for a lot of people is closure of their businesses never to be seen again in any form. Unemployment is rising and will continue to do so while Government pursues a policy of bookeeping to run the economy.

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