Live register figures

The Live Register figures for March are out.

The standardised unemployment rate in March was 14.7%, unchanged from February. This compares with the latest seasonally adjusted unemployment rate of 14.7% from the Quarterly National Household Survey in the fourth quarter of 2010, and an annual average of 13.6% for 2010.

By way of comparison, the baseline forecast for 2011 unemployment in the Central Bank’s PCAR macroeconomic scenario is 13.4%. In the adverse scenario, this rises to 14.9%. We are almost there, and it is only March.

At least the Central Bank scenarios got the 2010 unemployment numbers right! This contrasts with their 2010 GDP numbers, as Dan O’Brien pointed out earlier in the week.

(And I admit that I am baffled by an adverse house price scenario that is not robust to the ‘What if Morgan Kelly is right?’ objection.)

37 thoughts on “Live register figures”

  1. How come the live register is ‘suddenly’ upto 14.7% when it was in the 13%’s last month? Does the QNHS adjust this? I know the live register is not the true reflection of unemployment yadee ya, O and can the last civil servant with a job bury the dead private sector as they retire on a non Irish life pension!

  2. The basic temporary solutions to unemployment include massive switching of capital programme to labour intensive and ready-to-roll initiatives. The feasability of this should be assessed with respect to the current plans. The roll-out of internship places as signalled by the PFG is worth looking at closely. The merging of job assistance and benefits payment services is also a substantial opportunity to improve the overall system. There is strong theoretical and empirical support for the idea that the current labour market is not clearing and that there are massive long-run human, social and economic costs associated with this.

  3. @Rich
    “Does the QNHS adjust this?”
    Yes. The QNHS is the definitive number. The unemployment rate is in the intervening months calculated according to the change in the live register. With some/many now dropping off unemployment benefit as they’ve exhausted their benefits, the live register adjustment method is falling into disarray somewhat. It’ll probably catch up with the next QNHS or two? And then it will probably overstate unemployment for a bit once the, um, corner is turned.

  4. Not good.

    We tend to focus on financial figures – facts in an abstract ‘objective’ world: and tend to ignore discussion of the ‘social’ and the ‘psychological’ facts in the real world of human beings which includes objective, social and subjective – and the latter two of course cannot be ‘measured’ in the same units as the financial.

    15% is a fairly devastating indicator only, at only one end, of the social and psychological costs of ‘Irish governance’ in the previous decade …

  5. A house price scenario that is robust to the ‘What if Morgan Kelly is right?’ objection gives an answer that we don’t want. Therefore it cannot be entertained. What’s baffling about that?

  6. The story on the cover if yesterday’s IT suggested that there were discussions with the Troika a to what parameters were to be used for the stress tests. This is disconcerting. What if they say they don’t want really adverse scenarios when the markets seem to be demanding same.

  7. @ Kevin x 2

    I think people are missing the key issues about the PCAR/PLAR tests in terms of house prices – the bigger issue is the default model rather than the asset value model. Irish defaults, historically, have typically, and even up until now, been very very low relative to any other country faced with similar macro and micro data. It’s probably explained by bankruptcy laws combined with both the Irish love of property plus the shame of default. The Gov’nor and the Regulator have both mentioned in recent weeks that the PCAR tests will ignore to some degree the historically low levels of Irish default, and use US/UK models instead. I reckon this will easily bring the forecast losses into MK territory, though i doubt we’ll actually end up seeing such a cultural shift in attitude to debt.

  8. @ Eureka

    “Compelling and inescapable logic”? You must be joking! The entire course of recent events tends to confirm the fact that the fate of the euro has been decoupled from that of the three peripheral countries in the most trouble. The new dispensation is best summed up in the change in name of the Competitiveness Pact to the Euro Plus Pact. This places the UK where it belongs: permanently outside the euro.

    Were the euro to fail, there would be a flight back to the Dm which would cause the German economic boom to come to a shuddering halt and push the entire European continent into a prolonged recession. Even Cameron has admitted as much.

    To relate the success of the Danish economy to not being in the euro is complete twaddle. The Danish crown is linked in lock-step to the euro as Denmark is at the ERM II stage. In other words, it has all the monetary policy disadvantages of a single currency without any of the practical advantages. In a country with a major international airport in the middle of Europe, it is hardly surprising that there is strong official support for the country to eventually revisit its referendum decision not to join. The same holds true for Sweden.

    As to the UK? It is, as I said, where it belongs. The problem posed is whether Ireland is any longer where it belongs given the country’s degree of dependence on the UK market.

  9. The stress test scenarios were developed at the start of January, so perhaps the Central Bank deserves some indulgence. It was just awful luck that the same day the CBI issued its stress test macroeconomic assumptions that the CSO dropped the bombshell on 14%+ unemployment. Also as Jto would say, it is notoriously difficult to forecast Irish quarterly GDP because of the global influences on MNCs’ exports.

    The 14.7% unemployment rate is frightening and contrasts with Greece and Portugal at 11-13% though is thankfully still some ways off 20% in Spain. It would be reassuring to see the government acting on its first 100 days commitment to a strong jobs programme.

    On a slightly separate subject does anyone know whose contribution to the bailout will be reduced tomorrow if the “final” cost is €20bn as seems widely expected. If it is €20bn then the headline bailout will drop from €85bn to €70bn but who will cut their contribution – EFSF/EFSM/bilaterals/IMF/NTMA&NPRF? Anyone know?

  10. @ David O’Donnell

    Not good.

    We tend to focus on financial figures – facts in an abstract ‘objective’ world: and tend to ignore discussion of the ’social’ and the ‘psychological’ facts in the real world of human beings which includes objective, social and subjective – and the latter two of course cannot be ‘measured’ in the same units as the financial.

    My impression is that the issue of unemployment is a much more hot button issue in the US than it is in Ireland.

    In the media, while one would expect the NYT to give it a lot of attention, The Wall Street Journal also gives it a lot of focus as do all the main economic think-tanks.

    I’m not suggesting that people don’t have what would be termed ‘sympathy’ for the jobless but I would think that If I was unemployed in Ireland, I would feel that I was part of an invisible group.

    Of course 85% are still employed.

  11. @BEB: I reckon this will easily bring the forecast losses into MK territory, though i doubt we’ll actually end up seeing such a cultural shift in attitude to debt.

    My guess is you’re right, but arguably an adverse scenario should be based on the assumption that MK is right about prices and that you’re wrong about Irish attitudes to default. Walking away from debt becomes fashionable. Irish attitudes to lots of things have changed in recent decades so, while it’s certainly pessimistic to assume such a shift, it’s not outrageous gloom-mongering.

    @zhou: surely it’s only sensible to consult the Troika? Lorenzo Bini-Smaghi accuses Ireland of undermining the last round of stress tests. At least deprive him of that line this time, by getting ECB input on the assumptions.

  12. @Mark Dowling
    “Since it’s a survey, what is the margin of error on QHNS?”
    Goodness, no idea, it’s probably in the methodology somewhere. There have been doubts raised as to its efficacy to some degree – the definitions surrounding self-employed in active employment leave some room for doubt whether people who are self-employed are really earning more than pocket money.

    @Michael Hennigan
    “Of course 85% are still employed.”
    Well, maybe. There are 300,000 fewer employed than at peak. 200,000 of them have shown up as unemployed. The other 100,000? Some have left, some are just not counted. For me, the working age population is one to watch. The census may give us more idea.

  13. @Michael Hennigan

    Better to be unemployed in Ireland than in US.

    The unemployed and the underclass in Ireland are largely ‘invisible’ …. the great failure of the so-called boom was that no effort was made to push this generational underclass into the ‘educational and labour force’ – a few, naturally enough, take to crime. Labour force participation rates also matter – only in recent times did the female labour force participation rate exceed 50% …. I’m a bit out of touch with these figs, but if one included many of those who are ‘not included’ in the published figs suggests that the ‘effective/real’ rate of those not involved in economic activity is higher; not sure where our dependency ratio is at the mo …. but looks like much more notice to be taken in all these areas again ….

  14. @hoganmahew

    For many of the self-employed the term has become a contradiction in terms!

  15. @ Eoin Bond

    Regardless of previous cultural factors having effects on Irish People being adverse to default I don’t think its safe to presume that this time the Irish will continue their trend extreme default anxiety.
    For lots of reasons.
    1. A lot of the mortgage default will be from young first time buyers and business investors on mortgages taken out between 2004-2008. I dont think young celtic cubs would have had the strong moral adversity as their parents would. In good old Catholic Ireland default would have been seen as immoral.
    2. Huge non mortgage debt that people have is greater than in other times.
    3. The Size of the bubble. Ireland’s housing bubble relative to wages is believed to be one of the biggest of any time.
    4. Policy change. What happens when the ECB get their way and the state is forced to sell off assets including the mortgage books to the highest bidder. One would think that this would lead to less can kicking when it comes to the way the banks are treating people who are not making payments.
    5. You could actually argue that given the bubble was bigger than anywhere before using US/UK traditional levels of default is generous.

  16. @DOCM
    I wish I was joking. Todays unemployment figures will be replicated (maybe later) in Greece and Portugal. The Euro is not working.
    It will break up and the unpalatability of the result does not stop the event.
    This is a bit poorly thought through but can somebody tell me why this is wrong.
    When Ireland defaults how will it pay its public servants and how will they, in turn, purchase from the private sector?
    There will physically be no new money in the domestic economy.
    So the state will have to start printing money. It won’t be allowed print Euros so it will print something else. It will use this money to pay its civil servants who in turn will use the money to buy milk on the way home from work to the shopkeeper who will reluctantly accept this money because it allows him to pay his tax or pay for his Electricity.
    The Euro will probably co-exist with the new currency for a while but then MNC’s will move to the old currency as it will be cheaper to pay their employees in it. In that creeping way you have a dual currency zone.

  17. @Jadpig

    1)

    If the stress tests only require 20bn, then will the contingency fund not simply be 15bn (rather than 25bn)?

    If not, then I would have thought it was fairly straightforward that we would use our own money rather than borrow another 15bn at 5.8%.

    2)

    That said the NPRF did get a return of 11.1% in 2010 on its discretion portfolio (non-AIB/BoI) so perhaps there IS an argument to borrow 15bn at 5.8% rather than take it from the NPRF who can get returns which are larger than our interest rate.

    3) However, I was under the impression we would exhaust our own resources on bank recapitalisations before using borrowed money (although I don’t believe this is written as fact anywhere).

  18. @ Eamonn

    i think you’re kinda missing the point. All stress tests, as well as the somewhat similar dynamic provisioning, take into account historical analysis to forecast future trends. Using anything else is essentially guessing, as opposed to statistically modelling. I’m not critisising the CBI for using the UK/US data instead, simply pointing out that they’re already thinking the unthinkable and not simply relying on historical probabilities. Remember, despite the mass negative equity and mass unemployment, we are still yet to see mass defaulting. If anything Irish people are foregoing personal consumption in order to repay debt, something which does not happen to anywhere near the same degree in the US, for instance. While it may end up happening, current data says it isn’t, and historical data would suggest it will not, but at least it can’t be claimed that we’re ruling out the “What if MK is right?” theory straight away.

  19. My understanding is that there is a big difference between US and Irish mortgages.

    In the US, mortgages are basically non-recourse loans. The bank can not go after other assets/income once it has seized the house.

    By contrast, in much of Europe and in Ireland as well I believe, the bank can still go after other assets/income if the proceeds of the sale of the seized house prove insufficient to repay the loan.

    I believe that woul explain much of the differences in repayment behaviour between the US and Europe.

  20. @ Incognito

    you are correct, which is why i assume they have brought in the UK data as well to moderate that affect. But i think they are trying to mirror a situation whereby mortgagees don’t care about the stigma of defaulting, as well as the damage to their personal credit scores. I don’t think they will assume that Irish mortgages default 1:1 on the same level as either the UK or US, but simply to say, “Well, what if it had some similarities….”.

  21. BEB,

    While it will be interesting to see the default assumptions (which I’d expect to be below the US), I think a large part of the hit is likely to come from an assumed cost of funds versus interest income.

    The “fill in the nationality” don’t default on their mortgages due to x, y or z tends to be crap. The only country to give a plausible reason were some Dutch lenders who said borrowers didn’t get into arrears because they’d be foreclosed within months.

  22. @BEB

    Agree. The ease of (or lack of) default in different countries as well as historical data has to be considered when predicting a default rate. Do the reasons for a historically low level of default suddenly not apply now? Maybe if it was just the banks history of forbearance… maybe not if it is due to the difficulties of defaulting as well as social reasons.

  23. The following article provides a summary of non-recourse mortgage states and anti-deficiency statutes. This may prove helpful for participants.

    List of Non-Recourse Mortgage States and Anti-Deficiency Statutes

    In a non-recourse mortgage state, borrowers are not held personally liable for more than the home’s value at the time that the loan is repaid. The lender may recoup some of its loss through foreclosure. However, the lender may not sue the borrower for additional funds. If the foreclosure sale does not generate enough money to satisfy the loan, the lender must accept the loss.

    Each non-recourse state has its own anti-deficiency statutes that prohibit lenders from seeking judgments. In a few cases, anti-deficiency statues do allow lenders to collect a limited amount of money from the borrower (such as the difference between the debt and the fair market value of the property).
    Note that in some states (such as California) non-recourse laws apply only to “purchase money” loans (i.e. original home loans that are used to purchase property). Almost all HELOCs and home equity loans are considered recourse loans and lenders for these loans may sue borrowers to recoup loss. (Except in some cases where the second mortgage lender forces the foreclosure. See: HELOC Foreclosures). There has been some speculation that mortgage refinances do not constitute “purchase money” loans. However, there have been no cases to determine this issue one way or the other.

    Anti-Deficiency / Non-Recourse States
    Alaska
    Arizona
    California
    Connecticut
    Florida
    Idaho
    Minnesota
    North Carolina
    North Dakota
    Texas
    Utah
    Washington

    One Action States
    In some states, lenders are only permitted a single lawsuit to collect mortgage debt. This plays out differently depending on the state’s laws. In New York, for example, a lender must choose between the actions of foreclosing on the property or suing to collect the debt. The following states have some type of one action statute:

    California
    Idaho
    Montana
    Nevada
    New York
    Utah

  24. @Bond Eoin Bond – “though i doubt we’ll actually end up seeing such a cultural shift in attitude to debt.”

    Hmmmm – I’m not so sure. I think that times change and people change. We may be witnessing that change in these times. ‘Cultural’ shift. Seismic?

  25. @Joseph,
    As far as I’m concerned past performance in Irish mortgages can’t provide a guide. Historically access to credit was limited. Only professionals and safe bets would get through the door. I believe building societies required borrowers to have a history of savings with them. It’s probably worth mentioning that a hefty down payment was required.

    In the 80s wage inflation quickly eroded the burden of monthly payments. Post 80s default stats don’t capture all distressed borrowers as they could cash out of the property at a profit.

  26. @Kevin O’Rourke

    Highest congratulations on your Oxford appointment. As it is quite a long time since Fianna Fail controlled Oxford City Council, I expect that you are hoping the absence of corrupt-FF-politicians-in-the-pay-of-evil-developers will enable you to purchase a quality house in Oxford at a price well below the artificially high price that one could expect to pay for it in Dublin because of said corruption. I trust that you will not be disappointed. If you are considering selling your Dublin house, I’d consider putting in a bid for it, but only if Professor Morgan Kelly does the valuation.

    With regard to the live register figures, the 1,100 increase is little more than statistical noise. I will stick my neck out and predict that it will eventually be revised to a small decrease. I give my reasons below for predicting that.

    The reality is that the live register figures have been more or less flat for 15 months. Nearly all increases or decreases since then, that were given in the first figures published, were later revised away. THese are the latest CSO seasonally-adjusted live register figures (in 1,000s) each month since January 2010. The unadjusted figures are in brackets.

    Jan 2010: 435.0 (436.9)
    Feb 2010: 431.8 (437.0)
    Mar 2010: 431.1 (435.1)
    Apr 2010: 435.2 (432.7)
    May 2010: 440.2 (437.9)
    Jun 2010: 441.7 (452.9)
    Jul 2010: 445.6 (466.8)
    Aug 2010: 448.6 (466.9)
    Sep 2010: 448.8 (442.4)
    Oct 2010: 448.3 (429.6)
    Nov 2010: 446.1 (425.0)
    Dec 2010: 446.0 (437.1)
    Jan 2011: 441.7 (442.7)
    Feb 2011: 440.9 (444.3)
    Mar 2011: 442.0 (441.2)

    As can be seen, very little change in 15 months. A slight increase between January and September 2010, but a fall in every month since then until today’s figures.

    Some of the largest increases and decreases since January 2010, that were given in the first figures published and which triggered threads on this site, were later revised away. For example, the initial estimate for September 2010 was a decrease of 4,000. It has since been revised to an increase of 200. The initial estimate for December 2010 was an increase of 5,000. It has since been revised to an decrease of 100. Threads were opened on this site when both the September and December figures were first published. Nearly all the comments in them, including my own, look silly now, because the figures have since been revised by the CSO to give the exact opposite of what was first published.

    The CSO normally revise all the monthly seasonally-adjusted figures in a given year at the end of that year. They revised all the 2010 seasonally-adjusted figures in January. The overall figures stay the same, but the monthly seasonally-adjusted figures are all changed. The changes cancel each other out. Some are revised up, some down. So, the September 2010 figures, at first thought to be good, now appear bad. And, the December 2010 figures, at first thought to be bad, now appear good. It is not the fault of the excellent CSO. Seasonal-adjustment often produces quirks and distortions. The seasonal-adjustments can only be computed accurately at the end of the year in question.

    This is why I predict that the figure published today for March 2011 will be revised at the end of the year to show a small decrease. Look at the figures above. In March 2010, the unadjusted figure fell by 1,900. Following the end-2010 CSO revisions, the CSO estimated that this represented a seasonally-adjusted fall of 700. Now today the CSO figures show an unadjusted fall of 3,100, which is 1,200 greater than the unadjusted fall in March 2010. But, the preliminary CSO estimate is that this represents a seasonally-adjusted rise of 1,100. Clearly a quirk. If the end-2010 revision converted an unadjusted fall of 1,900 in March 2010 to a seasonally-adjusted fall of 700, there is a high probability that the end-2011 revision will convert a greater unadjusted fall of 3,100 in March 2011 to a seasonally-adjusted fall of between 1,000 and 2,000.

    All this is nit-picking, of course. As I said, the reality is that the live register figures have been more or less flat for 15 months. This is highly unsatisfactory. However, regardless of how well the manufacturing and services exports sectors perform, there will be no significant fall in the live register numbers until the construction industry resurges. The GDP figures last week showed that construction output as a percentage of GDP had fallen to 3.5% by Q4 2010. This is probably the lowest recorded in any developed country since World War 2. In most developed countries, it is around 8%. It needs to be brought back to this level in Ireland asap. It will eventually, of course, of its own accord, since no developed economy can continue indefinitely with such an absmal share of its GDP accounted for by construction. The collapse to 3.5% is the price being paid for the media/academia’s declaration of war on the construction industry over the past decade, in which those active in that industry have been branded as corrupt crooks, and whose current demise, temporary though it is, has been the subject of universal gloating in media/academia circles.

    With regard to Dan O’Brien’s article on the GDP figures, and the Central Bank’s over-estimation of them by 0.8% (CB forecast of -0.2% versus actual -1.0%)conveniently omitted in the article is any mention of the fact that the Central Bank have under-estimated GNP by 0.9% (CB forecast of -3.0% versus actual -2.1%). Have we not been told by leading economists for the past 30 years that it is the GNP figures that matter? In fact, reading Dan O’Brien’s article, the letters ‘GNP’ don’t appear in it at all. Dan’s whole article is about how the economy was collapsing in Q4, based on the fall in GDP, but not a mention of the fact that GNP rose by 2% in Q4 and by 4% cumulatively between Q1 and Q4, despite the fact that on numerous previous occasions, when the GNP figures were worse than the GDP figures, the same Dan wrote that it was the GNP figures that matter. It is called ‘having your cake and eating it’.

  27. The unemployment figures will worsen. Emigration has been throttled back at least to the less radioactive hemisphere. You can pay them the dole while we sort ourselves out …..

    This is a depression. Of far greater depth than the other one, last century. But fewer people will starve and there are extra houses for the duration.

    I predicted displaced persons a few posts ago. For the moment, they are Japanese and will require your best rice and warmest lodgings. There will be more. Ireland of the welcomes? Well heeled refugees are like long staying tourists!

  28. @ Liam Delaney

    “There is strong theoretical and empirical support for the idea that the current labour market is not clearing and that there are massive long-run human, social and economic costs associated with this.”

    The Claire X articles in the IT last year said more than any stats could

    http://www.irishtimes.com/newspaper/opinion/2010/1108/1224282865388.html

    “But only one has the opportunity to write here about the “unimportance of being unemployed”. It’s not just the sudden poverty. It’s the imbecile terror as confidence, choice, control, equanimity, independence, security, dignity, casual generosity, sometimes even identity itself, vanish. The sickening financial, personal, psychological, social amputations”

    Donovan Wylie is or was a Magnum photographer who toured around Ireland in 1988 and took the lie of the land.

    His “Young Unemployed Man in Kitchen, Athlone, County Westmeath” is the one of defining images of unemployment in Ireland and the damage it causes.

    I often wonder what happened to the subject of the photo. .

  29. @ Eoin Bond

    I think (for what it’s worth) that the poor Irish Mortgagee is always willing to pay – i.e. not unwilling to pay. It’s when the shift from not unwilling to not being able to pay happens that we will see a cultural shift. Kinda mirrors the whole sovereign thing!
    Either way I suspect MK will be right.

  30. John – interesting point that CSO misreported drops in the live register when in fact there were increases. Was this politically motivated? How independent is the CSO?

    I have been arguing for a long time that a key issue at the moment is non representation of the following groups in the figures:

    1. Married couples where one is working, the other is unemployed – after 12 months the unemployed spouse loses benefits but doesn’t reapply for JSA because he/she would be rejected on spousal income grounds (he/she could of course claim for USC credits only)
    2. Similar scenarious in familes with under 25s living at home who will not qualify due to parental income
    3. Combinations of the scenarios above involving self employed spouses and parents – again benefits might be quite low and would offset the cost of accounting (my own tiny business costs me 2800 a year in accounting fees though admittently they do absolutely everything including contract management, payroll and invoicing as well as tax returns and VAT). So some people might not be able to afford the cost of an extra set of audited accounts.
    4. Lastly the huge delays in processing some JSA applications and appeals may mean that there is a long delay in moving from limbo to being recognised as jobless. Again this was very politically expedient to encourage for FF.

    Being jobless doesn’t mean you don’t have work. Likewise, having a job doesn’t mean you have security of income or work continuity.

  31. @Laura

    John – interesting point that CSO misreported drops in the live register when in fact there were increases. Was this politically motivated? How independent is the CSO?

    JTO again:

    The CSO are very independent and highly professional.

    They are not politically motivated at all.

    You have selected only half of what I said.

    Yes, I said that there were months last year, when the initial CSO figures indicated a fall (e.g. September), which was later revised to a small rise.

    However, I also said that there were months last year, when the initial CSO figures indicated a rise (e.g. December), which was later revised to a small fall.

    This is just normal statistical adjustment for seasonality. The exact adjustment can not be calculated completely accurately until the year is over. The seasonally-adjusted figures are revised at the end of every year.

    Your conspiracy theory doesn’t stand up, I’m afraid. If the CSO were politically-motivated to serve FF, why would they publish the figures for December in mid-January (in the run-up to the election), showing a 5,000 rise in the live register in December, then revise the December figures to show a small fall in late March (after the election)?

    Regarding your other points, I don’t know enough about the social welfare system south of the border to answer them. All I know is that its a lot more generous than the one north of the border.

  32. Over time the EU and the Eurozone will make adjustments to deal with the problems created by states who think Europe is the wild west. I see corporate tax rates having a mandatory lower bound, similarly for VAT. In return there would be a EU wide unemployment insurance levy which would pick up extensions to the eligibility period when the unemployment rate exceeds 10% or so. Countries in distress with high deficits and high unemployment will get interest rate relief under defined conditions. Europe and the Euro Zone address problems caused by large trading countries such as the USA, Japan, China, and coming on strong Brazil, Russia, India. There is no single country in Europe strong enough to counter balance the competition. In effect each European country will be member of a federation. There are many examples of federations such as the USA, Germany, Canada, Russia before and after 1989.
    In Ireland we fantasize that we are a Sovereign State capable of going it alone, we will go nowhere outside an arrangement similar to the one we are in now. I hope we are not in for a replay of the glorious Dev era where we played the nationalist, protectionist card as the economy stagnated and people experienced extreme poverty. We should remind ourselves that our past and recent behaviour has not been rational. The first thing that must be done is eliminate the need to hold a referendum to pass treaty changes. The Irish electorate is even more irrational than the Irish Gov’t.

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