Significant signs of progress as jobs haemorrhage staunched

The best news came from the technology and hospitality sectors but disappointing figures for the agricultural sector continue to be something of a puzzle

FOR A Government that has put so much emphasis on jobs, yesterday’s announcement of the first increase in employment since the recession began was manna from heaven.

In net terms, 10,000 more people were at work in the final quarter of the year compared to three months earlier. Not only was this the first increase in 16 quarters, but the rate of growth – at 0.6 per cent – was strong by any international standard.

As the first chart shows, after the numbers at work began falling in the beginning of 2008, they reached a haemorrhage point in the first months of 2009, when employment fell by almost 80,000 in a single quarter. A gradual if unsteady staunching took place thereafter, before yesterday’s good news.

But if the employment numbers were a pleasant surprise, yesterday’s revision by statisticians to the unemployment rate was not. The rate at the end of last year was almost a half percentage point higher than they had estimated last week when the monthly welfare claimant count was published.

And as the first chart shows, the rate of joblessness did not fall from its recessionary peak of 14.6 per cent between the third and the fourth quarters, and that despite the growth in employment.

The breakdown of jobs figures by economic sector are illuminating. Trends in six private sector-dominated industries are depicted in the second chart. In order to show how they have performed relative to each other, all figures are rebased to a starting point of 100 at the first quarter of 2008.

The best news comes from technology and hospitality.

Employment in the information and communications industry registered a fourth successive quarterly increase in the final three months of last year as the sector went from strength to strength. As the chart shows it is one of the few sectors to have increased employment since the recession began.

The rebound in tourism in 2011 was in evidence in the accommodation and food industry, where jobs numbers surged over the year.

Industry (mostly manufacturing) was the biggest single employer before the recession, but as the chart shows the numbers employed in the sector began to fall rapidly once the post-Lehman brothers collapse in world trade trade took hold. This happened despite unusually resilient export and production figures.

But the chart also shows that industrial jobs numbers grew for the first time in the final quarter of last year, after bottoming out in the third quarter. If the European downturn proves shallow there is good reason to believe that the export-focused industrial sector will do more hiring, or at least stop shedding labour.

By contrast, the fall in agricultural employment showed no sign of bottoming out as of the end of last year. The sector remains something of a mystery. In the final three months the numbers employed in the sector continued to shrink, and this despite something approaching boom conditions in farm incomes and output.

Another mystery is financial services, insurance and real estate sector, but for exactly the opposite reason. Output in the sector has collapsed since the credit bubble burst. Despite this, total numbers employed not only grew in the final quarter but remain largely unchanged compared to the pre-burst period. Expected large lay-offs in the two pillar banks this week will show up when the first quarter figures are published in June.

The big shake-out in the public sector, as incentives to retire early were taken by almost 8,000 workers, will also show up in those number.

It is very likely that there is – at the very least – one more quarter of falling employment in store before durable growth resumes.