Analysis: The figures do everything but endorse Government policies, writes Economics Editor Marc Coleman

The Quarterly National Household Survey (QNHS) is one of the most important regular signals we receive. It tells us how many people are working in the economy, which sectors are creating jobs and which sectors are shedding them. It also gives regional breakdowns of this information and adjusts trends for any seasonal factors that might distort the true state of the labour market such as slower job creation in construction during the winter months.

In the 12 months to the end of February, a staggering 90,000 jobs were created in the economy. Irish Intercontinental Bank economist Austin Hughes noted that this rate of job creation - an increase of 4.7 per cent in the workforce - was 10 times the rate seen in France, Germany and Italy and four times the US rate.

Being a politician, Minister for Enterprise, Trade and Employment Michael Martin could be forgiven for his reaction that the figures provided "a robust endorsement of the Government's pro-jobs policies".

On any close reading, the survey results do anything but endorse the Government's employment record. Rather the figures reveal an economy whose imbalances are worsening, whose risks are increasing and whose growth is increasingly reliant on rampant increases in growth and a pre-election splurge in public spending.

The figures also show that the manufacturing sector - a sector euphemistically entitled "other production industries" in the data in the vain hope that no one might notice its slow demise - shed 12,300 jobs in the 12 months to February. These jobs are dying in low value-added but employment-intensive operations where margins are being squeezed by a rising cost of living.

But these CSO job figures relate to February, two months before the rate of inflation shot up to 3.8 per cent. By the time social partnership talks are concluded - if they are concluded - this will have added another percentage point a year to wage growth at a time when exporters will be further squeezed by a weakening dollar.

From a competitiveness point of view, this survey is nothing to shout about.

The same is true from an unemployment point of view. "Ireland's unemployment rate now stands at only 4.4 per cent, one of the lowest in the EU", the Minister's press statement said. Technically speaking, this is true. But when we look at why it is true, it does anything but endorse government policies.

The earliest three-month period for which average employment numbers are shown in the survey is December to February 2004, the latest is December to February 2006. In the first period, total employment in the sectors of public administration and defence, health and education - broadly speaking, the public sector - amounted to 386,000 persons. By the second period that number had grown by 46,000 to 432,000.

While this reflects some modest private sector employment, it also signals an unplanned increase of at least 40,000 public sector workers. Being introverted and protected, the public sector has very low immigrant participation, so these were overwhelmingly Irish citizens.

At the last election the Government actually promised to cut public sector employment. So, but for Government promises being broken, unemployment would now be - give or take - 40,000 higher than it is. Adding this to the 92,000 people counted in the survey as unemployed would give a total jobless figure of 132,000, or 6.3 per cent unemployment.

Are these staff really needed, or has the Government succeeded in massaging the unemployment figures at the taxpayers' expense? The answer is a bit of both, but far more of the latter. The public sector has failed to prove any increased outputs as a result of added numbers and a significant chunk of this growth reflects a massive game of musical chairs caused by decentralisation.

But the really scary figure in the survey is the quarter of a million persons working in construction, or one in eight of the workforce. Some 100,000 jobs could be shed if employment here returns to the EU average of one in 14 of the workforce. Of the 40,000 or so migrant workers, most may go back home. But the rest would still add a further two or three percentage points to our unemployment rate. As the ECB raises rates this year and next, borrowing and construction activity may slow. The Quarterly National Household Survey may by then be less a source of self-congratulation for the Government.