Ireland’s weak labour market data likely affected by volatility
At face value, this morning’s CSO Labour Force Survey (LFS) is very concerning, employment falling by 0.6% in Q1 2026 to 2.8 million, annual job creation flattening off to zero, and the unemployment rate rising to 5%. However, volatility looks to be at play. The figures suggest full-time employment has increased by 1.5% over the past year to 2.23 million, but part-time work has declined sharply by 5% to 561,500. Also, the CSO’s alternative pay-rolled employees measure was 2.6 million in Q1 2026, up a healthy 2.5% YoY. Similarly, Ireland’s PMI surveys and the 6% growth in income tax returns in Q1 did not point to any abrupt decline in employment.
We had forecast that Irish employment would expand by 1.8% in calendar year 2026, with the unemployment rate rising to 4.8%. In summary, there appears to be too much noise in today’s LFS survey for it to warrant a change in our forecasts at this stage. Nonetheless, peering through the statistical fog, there still appears to be a gradual slowdown in job creation—now driven more by construction, manufacturing, and the public sector. We will also be watching for any signs that recent uncertainty related to events in the Middle East is weighing on hiring.
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