MINISTER FOR Finance Brian Lenihan has moved to counter fears that the economic recovery has stalled.
Mr Lenihan said last night the economy has stabilised despite the release yesterday of a raft of figures and indicators which raise fresh questions about the health of the economy. Most of the new numbers suggest that the mild recovery, in evidence earlier in the year, has plateaued. Some of the indicators point to renewed weakness.
Mr Lenihan said: “We are seeing an economic stabilisation, and growth as well.”
The numbers out of work and claiming unemployment benefit both rose in August, according to figures released yesterday by the Central Statistics Office (CSO).
Unemployment inched up from 13.7 per cent in July to 13.8 per cent in August. When adjusted for seasonal factors, the dole queues swelled by 2,500, to reach a nation-wide total of 455,000 people.
The deterioration in the labour market in August led to the fourth consecutive month of rising joblessness. The percentage of claimants in receipt of benefit for more than a year also continued to rise, and now approaches one in three of the total.
Retail sales figures for July disappointed too. These numbers, which are among the best indicators of consumer spending, registered yet another monthly decline. Trading volumes and turnover were both down, with totals back to levels registered at the turn of the year.
The CSO numbers show that 10 of 13 retail subsectors experienced a weakening of sales in July when compared to June. Retail Ireland, a group that represents the sector, described the figures as “very disappointing”.
The number of mortgages arrears, released by the Central Bank yesterday, are less timely than the other indicators, relating as they do to the quarter ending in June. Nonetheless they are significant as they show that the numbers of people struggling to service their mortgages continued to rise rapidly.
As a percentage of total mortgage holders, 4.6 per cent were more than 90 days behind in their repayments. This amounts to 36,438 individual mortgages, representing an increase of well over one-third over nine months (when the figures were first published in September 2009).
In the manufacturing sector, a monthly survey undertaken by NCB stockbrokers found that industry continued to grow in August, but that the expansion was feeble and its pace slowed for two consecutive months.
Given the fresh concerns about the economy, the publication today of exchequer finances for August will be watched even more closely than usual.
Speaking in advance of the release, the Minister for Finance Brian Lenihan indicated yesterday that the figures will show that public finances have stabilised. VAT and excise revenues in August were both up on the same month in 2009. This could suggest that the decline in retail sales up to July was staunched in August.
Mr Lenihan said that his assessment was for economic growth this year. There were some difficulties, the Minister recognised, but the public also needed to look at positive aspects of the economic performance.
“We can surmount those difficulties. We have opportunities and it is important we realise them,” he said.
Asked about the latest unemployment figures, Mr Lenihan accepted that there had been an increase in the jobless total when seasonally adjusted. But he signalled that that increase would soon end. “It’s clear that unemployment will peak in the next few months, and then fall,” he said.
Fine Gael enterprise spokesman Richard Bruton said the latest figures suggested that Ireland was experiencing a second period of recession.
He said he based that view on the fact that unemployment numbers fell for eight months, but then rose in the four months to August.
“These figures confirm that the stabilisation of national income is not being reflected in the jobs market. The Government’s present strategy will, at the very best, produce jobless growth,” he said.
“A particularly worrying feature of the latest figures is the extent to which unemployment is becoming embedded. Almost a third of people out of work are now long-term unemployed. Twelve months ago long-term unemployment represented less than a fifth of the Live Register,” he said.