Ms Laura Weymes:

With regard to ongoing trends, there is evidence of seven consecutive quarters of employment growth, with employment growing by 1.7% in the second quarter. What this means in level terms relative to the first half of 2013 is that the figures now indicate that there were 37,000 more jobs in the first half of the year relative to the same period last year. This employment growth has been relatively broadly based. In year-on-year terms, ten of the 14 sectors designated by the CSO are posting growth. In terms of trends, on the live register side, there has been acceleration in the pace of contraction of the live register, particularly during the summer months of this year. In the last two quarters to the end of September the rate of reduction was running, in annualised terms, at approximately 35,500. Consistent with this, there has been a fall in the standardised unemployment rate from its peak in February 2012 by four percentage points to rest at 11.1% in September.

The next slide focuses on the outlook. Relative to the SPU, the last formal set of projections, we now have two further quarters of Q and HS data. These point to a slight easing off in the pace of growth in H1 of this year relative to the second half of last year, 2% in H1 this year relative to 3.2% last year. This has prompted a slight downward revision in our estimate for employment growth in 2014. We have reduced the figure from 2.2% in the last set of projections to 1.8% in full year terms this year.

In terms of sectoral composition, reflecting the composition of employment and the strong focus on services, services are growing at a rate of approximately 1.7% and account for three quarters of the employment figure. Much of the momentum is coming from the full-time private services sector.

With regard to what we have seen in the labour force which has a bearing for the bottom line unemployment rate level, trends in the first half of 2014 differed slightly from our outlook at the time of the SPU. Labour force volumes have been contracting on a quarterly basis in each of the quarters this year; therefore, even with a strong second half, we would still profile a very soft labour force full year figure. We have it slightly at a negative figure for 2014 and recovering in 2015. To be clear on the migration assumptions underpinning this, we are still profiling outward migration, although with a slighly lesser arc than would have been assumed at the time of the last projections. This is probably a reflection of the responsiveness of Irish labour supply to overall labour market and economic conditions. There will be considerably stronger labour force growth in 2015, consistent with an unemployment rate falling to just over 10%.

The next slide elaborates on the drivers of the change in the labour market outlook. To focus on the chart on the left hand side of the slide, the labour force is principally driven by three factors - participation rates, the natural rate of population increase and the path for migration. The last two components are suppressed into the blue bar which we have labelled "the demographic effect". After a negative contribution last year, this is exerting positive momentum in 2014. There has been a slight falling back in participation rates on a full year basis for 2014, accounting for the negative contribution. This, again, will turn positive in 2015.

The chart on the right-hand side splits the drivers of the unemployment rate and what is contributing to the change in the rate between the labour force and employment growth. The falling labour force this year has helped to reduce the unemployment rate, although the main story from the chart is that employment growth continues to be the dominant source of momentum in terms of exerting downward pressure on the unemployment rate.