Irish unemployment falls in election boost to government

DUBLIN: Ireland's unemployment rate fell sharply, its bond yields hit all-time lows and a fast recovering property market showed the first signs of cooling, data showed on Wednesday, in a boost to the government ahead of elections next year.

The governing parties have pinned their hopes of re-election on voters starting to feel the benefits of an economy that likely grew by around 5 percent last year and on frustration easing over what many see as an uneven recovery.

Employment has been growing steadily since the jobless rate hit a high of 15.1 percent in early 2012, when Ireland was in an EU/IMF bailout.

It fell to 10.4 percent in the fourth quarter of last year, Central Statistics Office (CSO) data showed, down from 11.1 percent in the previous three months.

The coalition of Fine Gael and Labour, whose support has shown tentative signs of recovery after nose-diving during 2014, have forecast that the rate will fall below 10 percent this year, a target analysts say will now easily be achieved.

"That seems inevitable. It's pretty clear from the run rate that it's probably going to happen within a quarter or two to get down to the magic 10 percent number," said Simon Barry, chief economist at Ulster Bank.

"The bottom line is that the downward trend is very well established and is set to continue."

Noting that on an unadjusted basis, the jobless rate fell below 10 percent for the first time since 2008, Finance Minister Michael Noonan said in a speech that the rate was on track to fall below 9 percent by the elections due by April next year. Separate data from the CSO showed that property prices in Ireland posted their first contraction for 10 months in January, falling 1.4 percent and led by Dublin where prices have rebound fastest.

They were still 15 percent higher than a year ago.

While prices across Ireland are 38 percent below their 2007 peak, the central bank last month introduced restrictions on mortgage lending to try to ensure price rises do not return to unsustainable levels.

However Fiona Hayes, an analyst at Cantor Fitzgerald, said property prices will likely rebound in the coming months in the traditionally busier period for transactions with the lack of supply of housing still the primary driving force.

Irish 10-year yields were a whisker away from hitting 1 percent for the first time and on the cusp of joining top-rated euro zone bonds yielding less than 1 percent as fears about a Greek exit from the euro zone receded.