The jobless rate will dip to about 3.5 per cent this year, FAS has said.

In a report on labour force trends, the State training and jobs authority predicted the number of people working would increase this year by 3.4 per cent. This suggested an unemployment of about 3.5 per cent, it said.

However, such growth was slightly less than the 4.1 per cent rise recorded to the third quarter last year. The diminishing rate would reflect slower growth in the US and world economies as well as increasing labour market tightness and infrastructure bottlenecks.

Live register figures published last Friday by the Central Statistics Office indicated an unemployment rate of 3.6 per cent last month. This was the lowest level since 1981, and only one percentage point higher than the level predicted by FAS for 2001.

The authority said the longterm employment rate was 1.4 per cent last year, one-third the rate in 1997. About 1.74 million people worked in July-September, 68,600 more than a year earlier.

"Rates of employment growth ranged from 1.5 per cent in the mid-west to 6.7 per cent in the west," the report stated.

Employment expanded by 4.8 per cent in the Border, midlands and west (BMW), a region targeted for special attention by the Government and IDA Ireland. This was stronger than growth of 3.9 per cent in the south-east. But expansion in the BMW area masked an increase in unemployment to 4.9 per cent from 4.7 per cent.

"The rate of decline in unemployment ranged from 16 per cent in the midland region to over 30 per cent in the Border and south-east regions. Unemployment rates ranged from 5.9 per cent in the Border region to 3.4 per cent to Dublin," said the report.

FAS said the fastest sectoral expansion was in the construction business, where employment grew 16.3 per cent to 175,500.

Growth in the wholesale, retail, education, health, transport, storage and financial sectors also exceeded the average increase.

About 11,600 fewer people worked in the agriculture, forestry and fishing industries, an 8.2 per cent decline.

Employment expanded because economic growth in 2000, aided by the euro's weakness, was stronger than expected, "Gross domestic product is estimated to have increased in real terms by 9.9 per cent.

"The economy expanded more rapidly in 2000 than in 1999, although this time last year best available estimates suggested that growth in 2000 would be about one percentage point lower than in 1999," the report stated.

It went on: "The overall picture to emerge is that while the labour force continued to grow in 2000, it did so at a slower rate than in previous years.

"However, the slowdown in labour force growth was not as significant as had been expected."

Increased domestic labour was the main factor behind the rise in workers, with almost as many men as women taking jobs. Domestic participation rose by nearly three times the number of immigrants, FAS said.

"Net inward migration was also an important source for increased labour supply. In the year to April, 20,000 more people entered the country than left.

"The number of work permits issued to non-European Economic Area citizens was also up considerably."