Unemployment fell to a new low of 3.7 per cent in the first three months of 2001 according to the latest Quarterly National Household Survey.

The survey, regarded as the most accurate measure of employment, showed an annual fall of 15,900 in the number of people out of work to 65,600. Employment stood at 1,709,900 in the first quarter, down 400 on the previous quarter, but up 59,300 on the same period last year.

Despite a drop of 3,600 in the first quarter of 2001, the labour force - those in and out of work - grew by 43,400 between the first quarters of 2000 and 2001, with an increase of 25,800 women and 17,600 men.

The rise in the labour force is attributed to greater numbers of people of working age rather than a higher rate of participation, the survey said.

Ireland's employment and labour force growth rates have grown at a much faster rate than the rest of the EU in recent years, according to the Central Statistics Office.

"The latest increase is more moderate than before but still exceeds the most recent rates observed in other EU countries," the office said. Full-time employment rose by 49,400 in the year to 1,426,900, while part-time employment grew by 9,900 to 283,000.

All regions benefited, according to the survey, with Dublin enjoying the lowest unemployment rate at 2.6 per cent. The Border region had the highest rate at 5.8 per cent.

Construction was the fastest growing sector, with a rise of 20,200. Education and health came next, up 15,900, with the wholesale and retail trade employing an extra 13,000 and financial and other business services accounting for 11,300.

The numbers in agriculture, forestry and fishing fell by 12,100. IBEC said growth would slow with the labour force not rising as fast as it did in recent years. "It will, however, continue to be necessary to source some labour from outside the country to meet skill gaps and to advance the major infrastructure projects," the business lobby group said.

Unless steps are taken to provide child care on a widespread and affordable basis, the labour shortage would intensify, said Mr Pat Rabbitte, Labour Party spokesman on enterprise, trade and employment. The price of housing has become a barrier to re-entry to the workforce for many young Irish abroad, he said.

The Irish National Organisation of the Unemployed described the fall in unemployment as "heartening", but said the figures did not take into account job losses as a result of foot-and-mouth disease and recent cross-sectoral job losses in the technology and traditional industries.

CSO senior statistician Mr Joe Treacy said job losses as a result of foot-and-mouth had yet to feed through to official figures and any unemployment effects would not be felt until the next quarter.

Fine Gael spokesman on enterprise, trade and employment Mr Charlie Flanagan called on the Government to put in place a programme of regional development to combat disparities in employment around the State.