Job numbers will continue to surge over the next 18 months following the fastest growth in four years, Fás has predicted.

In its latest quarterly labour market commentary, the State training and employment agency says the short-term outlook at least remains highly positive. However, it questions whether the economy will be able to sustain the current low level of unemployment in the medium term.

The analysis, prepared by Fás economist Brian McCormick, says the labour market's impressive performance in 2004 continued into the first quarter of this year. "Employment growth accelerated in the first quarter of 2005, with the number of jobs up 72,400 (+3.9 per cent) on the first quarter of 2004, giving a total employment figure of 1.908 million."

"This represents the largest year-on-year rise in employment in over four years," it says.

There was also a slight fall in the numbers unemployed, with the seasonally adjusted rate down to 4.2 per cent, compared to 4.4 per cent a year earlier.

The services sector continues to be the main source of jobs growth, accounting for two-thirds of the overall increase in employment.

Construction also enjoyed strong growth, with an additional 30,800 jobs created between the first quarters of 2004 and 2005. Manufacturing remained static while the number employed in agriculture fell by 6,400 to 112,500.

A notable feature of the labour market was the continued increase in the number of women at work, to 810,100 - or 42 per cent of the total workforce. However, the increase in female participation has been heavily concentrated in services, which accounts for the majority of part-time jobs, the report points out.

The largest source of labour force growth in recent quarters has been net migration - growing by 25,000 in the first quarter this year compared to the same period in 2004. While the number of work permits issued has fallen, there has been a steady flow of immigrants from the new EU member states, the commentary adds.

"An average of 7,000 Personal Public Service (PPS) numbers per month have been allocated to migrants from the former accession countries since EU enlargement in May 2004," the report states.

Looking ahead, Mr McCormick says a continued good performance by the economy, which is expected, should be accompanied by strong jobs growth in 2005 and 2006. "Specifically, we are forecasting employment to grow by 2.7 per cent (+51,000) this year and by 1.7 per cent (+33,000) in 2006.

"However, these forecasts have been made more tentative by continuous high oil prices and the weakness of the major euro economies."

Explaining his concerns about unemployment in the medium term, Mr McCormick says the growth in jobs has been lop-sided, "dominated as it has been by low-productivity sectors".