The unemployment rate fell less than expected in the first quarter of the year, according to figures from the Central Statistics Office, dropping only slightly to 12%.

Unemployment eased back from 12.2% the previous quarter and has now fallen for eight successive quarters from a high of 15.1% two years ago. 

However the fall failed to match the 11.8% estimated in monthly unemployment claims data, which would have taken the rate down to the euro zone average.

The Government must implement one last round of tax hikes and spending cuts in October to cut its still-high budget deficit and Taoiseach Enda Kenny said yesterday that any hope of easing the cuts depends upon the strength of the economy.

"The upward revision in the unemployment rate to 12% looks a little disappointing, as does the marginal 0.1% jobs gain on the quarter - especially given exceptionally strong surveys of companies' employment intentions," said Conall Mac Coille, chief economist at Davy Stockbrokers

"But excluding an erratic fall in part-time work, the underlying picture of strong improvements remains,” he said.

“We're still confident that the Irish labour market is improving but today's data don't provide the headline-grabbing figures the Government might have hoped."

The number of people in work rose by just 1,700 or 0.1% quarter-on-quarter, compared with a 10,600 gain in the fourth quarter of last year, the CSO.

Almost two thirds of those in unemployment are classified as long-term unemployed having been without a job for over a year, although that rate has also begun to creep down in recent quarters.

In the year to the end of March, the number of people employed in the country rose by 42,700, according to the CSO.

This brought total employment during the period to almost 1.89m – 2.3% higher than in the year to March 2013.

There were 46,400 more full-time jobs during the period – though this was somewhat offset by a 0.8% drop in the number of workers employed in part-time positions.