The country's unemployment rate has been revised sharply lower to 5.3% in May, from an initial estimate of 5.8% following strong jobs growth in the first quarter.

This matches its low in February 2008, just before the global financial crisis, figures from the Central Statistics Office show today .

The revision also means the unemployment rate has now reached the level where the Department of Finance  forecast it would be on average during 2019 and 2020.

The CSO's latest Labour Force Survey shows the number of people in work in the three months to March rose by 62,100 to 2.22 million, a 2.9% year-on-year increase.

This compares with a 3.1% rise in the previous quarter, the CSO said. 

The revision means the economy is closer than initially thought to full employment, where just about everyone who wants a job has one.

Finance Minister Paschal Donohoe said yesterday that the economy is not yet overheating, but capacity constraints are emerging as the jobs market approaches full employment.

Economists define this as the highest level employment can reach without setting off inflation.

However, analysts at Davy Stockbrokers said the drop in unemployment was partly explained by a sluggish recovery in participation - the number of people in the job force who wanted to work. 

Consequently, it was not a wholly useful indicator of the slack in the labour market, the stockbrokers said.

The participation rate was flat in the year to the end of March at 62.1%, compared with a pre-recession peak of 66.7%. 

"The big picture is that the labour market recovery is far from complete, with rising participation and immigration set to be the drivers from here," Davy economist David McNamara said.

Central Bank Governor Philip Lane, who has also urged the Government to plan for possible overheating, said last month he would not become too concerned about the labour market until the jobless rate falls below 5%.

Even then, Professor Lane said he would have an open mind, pointing to revisions in advanced economies like the US, where unemployment has fallen below 4%, that show how low the jobless rate can go. 

IBEC said the biggest challenge facing the labour market will be finding workers to fill vacancies, with its members finding it increasingly difficult to attract and retain talent. 

"The Government needs to tackle pressing quality of life issues, especially housing supply and other infrastructural deficits. If these problems are not fixed, we risk undermining competitiveness and eroding the gains of the recovery in recent years," Ibec's economist Alison Wrynn said.

Today's CSO figures reveal that the overall employment rate for workers between the ages of 15 and 64 was 67.9%, compared to 66.9% the same time last year. 

The CSO's Labour Force Survey figures show that the number of employees in the first quarter of 2018 stood at 1,867,500, up 39,900 (2.2%) over the year. 

It also reveals that the number of self-employed persons increased by 20,500 (6.5%) over the year to 338,200. 

Today's CSO figures also show that a total of 132,900 people were unemployed in the first quarter of 2018.

This was down 18.6% from the same time last year and marked the 23rd quarter in a row of falling unemployment. 

Today's figures show that long term unemployment accounted for 37.7% of total unemployment in the first three months of the year.

Male unemployment decreased by 19.1% to 73,800 over the year to the first quarter of 2018, while female unemployment decreased by 18.1% to 59,200. 

The Labour Force Survey stats also reveal that the total number of people in the labour force stood at 2,353,400 in the first quarter of 2018, up 1.4% or 31,700 from the first quarter of 2017. 

Meanwhile, the number of people not in the labour force stood at 1,470,500 - an increase of 1.1% or 16,400 from a year earlier.