The Republic’s unemployment rate fell to 4.7 per cent in May, a rate not seen since before the pandemic, as the labour market continues to tighten.

The headline rate was down from 4.8 per cent in April and down from 6.9 per cent in May of last year.

According to the Central Statistics Office (CSO), the seasonally adjusted number of people classified as unemployed last month was 127,500. When compared to May 2021, there was an annual decrease of 46,700.

The CSO said the seasonally adjusted unemployment rate for men was 4.7 per cent for men, down from 4.9 per cent in April, while the rate for women was 4.6 per cent, down from 4.7 per cent.

One of the more unexpected trends to emerge in the pandemic has been the increased incidence of female employment and female participation in the Irish labour force.

The participation rate for women is now close to 60 per cent, higher than at any other time. The increase appears to be driven by increased levels of employment in high-skilled sectors, such as IT, finance and professional services.

“The unemployment figures continue to provide good news in the face of mounting economic uncertainty,” Andrew Webb, chief economist at Grant Thornton Ireland, said.

“With consumer and business sentiment increasingly downbeat, and the Employment Wage Subsidy Scheme ending this week, there are increasing concerns that a recession is coming,” he said.

“How the labour market reacts over the coming months will thus be keenly observed. While a recession is not currently predicted, an increasingly nervous consumer may lead to a switch in that view in the months ahead,” Mr Webb said.

The fear is that in trying to contain inflation with higher interest rates, the European Central Bank may check the euro zone’s tentative recovery from Covid.

With inflation running at a record high of 8 per cent across the euro zone and recovery from the pandemic faltering in the face of Russian energy threats, forecasters are warning that the continent could be pitched into a period of stagflation, which is characterised by low growth and high inflation.