The Irish economy will create 65,000 extra jobs in the year ending April 1999, according to the FAS Labour Market Review due to be released today.

The review also predicts a drop of a further 20,000 in the number of unemployed, bringing the unemployment rate down to 6.5 per cent by the end of April. At the end of November, it was 7.2 per cent.

The FAS review, which tends to give particularly accurate forecasts of labour market trends, says that employment growth is slowing down. In the year ending April 1998, there were 115,000 extra people at work, almost double the anticipated figure for next April.

The traditionally strong foreign-owned manufacturing sector will be particularly hard hit, according to FAS. Employment in these companies grew by only 4.4 per cent last year, compared with 7.6 per cent in the year ending April 1997. "The slower growth resulted from a fall of 38 per cent in new job creation and a 35 per cent increase in job losses," the review states.

However, it says that "indicators for the wider economy have remained stronger than those for manufacturing". This is particularly so in areas like construction and the services sector.

FAS bases its optimism partly on the fact that its own employment offices have received notification of 30 per cent more vacancies this year than in 1997. The State training agency also says that advertising for executive and professional jobs in the national press is running close to the record levels of 1997.

The director general of FAS, Mr John Lynch, believes that the figures suggest economic growth will shrink from 8 per cent this year to 6 per cent in 1999, largely as a result of a slowdown in the growth of exports. These are expected to rise by 11 per cent in 1999, compared with 19 per cent in 1998.

Mr Lynch says that there was "an unprecedented increase of 95,000, or 7 per cent" in employment in the spring. This moderated later in the year, but he estimates that the average employment level for 1998 will turn out to be about 85,000 higher than in 1997.

The Labour Market Review, which was written by FAS economist Mr Terry Corcoran, predicts that average employment in 1999 will be 55,000 higher again than last year. This means that unemployment will continue to fall sharply.

Despite the extremely elastic labour supply shown in recent years, the review expresses concern that there will be a further tightening in the labour market for manual workers and for less-skilled service workers. This is largely due to increasing numbers of secondary students continuing their studies to third level, and continuing difficulties in attracting the long-term unemployed back into the labour market.

The fall in youth unemployment is sharper than for any other group. In 1993, it stood at 25 per cent, but last year the figure was down to 12 per cent and the latest FAS figures show that only 11.5 per cent of 1997 school leavers were still unemployed 12 months later.

The long-term unemployed, as a percentage of the labour force, has dropped dramatically, from 9 per cent in 1993 to 3.9 per cent in 1998. However, this figure is partly due to the huge increase of nearly 220,000 in the labour force since 1993. The actual number of long-term unemployed has fallen from 125,000 to 64,000 since 1995, or by slightly under 50 per cent.

The large increase in the labour force and the extreme flexibility in supply has been due almost entirely to the much larger number of women in the workplace. Since the current jobs boom began in 1993, the employment rate amongst the working age population has risen from 53 per cent to 61 per cent.

However, the participation rate for women over the same period has risen from 39 per cent to 49 per cent. In the most economically active age group, 25 to 44 years old, the percentage of women at work has risen from 39 per cent in 1988 to 63 per cent.

One welcome aspect of the jobs growth is that practically all of it has been in productive sectors. Out of 312,000 jobs created since 1993, 291,000 have been in industry or services. Only 11,000 have been in the public sector and 24,000 on State schemes.