Unemployment dropped to an 18-month low in June, according to new data from the Central Statistics Office (CSO). The numbers claiming benefits fell to 167,000, when seasonally adjusted, from 168,000 in May.

However, there was an increase in the unadjusted total to 168,952 from 161,972, the latest live register shows. The figures mean the standardised unemployment rate remained static from May at 4.3 per cent.

Meanwhile, the number of notified redundancies fell 31.6 per cent in June to 1,848 compared with the same month in 2003. However, redundancies for 2004 to date are still running marginally ahead of last year.

The Government said the fall in the seasonally adjusted figure vindicated its economic policy, while the opposition seized on the rise on the unadjusted total.

The Taoiseach, Mr Ahern, said strong economic growth since the start of the year augured well for the jobs market this year.

He said: "We can be confident about our future prospects. The recently concluded pay agreement, when ratified, will create a stable environment for further investment, job creation and growth."

But the opposition said the figures were "disappointing" in light of recent economic upturn. Fine Gael urged the Government to "buck up" its handling of the economy. Deputy leader and finance spokesman Mr Richard Bruton said: "Uncompetitiveness continues to be a real problem in the economy, due in no small part to Government-imposed business costs and stealth taxes."

Mr Brendan Howlin, Labour spokesman on Enterprise, Trade and Employment, said manufacturing jobs were still being lost, while much new employment was relatively low paid in nature.

He said: "Although unemployment remains well below the record figures reached in the late 1980s and early 1990s, these live register figures show that there is no room for complacency."

The Irish National Organisation for the Unemployed welcomed the seasonally adjusted reduction, saying the end of school may have added to the increase in the unadjusted figure.