The unemployment rate fell to 16.7pc last month as thousands of employees returned to work.
ew official figures show that the rate fell by over 6pc in July from 23.1pc in June.
However, unemployment is still over 10pc higher than it was before the crisis when the economy was close to full employment.
Central Statistics Office data released this morning also reveals that the pandemic has hit younger people hard.
Unemployment stands at 41.2pc for 15 to 24 years olds compared with 13.7pc for over-25s.
The standard unemployment rate, which does not include pandemic payment claimants, rose to 5pc last month, up from 4.6pc in June.
However, it was down from 5.1pc 12 months ago.
Economist Dan O’Brien tweeted that Ireland’s official unemployment estimate had fallen sharply after peaking at almost 29pc in April.
“Much better than I would have expected, so good news,” he said. “But plenty of caveats, including how many wage subsidised jobs will ultimately be lost.”
Chief Economist at Grant Thornton Ireland, Andrew Webb, said the latest labour market information continues to show the severity of the pandemic on economic performance.
He said this included a particularly severe impact on younger people.
“The new COVID-19 adjusted measure of unemployment indicates a rate of 41.2pc for those aged 15 to 24 years and 13.7pc for those aged 25 to 74 years, reflecting the typically higher proportion of younger employees in the sectors that are last to re-open and hardest hit by the lockdown,” he said.
“It is crucial that these ‘temporary’ unemployed don’t become permanently so. The various measures in the July stimulus aimed at getting us back into the consumption patterns aim to ensure there are jobs to return to for those currently unemployed.”
He said there are nervous times ahead as we wait and see how the economy performs over the coming months."
Economist at job website Indeed, Jack Kennedy, said today’s figures bring some positive news.
“The success of the July Jobs Stimulus plan will be important for retaining existing jobs and creating new ones,” he said. “Extension of PUP and the Employment Wage Support Scheme will help those most affected stay afloat, while recruitment subsidies under the JobsPlus scheme should help the 41.2pc of those under 25 who are receiving PUP.”
He said this will be very important, as the option of emigration for young people we usually see during times of economic distress is currently unavailable.
“Although we can see that things are slowly getting better, the partial delay of phase four plans is a stark reminder of just how reliant the economy is on the public health situation,” he said.
“Although much of the economy has reopened successfully, the threat of reclosure looms for many who are just now getting back on their feet. Hopefully we will continue to see the steady momentum in the economy we’ve seen over the past weeks."