Irish unemployment hits three-year low of 13.6 percent

DUBLIN (Reuters) - Ireland's unemployment rate fell to a three-year low of 13.6 percent in June, offering some relief to a government desperate to revive an economy that has slipped into recession.

Ireland, which hopes to exit its 85 billion euro EU-IMF bailout at the end of the year, needs to boost growth substantially from 0.2 percent last year to keep debt under control and unemployment is seen as a key measure of the economy's health.

Gross domestic product shrank by 0.6 percent in the first quarter from the previous three months, according to statistics released last week.

"This shows slowly but surely the employment situation is getting better and for the domestic economy unemployment is the key number," said Alan McQuaid, chief economist at Merrion Stockbrokers.

"The feeling on the ground is that things have stabilized. It's not great, but it's not getting worse."

The state statistics office said unemployment had fallen to 13.6 percent in June from 13.7 percent a month before, according to an estimate based on the number of people claiming jobless benefit. The rate has not been that low since April 2010.

Unemployment benefit claimants fell 2,500 to a seasonally adjusted 422,900 on the month, a number than can be affected by emigration or increased participation in education.

The statistics service does a more comprehensive survey of unemployment on a quarterly basis, which in May put the jobless rate at 13.7 percent. It will release data for the second quarter in August.

Economists polled by Reuters said they expected the number of jobless benefit recipients - which includes part-time, seasonal and casual workers but is not seen as a fully accurate measure of unemployment - to fall to 420,000 by the end of the year.

(Reporting by Conor Humphries; Editing by Janet Lawrence)