Analysis: Dr Alan Barrett was careful yesterday to avoid stepping on the toes of the Central Statistics Office (CSO).

As newly installed co-editor of the ESRI's quarterly commentaries, Dr Barrett was, however, happy to point out that he does not quite agree with the CSO's sums.

In particular, he is not convinced about the statisticians' view on productivity. He explained yesterday that while the CSO is presuming that a lot of new jobs are coming in areas of low productivity, the ESRI sees no reason to believe that productivity levels have declined.

And until it has evidence from a stream of official data to suggest anything has changed, the institute will not be swayed from an otherwise very optimistic view of the economy.

With a growth forecast of 5.7 per cent for gross domestic product, the ESRI is putting itself above the Department of Finance's expectation of 5.1 per cent. In some circumstances, the differential might not raise any eyebrows. In light of last week's official first-half growth estimates from the CSO, however, it will attract some attention.

The CSO reckons the economy grew by about 3 per cent over the first half of the year - a significantly more modest performance than the ESRI is expecting for the full year. "If you take employment growth and then take a moderate productivity performance, you come up with our picture," said Dr Barrett.

In support of the institute's optimistic outlook on growth, Dr Barrett pointed mostly to the strong employment growth that continues to be recorded in the economy. He also looked to the most recent Exchequer returns, which showed a very buoyant tax position.

Employment growth came in at 93,000 new jobs in the year to the end of June, bringing to almost two million the total number of people working in the economy.

Dr Barrett acknowledges, however, that the devil can lie in the detail. Within the jobs growth, the largest increase came in the construction sector, which everybody knows continues to boom.

As befits any economist in his position, Dr Barrett is a little bit uneasy about this rampant expansion in the building world.

He wonders what might happen if or when construction slows down and starts to spit out the thousands of workers it has absorbed over the past few years.

To answer this question, the ESRI has thought about the profile of the State's newest construction workers and has concluded that many of them could have difficulty finding work in other areas that should continue to grow. This is because they may have come from slowing sectors such as agriculture and manufacturing, where they did not gain the skills they might need in today's booming service sectors. And it is here that we arrive at "structural unemployment", a condition the ESRI says the State must address before it develops.

The way to do this, Dr Barrett says, is to organise training and education programmes before it is too late.