Unemployment fell to a seasonally-adjusted 8.7% of the work force in the first quarter, its lowest level since the second quarter of 2001, the Central Bureau of Statistics said Wednesday. Falling from 8.8% in the fourth quarter of 2005, the unemployment rate has been steadily going down from a peak of nearly 11% at the end of 2003. "In my opinion this is the end [of the drop in unemployment]. It will likely go down to 8.5% in the next quarter or two, but that's it," said Excellence Nessuah Chief Economist Shlomo Maoz, citing interest rate hikes and a decline in job creation. The improvement was tempered by a slight dip in the rate of participation in the work force, which fell to 55.4% of the civilian population in the first quarter from 55.6% in the previous three-month period, seasonally adjusted, as minimal job creation failed to keep pace with the population's rate of growth. Male participation shifted to 60.8% from 60.9% and female participation slipped to 50.3% from 50.5%. Trend data, on the other hand, indicated stability in work force participation. While putting the minor change in participation to little more than "statistical error," Israel Institute for Economic Social Research Chairman Roby Nathanson stressed that, alongside the relatively small drop in unemployment, the data show that "the amount of work in Israel is not growing," despite strong economic growth. Low work force participation "is a continuing structural problem" in the economy, he said. "Almost every other person in Israel does not work." Though unemployment will likely hover between 8% and 9% of the labor force over the next year, programs to increase participation in the labor force, together with sustained economic growth, could bring unemployment as low as 6%-7%, Nathanson estimated. Maoz praised the decrease in unemployment achieved to date, attributing it to former finance minister Binyamin Netanyahu's economic policies, which he said created 220,000 jobs. Welfare cuts forced people into the work force and a lower government deficit led to low real interest rates, which - together with tax cuts - freed up funds to hire more workers, he said, but noted that interest rates have been raised too high since. "The Bank of Israel interest rate is already too high, and it should not be raised further," he said. Another analyst noted that the run-up to elections may have artificially boosted employment, but added that "an additional drop [in unemployment] is always good." The data released by the bureau indicate that the total number of employed Israelis grew a seasonally adjusted 0.3% to 2,540,500 in the first quarter. Part-time workers decreased by 1.3% to 769,700, as the number of those with full-time jobs rose 0.9% to 1,598,100. Part-time workers had increased and full-time workers decreased in 2005. The ranks of temporarily absent workers expanded 5.4% to 172,900. While the number of workers in agriculture in the first quarter was 17.9% below what it was one year before and there were 12.5% fewer workers in electricity and water supply, there were 10.1% less Israelis employed in health, welfare and social work and 6.3% less in public administration. The work force dedicated to community, social, personal and other services grew 24%; the number of Israelis working as domestic personnel in private households rose 22.6%; hospitality and restaurant staff expanded 16.3%; transportation, storage and communications grew 13.1%; employment in banking, insurance and finances advanced 6%; construction 5.6%; business services 4%; commerce and repairs 3.7%; and industry 3.3%.