Spain: Unemployment falls for first time since Q2 2011
July 25, 2013
The unemployment rate fell to 26.3% in the second quarter, which is down from the 27.2% rate recorded in the first quarter. In addition, the print undershot market expectations that had unemployment remaining at 27.2% and marks the first decline in the unemployment rate since Q2 2011. However, unemployment mostly fell due to seasonal hiring in the country's tourism and agriculture sector and remained well above the 24.6% registered in the same period last year. In absolute terms, the number of unemployed reached 5.98 million in the second quarter, down from the 6.20 million recorded in the first.
The economy gained 149,000 jobs in Q2. The largest increase was seen in services (+154,800), followed by agriculture (+37,500), whereas construction (-26,500) and industry (-18,800) experienced a negative performance.
High unemployment will continue to hamper private consumption in the near future and put additional pressure on the already strained government's fiscal position, as unemployment benefit payments will remain high. The dramatic situation of the labour market also translates into reduced revenues for the government's coffers, contributing to concerns regarding the sustainability of the country's pension system.
The government expects unemployment to average 27.1% in 2013, before falling slightly to 26.7% in 2014. FocusEconomics Consensus Forecast participants expect unemployment to average 26.9% in 2013, which is up 0.1 percentage points over last month's projection. For 2014, the panel sees the unemployment rate at 26.8%.