Spain: Unemployment hits new record high
April 25, 2013
In the first quarter, the unemployment rate rose to 27.2%, which was up from the 26.0% rate recorded in the fourth quarter of 2012. In addition, the print overshot market expectations that had unemployment rising to only 26.5%. At the current level, the unemployment rate is well above the 24.4% registered in the same period last year and marks, in fact, a new record in the country's modern history. In absolute terms, the number of unemployed reached 6.20 million, up from the 5.97 million recorded in the fourth quarter of 2012.
According to the survey, the economy lost 322,300 jobs in the first quarter. The deterioration was broad-based as all the main sectors of economic activity lost jobs over the previous period. The largest decline was seen in services (-170,500), followed by industry (-66,800), agriculture (-60,900) and construction (-24,200).
Rampant unemployment will continue to hamper private consumption in the near future and puts additional pressure on the already strained government's fiscal position, as unemployment benefit payments increase. Moreover, the dramatic situation of the labour market is also translating into reduced revenues for government's coffers, adding concerns regarding the sustainability of the country's pension system.
FocusEconomics Consensus Forecast participants expect unemployment to reach 26.7% in 2013, which is up 0.2 percentage points over last month's projection. For 2014, the panel sees the unemployment rate to reach 26.6%.