Spain: Unemployment increases in Q1 on services
April 29, 2014
The unemployment rate inched up from 25.7% in Q4 to 25.9% in Q1, which was in line with market expectations. In absolute terms, the number of unemployed persons reached 5.93 million in the first quarter, which was broadly unchanged compared to the 5.94 million recorded in the previous period.
The country's workforce recorded the largest drop since Q1 2001. It fell by 187,000 people over the previous quarter to 22.88 million in Q1, which represented the lowest level since Q1 2008. The services sector decreased the most, losing 126,000 jobs. The number of jobs in the construction (-48,200) and industry (-42,200) sectors also worsened, whereas the agriculture sector recovered 31,800 jobs. Spain's workforce continues to shrink as immigrants and nationals leave the country, dashing hopes of a prompt recovery in the job market.
High unemployment is going to continue to impact the economy, hampering private consumption in the near future and putting additional pressure on the already-strained government to pay unemployment benefits. The dramatic situation in the labor market also translates into reduced revenues in the government's coffers, thus contributing to concerns regarding the long-term sustainability of the country's pension system.
The government expects unemployment to average 25.9% in 2014. FocusEconomics Consensus Forecast participants expect unemployment to average 25.5% in 2014, which is down 0.1 percentage points over last month's projection. For 2015, the panel sees the unemployment rate at 24.4%.