Spain: Unemployment falls again in Q3
October 24, 2013
The unemployment rate fell to 26.0% in Q3, which is down from the 26.3% rate recorded in Q2 and marks the lowest level in a year. In addition, the print slightly undershot the 26.1% rate that markets had expected and marks the second consecutive decline. Unemployment, however, mostly fell due to seasonal hiring in the country's all-important tourism sector. In absolute terms, the number of unemployed reached 5.91 million in the third quarter, down from the 5.98 million recorded in the previous period. In Q3, the country's workforce dropped by 33,300 people to 22.7 million people, which is the lowest level since Q1 2008.
The economy created 39,500 jobs in Q3. The services sector was entirely responsible for new hiring, having added 123,900 jobs. On the other hand the number of jobs in the agriculture (-55,000), industry (-19,700) and construction (-9,700) sectors decreased.
High unemployment will 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 for the government's coffers, contributing to concerns regarding the sustainability of the country's pension system.
The government expects unemployment to average 26.6% in 2013, before falling slightly to 25.9% in 2014. FocusEconomics Consensus Forecast participants expect unemployment to average 26.5% in 2013, which is unchanged over last month's projection. For 2014, the panel sees the unemployment rate at 26.3%, which is down 0.1 percentage points over the previous month's estimate.