Spain’s unemployment fell for the first time in two years in the second quarter, bolstering Prime Minister Mariano Rajoy’s forecast of an economic recovery.
The number of jobless fell as the rate declined to 26.3 percent of the workforce in the three months through June, compared with a record 27.2 percent in the previous quarter, the National Statistics Institute in Madrid said today. Economists expected the rate to remain unchanged, according to the median of seven forecast in a Bloomberg News survey. Unemployment is three times higher than before the economic slump started in 2008.
Economists predict that the highest jobless rate in Spain’s democratic history will resume climbing as the euro region’s fourth-largest economy struggles to exit a two-year recession. Still, the Bank of Spain estimates the contraction eased in the second quarter, underscoring Rajoy’s bet that tourism and exports will reboot growth starting July 1.
“Job creation isn’t recovering in a durable manner yet,” Jose Antonio Herce, a partner at Madrid-based consulting firm Analistas Financieros Internacionales, said in a telephone interview. “It improves every year in the run-up to the peak tourism season and it drops after August.”
The total number of jobs in Spain increased by 149,000 to 16.8 million, while the number of unemployed declined by 225,200 as some jobless gave up looking for work. The unemployment rate among immigrants fell to 35.7 percent.
Today’s unemployment figures are “good news,” Economy Minister Luis de Guindos said in Madrid, adding that reforms must continue as recovery remains “fragile.”
“The Spanish economy is leaving the recession behind,” Guindos told lawmakers in the Spanish capital. “We are close to a period of recovery in which it’ll be key to deepen reforms in order to avoid a false recovery as happened in 2010,” he said. “Difficult challenges remain ahead, the biggest of all is unemployment”
The government is reluctant to respond to calls by the country’s central bank and the International Monetary Fund to deepen a labor-rules overhaul implemented last year to improve companies’ competitiveness. The Labor Ministry said it’ll present a report on the changes this month after which it may seek a review from an independent body.
Volkswagen’s Seat unit said this week it reached an agreement with unions in Spain to cut working hours in order to adjust output to market conditions without firing staff. The automobile maker said workers may avoid pay cuts if they opt for training entitling them to unemployment benefits.
The yield on Spain’s 10-year bonds fell to 4.654 percent as of 12:40 p.m. Madrid time. That compares with a euro-era high of 7.75 percent in July, before European Central Bank President Mario Draghi pledged to “do what it takes” to hold the euro together. Draghi has since repeated that EU countries need “growth-friendly” policies that don’t “unravel” the austerity steps that’ve been taken.
Spain’s budget deficit was the largest in the European Union last year as it received EU aid to bail out a banking industry burdened with bad loans. The nation has been granted until 2016 to bring overspending back within the EU limit of 3 percent of output, compared with 10.6 percent last year.
Eurostat data this week showed its public debt load surged above the EU average -- excluding Croatia -- in the first quarter for the first time in the single currency’s history.