- Jobless rate rises in first quarter during political impasse
- New elections set for June after party negotiations fail
Spanish unemployment rose for the first time in a year as the nation gears up for a new election after four months of talks to form a coalition government collapsed.
The jobless rate increased to 21 percent in the first quarter, the National Statistics Institute said in Madrid Thursday. Economists expected a reading of 20.9 percent, unchanged from the previous three months, according to the median forecast in a Bloomberg survey.
The number of Spaniards without a job rose by 11,900 to 4.8 million in what is typically a challenging quarter given the labor market’s seasonal dynamics, which sees firms shedding staff as tourist activity drops. Despite Thursday’s data, the Spanish economy has added 574,800 new jobs over the past 12 months as the recovery gained momentum.
The latest health check on the Spanish economy comes as voters prepare for a second general election in six months after King Felipe called to a halt efforts to piece together a governing coalition on April 26. The election will be officially called May 3, and the ballot is expected to take place June 26 with no candidate seen winning a majority.
Separate preliminary release showed consumer prices fell 1.2 percent in April from a year earlier, extending a nine-month streak of inflation rates below zero. On a monthly basis, prices rose 0.4 percent. Both measures missed economist forecasts in Bloomberg surveys.
While the political scenario remains unclear, the caretaker government led by Mariano Rajoy expects the economy to grow 2.7 percent in 2016 -- down from a previous estimate of 3 percent -- and 2.4 percent next year. Spain grew 3.2 percent in 2015, the fastest expansion in eight years. The government sees unemployment falling to 19.9 percent this year and reaching 17.9 percent in 2017.
Banco Santander SA Chief Financial Officer Jose Antonio Garcia Cantera said Wednesday the Spanish economy is “thriving” despite the political uncertainty with mortgage lending and retail sales accelerating.