Spain Jobless Claims Fall on Christmas Hiring in Rajoy Boost

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  • Decline in unemployed welcome news for prime minister
  • Index for services industry, composite reading beat estimates

Spanish jobless claims fell more than estimated in December as firms boosted hiring for the Christmas season in welcome news for Prime Minister Mariano Rajoy, who made a pledge to cut unemployment a centerpiece of his re-election campaign.

Jobless claims decreased by 86,849 from November after rising for the previous four months, the labor ministry said on Wednesday. That’s more than the 50,000 decline predicted in a Bloomberg survey of seven analysts. Jobless claims fell by 390,534 in 2016, the biggest drop on record as they decreased at a rate of 9.5 percent, the steepest decline since 1999, the ministry said.

Rajoy claimed a second term as Spain’s prime minister in October when he sealed enough support to form a minority government and end a 10-month political impasse. He made creating jobs the cornerstone of his appeal to voters, arguing that only sustained economic growth that brings down unemployment can sustain Spain’s pensions system and welfare state.

“On the back of strong economic growth, job creation will surely follow,” said Angel Talavera, an economist at Oxford Economics in London, by phone. “There is still a long way to replace the jobs that were lost during the economic crisis.”

Separately, an index for activity in the services industry also beat expectations for the month, clocking in at 55 in December. Adding to the positive tone, a composite reading also exceeded the median economist forecast, rising to 55.5 for the month, from 55.2 in November. That comes after Economy Minister Luis de Guindos said last month the Spanish economy had maintained momentum as political uncertainty cleared, arguing that the fourth quarter would be just as good or “slightly” stronger than the third quarter.

The Bank of Spain estimates the nation’s output probably accelerated 0.7 percent in the final three months of the year, while projecting growth of 3.2 percent for 2016 and 2.5 percent for this year, matching the Spanish government’s official projections. The Spanish statistics office is due to release a flash reading for the fourth quarter on Jan. 30.