Photographer: Pau Barrena/Bloomberg

Spain Unemployment Falls to Seven-Year Low Amid Budget Talks

Updated on
  • Jobless rate drops to 18.6% in boost for prime minister
  • Government sees growth of 2.5% this year while budget pending

Spanish unemployment fell to a seven-year low in the fourth quarter in a boost for Prime Minister Mariano Rajoy, who has made job creation the centerpiece of his administration.

The jobless rate dropped to 18.6 percent in the three months through December, the National Statistics Office said in Madrid on Thursday. That’s down from 18.9 percent in the third quarter and compares with a Bloomberg survey of economists predicting a decline to 18.7 percent.

The total number of Spaniards out of work stood at approximately 4 million people for the final quarter of last year compared with a record high of 6 million at the height of the economic crisis in 2013. Agriculture and industry led the pace of job creation for the quarter, while posts pegged to services and construction declined.

“It’s a positive surprise. Having said that, the pace of job creation is slowing,” Estefania Ponte, economist at BNP Paribas Personal Investors in Madrid, wrote in a note to clients. “This points to less dynamism in private consumption.”

Reacting to the figures, Rajoy said job creation on an annual basis is consistent with his election pledge to have 20 million Spaniards working by 2020 from the current 18.5 million. Over the past year, the Spanish economy added close to half a million jobs.

“If we’re able to maintain our economic policy, we’ll get to 20 million jobs,” he said in an interview on Onda Cero radio after the data were released. “There’s a lot left to do, but we’re moving forward.”

The latest figures come as Rajoy’s People’s Party seeks to approve a budget for 2017 after a 10-month political deadlock delayed the process. After losing his parliamentary majority, Rajoy will need a cross-party agreement to get the bill approved. Last week, Budget Minister Cristobal Montoro said the government aims to reach an accord before it presents the plan in parliament to stop it from being voted down.

The European Commission, which oversees the national budgets of each member state, gave Spain’s draft proposal the green light although it predicts a small deficit miss. The Bank of Spain and the Spanish government predict growth of 2.5 percent for 2017.