Spanish unemployment fell to the lowest level in almost four years in the second quarter, adding to expectations that stronger growth is translating into faster job creation.
The jobless rate dropped to 22.4 percent from 23.8 percent in the previous quarter, the National Statistics Institute said in Madrid on Thursday. That is in line with a Bloomberg News survey of 11 economists that called for a decline to 22.5 percent.
“Employment growth in the second quarter was sharper than expected, which suggests the recovery is taking a firmer grip on the economy,” said Raj Badiani, an economist at IHS Global Insight. “The government is better placed to defend its pre-election narrative that the recovery is more inclusive.”
The drop takes the unemployment rate to the lowest level since the third quarter of 2011, several months before Prime Minister Mariano Rajoy arrived in office with a pledge to create more jobs and kick-start economic growth. Under his tenure, unemployment rose to a record high of 26.9 percent in the first quarter of 2013, up from 22.6 percent at the start of his term in December 2011.
Despite the drop, the Spanish unemployment rate remains the second-highest in the euro region, after Greece, with more than five million people out of work.
Youth Unemployment
Spanish youth unemployment dipped to 49.2 percent in the second quarter, the first time it’s been below 50 percent since the end of 2011.
Rajoy’s government has raised its growth forecast for this year to 3.3 percent from 2.9 percent in April, putting the euro area’s fourth-largest economy on track to outpace its peers. The government foresees 3 percent expansion in 2016.
Rajoy, 60, is racing to win back disenchanted voters, promising to create 600,000 new jobs this year alone, as Spain gears up for a general election due by the end of the year. Hit by a series of corruption scandals and the legacy of austerity, his People’s Party is facing competition from its traditional rival, the Socialists, and anti-austerity party Podemos led by 36-year-old Pablo Iglesias.
Both challenger parties have pledged to overturn Rajoy’s labor market reform, which his conservative administration credits with being the motor behind job creation.
Speaking in Madrid after the data were released on Thursday, Rajoy said the drop in unemployment shows the reforms taken on by his government are paying off, and reiterated his target to have 20 million people at work if he wins a second term in office later this year.
“This is not the time to undo reforms,” he said. “If we avoid frivolities with reforms, and by taking everyone on board, our goal to create 20 million jobs is possible. I count on you and you can count on us.”
Source: Bloomberg