Sat, Jul 30, 2011 - Page 10 News List

Spain unemployment drops, but remains above 20%

Bloomberg

Spanish unemployment, the highest in Europe, held above 20 percent for the third consecutive quarter, undermining the nation’s recovery from its worst recession in six decades.

The jobless rate fell to 20.9 percent in the second quarter, the National Statistics Institute said yesterday in Madrid, which compared with 21.3 percent in the previous three months and matched the median forecast of six economists in a Bloomberg News survey.

Consumer prices gained 3.1 percent this month from a year earlier after increasing 3 percent last month, the institute said in a separate report.

Spain’s recovery from the collapse of the debt-fueled property bubble is being undermined by the deepest austerity measures in at least three decades as the government aims to narrow the euro region’s third-largest budget deficit to 6 percent of GDP this year from 9.2 percent last year. The unemployment rate has eroded support for the Socialist government, which faces elections by March that polls indicate it will lose.

The government last week decided to temporarily restrict immigration from Romania to those who can show a job contract to ease pressure on the labor market. The length of the restriction will depend on how employment evolves in Spain, Development Minister Jose Blanco said on Friday last week.

Spain has 4.83 million jobless, the survey showed yesterday, the most since the data series started in 1996. That compares with 2.96 million in Germany, a country twice its size. The drop in Spain’s registered unemployment, which fell last month for the third month, is due to a seasonal recovery in the country’s tourist industry.

The government expects the jobless rate to average 19.8 percent this year, the finance ministry said on April 6, compared with a previous forecast of 19.3 percent.

The economy is forecast to expand 1.3 percent this year after two years of contraction, with growth accelerating to 2.3 percent next year and 2.4 percent in 2013, it said.

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