Spanish Jobless Rate Holds at EU-High of 17.9 Percent
Spain’s unemployment rate, the highest in Europe, held at 17.9 percent in the third quarter as state stimulus spending put people to work, even as the government warned the figure would rise again by year-end.
The number of unemployed fell by 14,100 from the previous three months to 4.12 million people, the Madrid-based National Statistics Institute said today. From a year earlier, 1.52 million people joined the unemployment lines. The jobless rate was expected to rise to 18.7 percent, according to the median forecast in a Bloomberg News survey of eight economists.
Spain’s government has implemented one of the largest stimulus plans in Europe, putting more than 400,000 people to work widening sidewalks and building cycle tracks in cities. Finance Minister Elena Salgado said yesterday that the fourth quarter could bring “more worrying” jobless data as the third quarter was traditionally more favorable for employment.
“We’ll reach the peak of unemployment in Spain in the second quarter of next year, and it will be very close to 18 percent,” said Jose Carlos Diez, chief economist at Intermoney Valores in Madrid, the only economist in the Bloomberg survey to forecast a third-quarter rate below 18 percent.
Immigrants Leaving
The active population, or the number of people employed or looking for work, fell by 89,000 people in the third quarter, or 0.4 percent, and most of the decline was among foreigners, suggesting some immigrants may have gone home.
The International Monetary Fund forecasts unemployment will exceed 20 percent next year, and joblessness among young people is almost twice that level, sapping support for Prime Minister Jose Luis Rodriguez Zapatero. Spain’s opposition People’s Party extended its lead over the ruling Socialists to five percentage points, the most since Zapatero was first elected in 2004, according to an Oct. 12 poll in newspaper Publico.
Zapatero’s Socialists would win 38 percent of the vote compared with 43 percent for the PP if elections were held now, said the poll prepared by Publiscopio. Unemployment is Spaniards’ main concern, according to the state- run Center for Sociological Research.
Once the motor of job-creation in the euro region, Spain is now suffering from the end of a decade-long construction boom that has left a glut of 1 million new, unsold homes and produced the deepest recession in more than half a century. The IMF expects the Spanish economy to contract 0.7 percent in 2010, while the euro area, U.S., and U.K. post full-year growth.
Rising joblessness is swelling the budget deficit as the government has extended jobless benefits for the long-term unemployed and is implementing stimulus measures worth 2.3 percent of gross domestic product. The shortfall will swell to 9.5 percent of GDP this year, one of the largest in the euro region, before narrowing to 8.1 percent in 2010.