Spain's fourth-quarter jobless rate slips, in good news for growth

Spain's jobless rate unexpectedly edged lower in the fourth quarter, data showed on Thursday, giving more credibility to the government's forecast that the economy kept recovering from the impact of the COVID-19 pandemic in the quarter.

The National Statistics Institute (INE) said the rate stood at 16.13% in October-December, down from 16.26% three months earlier, but still much higher than 13.78% a year ago as the country's economic activity remained hindered by restrictions. For all of last year, unemployment jumped to an average of 15.53% from 14.1% in 2019.

Economists polled by Reuters had forecast quarterly unemployment at 16.6%. Employment increased in all sectors in the quarter, led by services, the INE said. The number of those without a job fell by 3,100 to around 3.72 million, while those employed rose 0.87% to 19.34 million.

In regional terms, underscoring the importance of tourism in the world's second-most-visited country, the Balearic and Canary islands, tourist spots popular with holidaymakers, registered some of the steepest job losses last year. Chronically high unemployment plagued Spain's economy for decades and it remains one of the EU countries with the highest share of people out of work, especially among young people.

Youth unemployment soared to 40.15% in the quarter from 30.5% a year ago, but slipped from 40.45% in July-September. "Job creation in the second part of the year has allowed to recover a large part of what was lost in the first half," Economy Minister Nadia Calvino told an event in Madrid.

While the Bank of Spain foresees a small economic contraction in the fourth quarter as the likeliest scenario, Calvino has said on various occasions GDP probably expanded in the fourth quarter, despite new business restrictions imposed to curb a resurgence in coronavirus contagion. That would follow a rebound in the third quarter after the end of a nationwide lockdown.

"Rising employment dispels the most negative scenario for fourth-quarter GDP growth, that hopefully will be positive", tweeted economist Ignacio Conde-Ruiz. The Spanish government expects a record 11.2% economic contraction in 2020 and a rebound of at least 7.2% in 2021. The INE is due to release fourth-quarter GDP data on Friday.

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