Spain's Jobless Claims Tumble -- 2nd Update

By David Román 

MADRID--Spain reported a sharp drop in the number of people seeking unemployment benefits in November, evidence that its economic recovery is boosting employment even as many job seekers give up and leave the country.

The Labor Ministry said Tuesday that jobless claims last month declined by 296,792 on the year, to 4.51 million. Compared with October, the seasonally-adjusted number of jobless claims fell by 51,308, the second steepest month-on-month drop since the current statistical series began in the mid-1990s.

Spain's economy has been steadily expanding since it emerged in mid-2013 from its second recession in five years. Last month it added 95,040 jobs, according to seasonally adjusted data, the highest monthly increase since August 2005 when Spain was experiencing a construction boom. Gross domestic product rose 0.5% in the three months through September.

Prospects for continued job growth look promising. Last week the Spanish unit of the Ford Motor Co. said it planned to hire 700 workers early next year as car makers keep up with growing demand from the home market and abroad.

The Labor Ministry's jobless claims list is a different measure from the benchmark quarterly unemployment rate published by the government's statistics institute. The institute counted 5.43 million unemployed at the end of September, yielding an unemployment rate of 23.7%--down from a peak of 27% in the first quarter of last year.

Some analysts say an exodus of working-age people seeking jobs elsewhere has been an equally strong contributor to the drop in jobless claims.

The statistics institute said the workforce contracted by half a percentage point in the third quarter from the same period last year.

Ioan Smith, an analyst with KCG Europe, cited preliminary government data showing that 257,000 more people--Spaniards and foreigners--left Spain last year than moved to the country. The data showed net emigration among Spaniards, many of them highly-skilled, was 79,000.

Without that decrease in the workforce, Mr. Smith said, Spain's unemployment rate would be well above 26%.

Spanish officials say job growth is strong--the result of a labor market overhaul implemented in 2012 that made it cheaper for companies to hire and fire employees and to switch working hours and positions.

Deputy Labor Minister Engracia Hidalgo said Tuesday that the number of full-time, permanent contracts in November was 28% higher than in the same month a year ago. The trend is a boost for economic activity, economists say, because workers on permanent contract typically spend and invest more than those on temporary contracts.

Visiting Paris on Monday, Spanish Prime Minister Mariano Rajoy said he expected Spain's unemployment rate to continue its downward trend for the rest of the year "and hopefully more strongly throughout 2015."

Jobless claims declined most sharply last month in construction, by 1.7%--evidence of a modest rebound from a property bust that has destroyed more than two million construction jobs since 2008. Jobless claims in manufacturing, a sector boosted by rising car sales, were down 1.2% from October. Data released Monday showed car sales jumped 17.4% in November on the year.

Write to David Román at [e-mail]

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