Large drop in Spanish unemployment in June

The number of unemployed people in Spain fell for a fourth consecutive month in June to reach its lowest since September 2009.

Those people officially registered as unemployed dropped by 124.349 or 3.2% month-on-month in June to reach 3,767,054, according to the country´s labour ministry, the second largest fall on record for that month.

In June 2013 it fell by 127,000.

Typically, the summer months see strong gains in Spanish employment as tourism picks up.

In seasonally adjusted terms, unemployment decreased by 48,579 - its largest ever drop in June - for a cumulative reduction of 353,250 or 8.9% year-on-year terms - the largest since at least 1999.

Services saw the largest reduction in unemployment (84,760), with Catolonia registering the largest reduction in total unemployment of all the provinces.

Sandalio Gomez, an expert on labour relations at Spain´s IESE Business school in Navarre told Europa Press that the figures were "good news", revealing a "large" reduction in the number of unemployed together with a significant 90,000 increase in the number of people receiving Social Security coverage.

A larger proportion of people being added to staff also points to growing confidence among businessmen in the sustainability of the economic expansion.

Gomez also pointed to increased hiring in construction and industry as a positive sign.

For their part, analysts at Barclays labelled the Spanish labour market "dynamic" as they revised their forecast for second quarter GDP growth from 0.64% quarter-on-quarter to 0.70%.

Nonetheless, they added that: "looking ahead, we expect some moderation in domestic demand as uncertainty following the UK vote to leave is likely to weigh on confidence and thus consumption and investment decisions. We expect growth to average 2.8% y/y in 2016, after 3.2% in 2015, and to slow to 1.3% in 2017."

On Monday, ratings agency Standard&Poor´s upped its projection for Spain´s GDP growth in 2016 from 2.6% to 2.8% but lowered its forecasts for 2017 and 2018 from 2.3% to 1.8% and from 2.5% to 1.9%, respectively.

In parallel, unemployment was now seen falling to 16.3% in 2018, down from an earlier projection of 17.0%.