MADRID (Reuters) – Spain’s unemployment rate edged closer to 15 percent in the first quarter as its services sector shrank, highlighting a persistent weak link in the economy days before a hotly contested national election.
The rate rose to 14.7 percent from 14.45 percent in the last three months of 2018, data showed on Thursday.
With Spain’s recovery from recession entering its sixth year, economic issues have largely taken a back seat in campaigning for Sunday’s election.
But its unemployment rate, which tends to rise at the beginning of the year as the festive holiday and shopping seasons wind down, remains the second highest in the European Union – and that unwelcome distinction resurfaced in a televised debate between party leaders on Tuesday.
Some 110,000 people were laid off in the first quarter in the service sector, which accounts for around half of economic output, the data from statistics agency INE showed.
Its headline figure, forecast to fall to 14.38 percent in a Reuters poll, marked the first quarter-on-quarter rise since the beginning of last year. The total number of people out of work rose by 49,900 to 3.35 million, the largest quarterly increase in six years.
Spain’s jobs market is highly reliant on seasonal factors such as tourism, worth around 12 percent of gross domestic product, and agriculture, and many temporary jobs in those sectors are cash-in-hand.
Employment increased in agriculture in the first quarter and remained largely unchanged in industry and construction, INE said.
In a calculated attack during Tuesday’s debate aimed at Socialist Pedro Sanchez, the outgoing Prime Minister and election frontrunner, Albert Rivera of centre-right Ciudadanos dubbed Spain “the European joblessness champion”.
Conservative PP leader Pablo Casado, meanwhile, made an unflattering comparison with thrice bailed-out Greece, the only EU country with a higher unemployment rate.
Sanchez, who became prime minister in June, said on Thursday that the economy was relatively strong and that, while the jobless rate had risen in the last quarter, employment was up over the past year.
“You have to be alert, but …the fundamentals of our economy are solid. Over the last year, we’ve created almost 600,000 jobs … the rate remains high but less than a year ago,” he said a television interview.
Spain’s jobless rate has nearly halved from its 2013 peak and, while the bulk of the recovery took place under Sanchez’s PP predecessor Mariano Rajoy, unemployment continued on a downward trajectory during the Socialists’ first half year in office.
Employment has not increased in the first quarter since 2007 and the unemployment rate in the first quarter of last year was 16.74 percent.
(Reporting by Paul Day and Joao Manuel Mauricio; Editing by John Stonestreet)