Jobless down slightly in first fall since last July

MADRID
SPAIN'S jobless rate fell slightly in April for the first time since July 2009, to 4.14 million people, although some economists were sceptical the fall marked the downward trend which the government is expecting.

The jobless rate for April fell by 0.58 percent, or 24'188 people, after increasing by 0.87 percent in March, data from the labour ministry showed yesterday, in line with a leaked report over the weekend. “Unemployment has stopped rising at the same rate as in previous months,” said Jose Luis Martinez, analyst at Citigroup. “But you can't talk of unemployment having topped out even if the economy is recovering because that doesn't mean that jobs are starting to be created.” Spain's consumer confidence index also rose yesterday to 78.2 in April from 72.7 in March, but remained well below the 100 mark that indicates optimism among consumers.

Yesterday's figures followed data released on Friday which showed unemployment had exceeded 20 percent in the first quarter, double the euro zone average..

Spain's jobless rate is the highest in the euro zone and underlines the difficulties Spain's economy faces in returning to growth after its worst recession in decades following the bursting of a property boom.

Unlike most of Europe, Spain has still not emerged from recession and has had seven consecutive quarters of contraction in gross domestic product.
The government is forecasting unemployment to average 19 percent this year.

FAILURE
A significant rise in unemployment above 20 percent would force the government to spend more on benefits and is likely to make recovery harder because of lower consumer spending.

A failure to cut unemployment will also worry debt markets. Credit rating agency Standard & Poor's last week cut its ratings on Spain's sovereign debt to AA, saying a longer-than-expected period of low growth could undermine efforts to cut the budget deficit.