Jobless claims up in April for first time since 1984

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Economy Minister says unemployment pace is picking up

7 May 2008

MADRID - The labour market suffered its worst setback in April since 1984 as the downturn in the construction sector continued to impact the economy.

According to figures released Tuesday by the Labour Ministry, registered unemployment increased from March by 1.6 percent - or by 37,542 - to 2.34 million.

Employers tend to take on more workers in April as the tourist season kicks off.
Not even during the recession of 1993 did unemployment pick up in April. In the same month last year, the number of people out of work dropped by 36,327.

The number of unemployed increased across the board, except in the case of first-time job seekers. But it was the construction and services sector that suffered the brunt of the deterioration in employment, with the number of people out of work rising by 16,647 and 17,455, respectively.

Labour Minister Celestino Corbacho said the slowdown in the labour market was "limited" to the construction sector and services ancillary to it.

Construction downturn
The construction industry in Spain created a million jobs since 2000 during a decade-long housing boom, which has now come to a halt.

During the height of the upsurge, there were up to 800,000 housing start ups a year, but industry expects the figure to fall to as low as 250,000 for 2008.

Home sales dropped by 25 percent in the first two months of the year, while house prices fell in real terms for the first time since 1997.

The government recently slashed its GDP growth forecast for the year to 2.3 percent from 3.1 percent previously and raised its estimate for unemployment to 9.8 percent from 8.2 percent. It sees unemployment rising to 10.0 percent in 2009.

"An increase in unemployment is always bad news," Economy Minister Pedro Solbes said. "The rise in unemployment may be accelerating."

Solbes said an increase in the number of people out of work was expected given that annual growth in GDP slowed to 2.8 percent in the first quarter from 3.5 percent at the end of 2007, and that growth for the full year is expected to slow to 2.3 percent.

Solbes insisted, however, the economy was continuing to create jobs, albeit at a lower rate than previously.

The European commissioner for economic and monetary affairs, Spaniard Joaquín Almunia, described the figures as "painful but in line" with Spain's current economic situation.

[El Pais / Adrián Soto / Expatica]

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