Spain Real Time Data Charts

Edward Hugh is only able to update this blog from time to time, but he does run a lively Twitter account with plenty of Spain related comment. He also maintains a collection of constantly updated Spain charts with short updates on a Storify dedicated page Spain's Economic Recovery - Glass Half Full or Glass Half Empty?

Wednesday, July 02, 2008

Spain Unemployment June 2008

Registered unemployment in Spain, where construction firms added more than 1 million jobs between 2000 and 2007, increased in June as the collapse in home-building continued and the impact of the shock to the financial sector gradually worked its way across the real economy.

The number of people claiming unemployment benefits rose 1.5 percent, or 36,849, from May to 2.39 million, the Labor Ministry reported today. From a year ago, the number of claimants has risen by 22 percent, or by 424,555.

Housing starts were down 41 percent in April from a year earlier and the number of mortgages granted fell 9.4 percent. Finance Minister Pedro Solbes admitted for the first time yesterday the that the home-building collapse will likely bring the Spanish economy to the brink of a recession by the end of this year. The Spanish economy expanded by 3.8 percent last year.

Jobless claims among construction workers were up 71 percent on the year to 370,208. Unemployment in service industries increased 18 percent or 211,198. The number of immigrants claiming benefits jumped 74 percent to 258,800. The number of registered workers in Spain declined 0.1 percent, or 18,823, to 19.36 million.

Spain's unemployment rate, as published by the statistics institute and based on the monthly labour survey, jumped to 9.6 percent in the first quarter from 8.6 percent in Q4 2007. The institute will release figures for the second quarter on July 24.


José Luis said...

Two commentaries about spanish unemployment:

- Registered unemployment rise is worst if we see the numbers refined of seasonal bias. As a document of de Ministry of Economy states, the CVE (literally "Corregido de Variaciones Estacionales) unemployment rise was of 70.900, not of 36.849 (see, page 23, third column CVE variations). That’s because the trend of spanish economy is to create more jobs in the first half of the year, so that hardly ever in June we had an unemployment rise. Unemployment data will be considerably worst in the second half of the year.

- Apparently there’s an incongruence between year on year GPD rise and unemployment rise. As a commentator called Eddy has stated elsewhere, if employment tax has gone down about 1% june07 to june08, how can GPD rise be 2% in the same period? (we know three quarters increments: 0,8, 0,7 and 0,3; the last quarter will be a little lower, Ministry Pedro Solbes dixit). Productivity is not going to rise far beyond 1%, so, what to do with official GPD data?

Edward Hugh said...

Hi José Luis,

"Registered unemployment rise is worst if we see the numbers refined of seasonal bias."

Oh definitely, I agree. That is also why the year on year numbers (which are comparing like with like) are the interesting ones. If you look at the upward slope of the line for increase in unemployment y-o-y it is pretty dramatic, and we have no idea at this point where this will stop. This isn't a simple recession, and at some point we are bound to see more problems in the financial sector.

"Unemployment data will be considerably worst in the second half of the year."

Clearly, and they may well get worse again all through 2009.

"If employment tax has gone down about 1% june07 to june08, how can GPD rise be 2% in the same period?"

Well there may not be so much incongruence as Eddy thinks here, since we more than likely will not see y-o-y GDP growth of 2% during the second quarter. In Q1 y-o-y was only 2.4%, and Q2 2007 was 0.9%. That is if you add the q-o-qs you get 2.7%, so you can't simply do it like this, since there are seasonal and working day adjustments to think about. I mean they may well have some sort of flash estimate, but that may well be revised downwards later. All the numbers in every economy are constantly getting revised upwards or downwards, and when something is contracting as fast as Spain's economy is it must be very hard to get a fix on what is actually happening.

Also the 1% drop in employment has not been 1% less all year, but has locked in progressively, so again you can't do a simple off the top of your head calculation in this way. It is more complicated.

My feeling is that there is nothing yet that would lead me to want to cry "foul" about the Spanish data, or the work of the INE. It is certainly a lot better than a lot of others I have to look at (you should try Italy's ISTAT).

I mean the problem in Spain is just going to be so big that you can't possibly hope to hide behind the fig leaf of a bit of data fudging. Lets go and see what is in the Q2 data when it comes out, and then we should have a much clearer idea of when we will actually enter recession. It seems to be touch and go at this point as to whether or not the contraction actually starts in Q2. My guess is that it does, but that is only a guess. Once the recession starts the actual headline y-o-y GDP number will become a pretty academic question. Nice for the newspapers, but technically not that informative.

Incidentally, retail sales in July may well get some bounce from the 200 euros that got sent out at the end of June. My stepdaughter just started a summer job in Desigual. They were given a target for commission of 42,000 euros sales for this month. On Tuesday afternoon (1 July) alone they pushed 11,000 euros through the till, having taken 4,000 euros in the morning. So sales can go up this month in some sectors.

The thing is this is completely wasting what little money the government have to play with in relation to the size of the problem. You can't push start a car when the engine is completely seized up, and this is just like pouring good milk straight down the drains.

We need a serious structural policy - comeplete with "muros de contención" and "corta fuegos" otherwise this is all going to drift in to one hell of a shocking mess. My feeling is that the road back (once the above two safety nets have been carefully put in place - ie once you have done something to stop too many builders failing in a nasty way, and you need to guarantee the banks I think) lies through putting the cedulas on the open market cuanto antes, otherwise no one is ever going to know what Spanish property is actually worth.

Obviously they will take a huge hit, which is why you need the safety net in place first.