The number of people claiming unemployment benefits rose 4.3 percent, or 103,085, over July, and reached 2.53 million.
From a year earlier, the number of claimants jumped 25 percent, or 501,705. Jobless claims among construction workers rose 9.9 percent on the month to 429,060 while unemployment in service industries rose 3.3 percent to 1.46 million. Of course, unemployment normally rises in August as firms lay off temporary workers over the holiday season, but the rise this year has been much stronger than in previous ones, and it is not unreasonable to anticipate that far fewer of them will be "reabsorbed" in employment as activity resumes in September. In fact quite the contrary situation is to be anticipated, as more companies lay off workers. My feeling is that the numbers will keep ticking up, and it is not impossible that at the end of the winter we will be hitting the politically sensitive three million mark.
Bloomberg's Recession Call?
Also this morning Bloomberg announce that they are predicting a recession following a survey of 14 economists (no, I was not asked!).
Spain is probably entering into a recession that will push the unemployment rate to a peak of 14 percent, as a slump in the housing market spreads through the rest of the economy, a survey of economists showed. The chances of Spain's economy shrinking for two straight quarters by the end of next year increased to 67.5 percent from 50 percent a month ago, according to the median of 14 responses in a Bloomberg News survey. Eight of the 10 economists who forecast the start of the recession predicted it would begin in the third quarter of this year.
Basically this all seems pretty reasonable to me. I go with the 8/10 who said it starts in Q3, and I think the only real issue is how long it will last, and how deep it will be. Or perhaps better put: just how many quarters will need to pass before we see the level of GDP reached in Q2 2008 again? Quite a few I hazard to bet.
Industrial Output Down 22% In February
Spain's National Institute of Statistics announced that industrial output dropped a working day adjusted 22% year-over-year in February, after falling 20.9% in January. A year ago, production was up 1.7%. The general index of industrial production, was down, on an unadjusted basis, by 23.9%. In February, manufacturing output fell 25% on an unadjusted basis, while mining and quarrying output declined 34.2%. Production of electricity, gas steam and air conditioning dropped 10.7%.
Spain Services PMI
The Spanish service sector continued to contract in March amid a punishing recession but did so at its slowest rate since September, the Markit Economics Purchasing Managers' Index showed on Friday. The index of activity amongst firms ranging from hotels to insurance companies stood at 34.1, way below the 50 level where growth starts, but above 31.7 in February and November's record low of 28.2. The decline in business activity marked the fifteenth consecutive month
"Although the declines in activity, new orders and employment all eased during March, the latest PMI data still signalled a considerable contraction of the Spanish service sector," economist at Markit Andrew Harker said. "Any potential recovery remains a long way off as service providers fight to survive the economic crisis by slashing charges and jobs".