Spanish Unemployment Up By Nearly 100,000

The number of people out of work in Spain rose to an 11-year high in September, rising for the sixth consecutive month as the collapse in the construction sector and global credit crunch which produced it extended their reach across the entire economy. The number of job benefit claimants rose by 95,367 in September, up 3.7 percent from August, to 2.6 million, the highest since May 1997, according to the Spanish Labour Ministry. This was considerably above what many analysts had been expectating and is likely to continue. I don't think there is now any doubt about it, what is likely to be the longest running recession in Spanish history started on 1 July 2008. That's a historic date now. Make a note of it somewhere. For your grandchildren, perhaps.




The data is hot on the heels of the latest EU monthly unemployment report from Eurostat, who on Wednesday found that Spain had the highest unemployment rate in the euro zone in August, at 11.3 percent. The number of registered jobless has risen by 30 percent or 608,005 people since September 2007 as activity has slowed sharply in the construction and services sectors.




But yesterday's data showed that the problems have now spread well beyond the construction and real estate sectors, with 57,000 new registered jobless claimants from service industries. There were 14,000 new claimants in the construction sector.

Unemployment is rising three times as fast among immigrants who accounted for 299,000 registered jobless in September, up 75 percent from 171,000 a year earlier.

Planning Approvals and Sales Down

And, of course, all of this is just the begining. Planning approvals fell 58%, to 188,046 units, in the first 7 months of the year, according to the latest data from the Ministry of Housing. 80% of the approvals were for blocks of flats, which are down in volume by 60% since last July. Detached and semi-detached properties make up 40% of planning approvals, and were down by a more modest 45%.

The number of Spanish properties sold in July fell by an annualised 26%, to 46,467, according to the latest figures from Spain’s National Institute of Statistics (INE). Based on figures from the same source, sales fell by 30% in June, and 34% in May, suggesting that the rate of decline in sales is starting to slow.

The Ministry of Housing recently released figures showing year on year sales declining by 32% in the second quarter, broadly in line with the trend seen in the INE’s figures. Both sources show that Spanish property sales are down by more than a quarter compared to last year.

Payment Defaults On The Rise


Debt defaults rose 203 percent in Spain between July and September and are likely to spike higher as Spanish companies run into liquidity problems during the global credit crunch, according to a report out today from consultants Credit and Caution.

Their research found that the number of firms that suspended debt payments in the third quarter rose to 676 from 224 a year ago. The rise in defaults follows an increase in Spanish banks' non-performing loans ratio to 2.14 percent in July from 1.6 percent in June, after Spain's largest real estate firm Martinsa Fadesa filed for administration.

Spain's financial system had some of the world's highest bad loan provision levels but these are gradually being drained, and have now reached 107 percent for savings banks and 149 percent for commercial banks from an average 200 percent end of 2007, according to Bank of Spain data.



During the first nine months of 2008, defaults by Spanish companies rose by 139 percent to 1,688 from the same period a year earlier, Credit and Caution reported. Of those, 25 percent were building companies and most other among real estate firms or service firms related to the property and construction.

Medium-sized commercial banks and savings banks are those most exposed to rising default levels as they have the highest exposure to real estate and construction firms which hold 25 percent of all outstanding debt in Spain.