Spanish unemployment falls again, but economic outlook less bright

MADRID: Spain's unemployment rate fell to its lowest in almost three years in the third quarter as the services and construction sectors expanded, though the central bank warned weakness abroad could weigh on the country's economic recovery.

The headline jobless rate fell to 23.7 percent, data from the National Statistics Institute showed on Thursday, down from 24.5 percent in the previous quarter and below a Reuters forecast of 24.3 percent.

The figure was the lowest registered since the last quarter of 2011, though Spain's jobless rate remains the second highest in the euro zone behind Greece and a major drag on the recovery, which is outpacing most of the currency bloc.

Separately, the Bank of Spain said it expected growth to have slowed to 0.5 percent quarter on quarter between July and September, from 0.6 percent a quarter earlier.

It also warned that forecasts of growth of 1.3 percent this year and 2 percent in 2015 were increasingly under threat.

"Downside risks to this central scenario have accentuated in the last few months due to a worsening of the international outlook, in particular in the euro zone," the Bank of Spain said in its quarterly report on Thursday.

Euro zone businesses performed much better than expected in October but did so by slashing prices, while optimism about the future fell to its lowest level in over a year, surveys showed on Thursday.

Meanwhile, Spain registered employment growth in three out of four key sectors, with jobs rising by 108,800 in services, 71,800 in industry and 43,500 in construction, while they fell 73,100 in agriculture, INE said.

The government projects unemployment of 24.2 percent at the end of this year and by 22.2 percent by the end of 2015.

A total of 5.428 million Spaniards were unemployed, according to the quarterly poll, down by 195,200 people, while the number of people either working or available for work fell by 44,200 from a quarter earlier to 22.932 million.

"This is a good figure, in general. Employment has risen, which shows the economy is now capable of creating jobs, even at moderate growth levels," said Jose Luis Martinez, economist at Citi.

In seasonally adjusted terms, employment rose 0.36 percent from a quarter earlier while unemployment fell by 2.1 percent, INE said.