24.6% Unemployment Rate in Spain

EURO WATCH

24.6% Unemployment Rate in Spain

By RAPHAEL MINDER
Published: July 27, 2012
MADRID — A day after markets registered relief at comments from the European Central Bank president in strong support of the euro, data from Spain showed the fragility of the underlying economy as the region’s debt crisis drags on.
Just over 5.69 million Spaniards ended the second quarter jobless, raising the unemployment rate to a record 24.6 percent, compared with 24.4 percent in the first quarter, according to the latest national employment statistics published Friday.


Youth unemployment rose to 53 percent in the second quarter, up 1.3 percentage points from the previous quarter and 7 percentage points from a year ago.

The rise in unemployment underlines the challenge faced by the government of Prime Minister Mariano Rajoy to turn around an economy that is sinking further into recession and clean up public finances. As part of a new €65 billion austerity package announced earlier this year, the government is also set to lower unemployment benefits.

The government was expected later Friday to approve new sanctions against fiscal fraud, including fraudulent claims for social security and other benefits.

Some of Spain’s leading banks reported significant drops in earnings Friday, largely the result of having to set aside more money to cover loans that could default.

CaixaBank said its first-half profit fell 80 percent to €166 million as it provisioned another €3.735 billion against loans made to Spain’s collapsed property sector. Banco Popular reported a 42 percent decline in first-half profit, to €176.5 million, after provisioning €3.4 billion. On Thursday, Banco Santander, Spain’s biggest commercial bank, had also reported a sharp drop in profit as a result of higher provisioning.

Markets in Europe were essentially flat midday, having risen sharply Thursday after the president of the European Central Bank, Mario Draghi, said at a conference that the bank would do “whatever it takes” to save the euro.

The Euro Stoxx 50, a measure of euro zone blue chips, was up 0.15 percent, and the FTSE 100-share index in London was up 0.01 percent.

Asian markets were higher. The Nikkei 225-stock index in Tokyo was up 1.46 percent, and the Hang Seng index in Hong Kong was up 2.02 percent.

Spanish and Italian bond yields were lower, stemming a week of rises, as investors registered less nervousness about the potential need for bailouts. The yield, or interest rate, on the 10-year Spanish sovereign bond was at 6.726 percent, down 0.10 percentage point. The Italian 10-year yield was at 5.938 percent, down 0.077 percentage point.

The euro was at $1.2274, down slightly from $1.2280 late Thursday in New York.