The Spanish authorities reported a dive of 98.3K unemployed in May, a drop of around 2%. This was double the expectations and helped the euro gain. However, a deeper look in the details reveals a very worrying picture.
Tourism is a big thing in Spain, and it got even bigger in recent years. One of the reasons is the “Arab Spring” that deterred tourists from traveling to North Africa. There’s nothing wrong with growth in tourism, but this may be overshadowing the dive in permanent work. There’s a big devil in the details.
Out of 1,283,261 signed contracts in May, no less than 1,174,662 were temporary contracts. This is 91.5% temporary contracts.
Looking at the even bigger picture, there is a drop of 24.2% in fixed contracts year-over-year. This is much bigger than the drop of 14.7% in April, 16.5% in March and 5% in February. All the figures are YoY.
As seasonality plays a role in Spanish employment, the look at adjusted figures also paints a less than impressive picture: seasonally adjusted unemployment dropped by only 265 people to 4,875,327.
This seasonally adjusted number is better than the parallel figures in May 2012, when unemployment rose by 85.4K or 2011 when the same seasonally adjusted number rose by 51K.
However, it is very hard to say that the tables have turned in Spain. We can label it “we have already seen worse”, but not more.
Further reading: Spain’s Toxic Mix – 5 Serious Economic Issues