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Biggest fall in April jobless for two decades

Spain registered its steepest decline in the number of jobless people for April in almost two decades, government data showed on Tuesday, as the eurozone country's economic recovery gathered pace.

Published: 5 May 2015 12:11 CEST

Biggest fall in April jobless for two decades

People queuing outside a Spanish job centre. Photo: Dani Pozo/AFP

In the third straight month of falling unemployment, jobless claims declined in April by 118,923 to 4.33 million from March.

That is the biggest drop for the month since the current statistical series began in 1996, the labour ministry said in a statement.

Job creation? The truth behind Spain's unemployment figures

On a seasonally adjusted basis the number of registered unemployed fell by 50,160.

Spain's seasonal employment market, which includes jobs in the country's vital tourism industry, is often tight in April as hotels and restaurants take on extra staff for the Easter break.

The number of registered unemployed was down by 351,285 or 7.5 percent over April 2014, its strongest decline in 19 years, the ministry said.

The number of people without work fell across all sectors and in every region.

Deputy Labour Minister Engracia Hidalgo said in a statement that the data show the “solid and positive” trend in unemployment is consolidating.

The labour ministry's monthly figure is a different measure from the quarterly unemployment rate, which stood at 23.78 percent in the first quarter, according to the National Statistic Institute.

The institute, which includes in its estimate other job seekers who are not signed on, said there were 5.44 million unemployed in Spain at the end of March.

Spain returned to growth in 2014 with an expansion of 1.4 percent after five years of recession or stagnation following the collapse of a building boom in 2008.

Spain's conservative government, which is facing a year-end general election, last week hiked its economic growth forecast to 2.9 percent for 2015 and 2016, a prediction unions said was too optimistic.

It had previously expected growth to reach 2.4 percent in 2015.

The government forecast the unemployment rate would fall to 22.1 percent in 2015.

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How is Denmark's economy handling inflation and rate rises?

The council, led by four university economics professors commonly referred to as “the wise men” or vismænd in Denmark, gave a much rosier picture of Denmark’s economy in its spring report, published on Tuesday, than it did in its autumn report last year.

“We, like many others, are surprised by how employment continues to rise despite inflation and higher interest rates,” the chair or ‘chief wise man’, Carl-Johan Dalgaard, said in a press release.

“A significant drop in energy prices and a very positive development in exports mean that things have gone better than feared, and as it looks now, the slowdown will therefore be more subdued than we estimated in the autumn.”

In the English summary of its report, the council noted that in the autumn, market expectations were that energy prices would remain at a high level, with “a real concern for energy supply shortages in the winter of 2022/23”.

That the slowdown has been more subdued, it continued was largely due to a significant drop in energy prices compared to the levels seen in late summer 2022, and compared to the market expectations for 2023.

The council now expects Denmark’s GDP growth to slow to 1 percent in 2023 rather than for the economy to shrink by 0.2 percent, as it predicted in the autumn.

In 2024, it expects the growth rate to remain the same as in 2003, with another year of 1 percent GDP growth. In its autumn report it expected weaker growth of 0.6 percent in 2024.

What is the outlook for employment?

In the autumn, the expert group estimated that employment in Denmark would decrease by 100,000 people towards the end of the 2023, with employment in 2024 about 1 percent below the estimated structural level.

Now, instead, it expects employment will fall by just 50,000 people by 2025.

What does the expert group’s outlook mean for interest rates and government spending?

Denmark’s finance minister Nikolai Wammen came in for some gentle criticism, with the experts judging that “the 2023 Finance Act, which was adopted in May, should have been tighter”. The current government’s fiscal policy, it concludes “has not contributed to countering domestic inflationary pressures”.

The experts expect inflation to stay above 2 percent in 2023 and 2024 and not to fall below 2 percent until 2025.

If the government decides to follow the council’s advice, the budget in 2024 will have to be at least as tight, if not tighter than that of 2023.

“Fiscal policy in 2024 should not contribute to increasing demand pressure, rather the opposite,” they write.

The council also questioned the evidence justifying abolishing the Great Prayer Day holiday, which Denmark’s government has claimed will permanently increase the labour supply by 8,500 full time workers.

“The council assumes that the abolition of Great Prayer Day will have a short-term positive effect on the labour supply, while there is no evidence of a long-term effect.”

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