Spanish unemployment up

Spain had an unemployment rate of 10.4% in the second quarter of 2008, up sharply from 9.6 in the first quarter. The Spanish National Statistics Market said employment in construction jobs were particularly weak as the housing bust in Spain takes hold. Construction jobs fell 4.5%. But manufacturing, agriculture and services also saw major declines in employment.

The Spanish government has so far resisted to call this slowdown a ‘recession,’ echoing the happy talk in the United States. Nevertheless, it is clear that Spain, Ireland and the UK have joined Denmark as European economies which have slowed considerably due to a major housing slowdown.

I expect these developments to lead to a worsening of credit conditions across the EU, with the obvious inevitability of further writedowns by European Banks, who have yet to report second quarter results. These writedowns may not actually start to be recognized until Q3 figures are available in November.

Sources
El paro sube en 207.400 personas el segundo trimestre y alcanza el 10,44%, la más alta en cuatro años – El Mundo
Spanish Unemployment Rises Sharply Again The Second Quarter, Bank Lending Slows and Banco Popular Default Provisions Ratio Plummets – Euro Watch