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Spain's Unemployment Falls

Source: Bloomberg - Tue 4th Jun 2013
Spain's Unemployment Falls

Spain's registered unemployment dropped in May as its peak tourism season started, lending support to the government's prediction of an economic recovery this year.

The number of people registering for jobless benefits fell by 98,265 from April to 4.89 million, the Labor Ministry in Madrid said today in an e-mailed statement. Spain, battling with an unemployment rate of 27%, is home to almost a third of all jobless people in the euro region.

The Organization for Economic Cooperation and Development last week forecast unemployment in Spain will surge to 28% next year. With the toughest austerity measures in the nation's democratic history depressing domestic demand, PM Mariano Rajoy is counting on exports to spark a recovery.

"Competitiveness is the key element to survive in the euro zone," Economy Minister Luis de Guindos said during an interview with Al Jazeera television on June 2. The Bank of Spain last week said more flexibility is needed for the economy to recover after Rajoy's government last year changed labor rules to help companies cut costs.

Spain registered its first trade surplus on record in March and tourism helped its current account swing back to a surplus from a deficit in February.

The country is regaining competitiveness compared to France, Jean-Dominique Senard, chief executive officer at Michelin & Cie said yesterday. Europe's largest tiremaker, based in Clermont-Ferrand in central France, intends to implement new labor rules at its French plants in response to a sixth straight annual decline in the region's car market.