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Spain Aug jobless rises as contracts run out

Source: Reuters - Thu 2th Sep 2010

Spain's registered jobless total rose in August for the first time in five months as summer contracts in the tourism sector ended, masking a longer-term trend suggesting the country's unemployment crisis may be close to peaking.

The jobless rate rose 1.5 percent from a month ago, with 61,083 more people out of work, the Labour Ministry said on Thursday. That was down from last August's 84,985.

Spanish unemployment spiralled to 20 percent in the second quarter, the highest level in the euro zone and the government's key concern in a struggling economy.

The number of jobless was up by 9.3 percent from the same month a year ago, but the August pick-up was expected given that many contracts in Spain's tourism sector, which employs around 12 percent of the country's workforce, end along with the holiday season "It was expected and if you strip out the seasonality then there was just a small increase in unemployment. It suggests that unemployment has not yet peaked, but that it's not rising anywhere near as fast as it was last year" said Giada Giani, economist at Citi.

Unemployment rose across all of Spain's main sectors, but mainly in the dominant service sector, which climbed by 1.7 percent or 38,093 people. Jobless levels in industry rose by 1.9 percent, while the badly hit construction sector rise by 1.8 percent.

The government remained upbeat over longer-term prospects for job creation.

"The August data shows us that the situation is beginning to stabilise and in the coming months we could have better news" said Economy Minister Elena Salgado on the radio after the release of the data.

"We will see job creation very soon. We are coming out of the crisis." The government forecasts job creation by the end of the year.

The monthly data do not offer an overall unemployment rate and only report the number of workers registered with the government as out of work.

Average unemployment in the euro zone was half that of Spain in August, holding at 10 percent.

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