Spanish Unemployment Rose in 2nd Quarter on Building

By Ben Sills

July 24 (Bloomberg) -- Unemployment in Spain, the source of half the euro region's new jobs between 2001 and 2006, rose to the highest rate in 3 1/2 years in the second quarter as home- building collapsed.

The unemployment rate advanced to 10.4 percent from 9.6 percent in the first quarter, the Madrid-based National Statistics Office said on its Web site. That compared with the 10 percent median estimate in a Bloomberg News survey of eight economists. The number of jobs increased 0.1 percent to 20.4 million, compared with a 0.4 percent decline in the first three months.


``This is further indication that the adjustment is intensifying,'' said Susana Garcia-Cervero, senior economist at Deutsche Bank AG in London. ``When things deteriorate they can go very quickly.''

The slowdown in construction is spreading through Spain's manufacturing and services industries, with surveys showing both contracted for a sixth month in June. Economic growth will slow to 1.8 percent this year, the International Monetary Fund forecast this month, after a 3.8 percent expansion in 2007.

The number of jobs in construction fell 4.5 percent to 2.55 million, manufacturing jobs declined 2.1 percent and agricultural jobs dropped 5 percent. Service-industry jobs increased 1.9 percent to 13.81 million.

Home prices in Spain fell for the first time in almost 10 years in the second quarter, Spain's Housing Ministry said this month. Martinsa-Fadesa SA, a Spanish developer, sought protection from creditors after defaulting on 5.2 billion euros ($8.2 billion) of loans.

To contact the reporter on this story: Ben Sills in Madrid at bsills@bloomberg.net