Via Google translate from Libre Mercado, Joan Rosell, the president of the Spanish Confederation of Employer Organizations (CEOE) has estimated 60% of Spanish Companies are Losing Money.
This is a Mish-modified translation of some key snips.
In an interview with the newspaper La Razon, Rosell said that “social unrest is evident and the business world is no exception.”
The private sector “has already made all the restructuring that had to do and the decline in employment in the private sector has virtually stopped. Now is the time for restructuring the public sector.”
After defining the first year of Mariano Rajoy’s government as a year of shock, Rosell has considered that the Spanish economy has “superfluous fat on many sides: Central government, regional and local. We are a hyper-regulated country”.
Still, the CEOE president has identified several dynamic sectors in the economy, such as tourism, and exports (automobile, capital goods, power and chemical), and Rosell points out that Spain is gaining positions and externally against France , Italy or Germany.
Unemployment Rate Drops
According to the Financial Times, Spain’s unemployment rate fell in December. This is the first drop in unemployment since July. However, that drop follows heavy job losses in the prior two months.
Spain saw a slight drop in the number of registered unemployed in December, in a welcome but most probably fleeting boost to the recession-plagued economy.
According to figures released by the ministry of labour on Thursday, the number of unemployed Spaniards fell by 59,094 between November and December. This followed two months of heavy back-to-back job losses, and left the overall number of unemployed 1.2 per cent lower at just under 4.85m.
December is usually a relatively strong month for the Spanish jobs market, as retailers, restaurants and other service providers bolster their staff ahead of the Christmas season. Even by that standard, however, the past month was exceptionally buoyant: according to Spain’s labour ministry, the drop in the number registered unemployed was the largest on record.
Raj Badiani, an economist with IHS Global Insight, described the December figures as a “rare piece of good news”, but pointed out that the rise in employment was the result of a “temporary fillip to short-term service sector employment”.
Most economists expect the Spanish unemployment rate to remain above 25 per cent in 2013, and for the economy as a whole to endure another year of recession.
Hyper-Regulation with Bloated Public Sector
Here is the problem in a nutshell: Spain is indeed a hyper-regulated economy, with a banking system that is insolvent, a hugely bloated public sector, unemployment over 25%, and youth unemployment over 50%.
Structural problems remain and over half of businesses are losing money. Don’t get too excited about a seasonal rebound in hiring.
Mike “Mish” Shedlock
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About The Author
Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit Sitka Pacific’s Account Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.
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