Spain announced Thursday a dip in its towering unemployment rate in the latest sign that the eurozone's fourth-largest economy is battling its way out of recession.
Demonstrators attend a rally in Madrid against austerity policies and record high unemployment on June 16, 2013
The jobless rate eased for the second straight quarter to 25.98 percent in the third quarter of 2013, a report by the National Statistics Institute showed.
The news dovetailed with a Bank of Spain assessment the previous day that Spain had emerged from two years of recession in the third quarter with timid 0.1-percent economic growth.
That was enough to send world stock markets briefly higher as investors hoped for a broader recovery in the eurozone after five years of economic crisis.
The number of people out of work in Spain dipped by 72,800 to 5.9 million in the third quarter, lowering the unemployment rate from the previous quarter's 26.26 percent.
It was the second straight quarter showing a drop in the unemployment rate, which peaked at a staggering 27.16 percent in the first three months of 2013.
But analysts warned it was too soon to celebrate.
"Spain still remains entrenched in deep recessionary conditions despite what the Bank of Spain said about the third quarter," said Raj Badiani, British-based economist at research house IHS Insight.
The jobs improvement likely reflected a prolonged tourism season in Spain, which benefitted from instability in Turkey, Greece and North African countries, Badiani said.
The latest figures showed that the number of people employed actually declined by 497,000 workers, or 2.9 percent, over the year, he noted.
"Those kinds of employment falls are going to have severe indications in terms of household income and confidence and will be a major obstacle in terms of a sustainable and solid recovery in consumer spending," Badiani said.
"Until that is in place we are not going to see any strong sustainable recovery in Spain."
Many discouraged job seekers had simply left the official workforce, either staying in education, joining the black market, or leaving the country to find work, Badiani said.
Spain's workforce shrank by 370,000 people over the year, the data showed.
"More than half of the reduction in unemployment, 54 percent, is due to the loss of workers, that is to say discouraged people who have dropped out of the workforce," said Angels Valls, analyst at Spain's ESADE business school.
Spain is still struggling to overcome the aftermath of a decade-long property bubble that imploded in 2008, throwing millions of people out of work, racking up huge debts for the government, banks and people, and plunging the economy into a double-dip recession.
Prime Minister Mariano Rajoy's right-leaning government, which took power in December 2011, has enacted economic reforms and austerity policies so as to curb annual deficits and rein in the national debt.
But the painful impact of the spending squeeze, high unemployment, and a slew of corruption scandals have sparked angry street protests.
For young people, the employment news remains bleak with 54.39 percent of 16- to 24-year-olds out of work, according to the latest report. Every member of some 1.8 million Spanish households is out of work, it said.
Rajoy's government is promising better times ahead, however, forecasting an overall economic decline in Spain of 1.3 percent in 2013 and then a return to growth of 0.7 percent over 2014.
It forecasts an unemployment rate of 26.6 percent this year and 25.9 percent in 2014.
The International Monetary Fund has warned that Spain's unemployment rate will stay above 25 percent until 2018 unless Rajoy's government undertakes deeper labour market reforms.
The positive data from Spain -- which was a focus of anxieties for the eurozone's stability last year -- reflected signs of recovery in European countries hit by the financial crisis, such as Greece, Ireland and Portugal.
France, the eurozone's second-biggest economy, has confirmed that it exited recession in the second quarter.
A recent estimate by statistics institutes in France, Germany and Italy forecast that the eurozone overall would return to timid growth of 0.1 percent in the third quarter.
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