Spain's job market data suggests solid activity growth continues in Q4

There was an upside surprise in Spain's Job market data in November. The registered unemployed declined significantly by 27.1K in the month, which is sharpest drop since the series creation.

All the activity sectors and the number of unemployed stands at  lowest levels of past five years. New Social Security affiliations climbed by 1.62K in November. This is one of the highest annual increases since 2006.

"...we are revising slightly upwards our Q4 15 GDP growth estimate from 0.6% q/q to 0.7% q/q. Our 2015 forecast remains unchanged at 3.1% y/y, but the carryover effect implies a slightly higher growth in 2016 of 2.7% y/y (+0.1pp). ", says Barclays in a research note. 

Private consumption is likely to remain the primary growth engine, and this strong labor market report and the latest solid retail sales data infuses this view.

Investment recovery should continue and the net trade contribution to growth should still be modestly negative but close to 0. A modest economic activity deceleration at the end of the year/beginning of 2016 is still likely, given uncertainties related to general elections.