Spanish labour market likely to grow moderately in 2016

Spanish labour force survey print was better than expected in the fourth quarter of 2015, as  Spain's unemployment rate (seasonally adjusted) declined 0.7 points to 20.9 percent in Q4 15, recording its lowest in over four years. The total number of employed increased to 18094.2k, with increase in private and public sector hiring by 31.2k and 14.3k respectively in Q4 15. Overall, Spain's unemployment rate decreased by 2.2 points in 2015 while employment rose by 3.0% y/y. The participation rate dropped further to 59.3% in Q4 15, due to strong net migration outflows.

Buoyant private consumption, bounce back in investment and positive public consumption helped the Spanish recovery to accelerate to 3.2% y/y in 2015 as compared to 1.4% y/y in 2014. Accommodative monetary policy, cheap oil and increase in real wages are likely to remain steady in the forthcoming months.

"The strong labour market dynamics are expected to extend into 2016, albeit at a lower pace, as growth should decelerate slightly to 2.6% y/y", said Barclays."We expect a slowdown in private investment in H1 16 as a result of increased political and policy risk."