• Unemployment At Almost 25 Percent
• Third Of Euro Zone Jobless In Spain
• Analysts Call For Action From ECB 

Unemployment in Spain reached almost 25 percent throughout the course of the second quarter, from 24.44 percent in the previous quarter.

According to the National Statistic Institute, the jobless rate touched 24.6 percent - the country’s highest level since its return to democracy in the mid-1970s – on fears of a lengthy and potentially devastating recession. Over 5.7 million Spaniards are now without work in the heavily indebted Spanish nation, with many analysts forecasting further pain for Spain. "It's another example of in”, said economist at Capital Economics, Ben May. “And with the economy unlikely to expand anytime soon, and the dire position the economy is probably more likely to fall deeper into recession, things are only going to get worse."

Almost a third of those who are currently unemployed in the euro zone are located in Spain, with half the nation’s young people (26 and under) without work.

A Little Less Conversation

Mario Draghi’s heroics yesterday pledging, as he did, to do “whatever it takes to preserve the euro” has bolstered stock markets across the globe and sent the euro flying. But plummeting German PMI, UK GDP on the rocks and Spanish unemployment rocketing – the underlying situation is all too clear for some analysts to get excited about until action backs up Draghi’s words.

“If we have learned one thing from verbal interventions it is that the market impact will only prove sustainable if backed by action”, said Kasper Kirkegaard (pictured) of Danske Bank. “Considering Mr Draghi’s comments a restart of SMP (or EFSF/ESM) buying appears the most likely near-term response and is also one of the few euro positive tools.

“When discussing short-term challenges Mr. Draghi stated that the two big LTRO’s had taken care of the risk aversion factor, that the ECB can do little about counterparty recess, but that it can act on excess sovereign funding costs.” Kirkegaard will also be eyeing the ECB meeting tentatively, for evidence of the same caveat that Angel Gurria, head of the OECD, spotted amid Draghi’s upbeat speech. The ECB president said that the bank would have to "explore the flexibility of its mandate” in supporting the likes of Spain and Italy through the storm.

Upbeat Sentiment Short-lived?

These latest figures are the latest to betray the extent of the crisis situation in Spain, with consumer and business confidence having already been badly damaged on concerns that Spain may need a full sovereign bailout. Though Spanish 10-year bond yields have dipped in the wake of Draghi’s speech, currently hovering around the 6.7pc mark from a 7.5 percent euro-ear high earlier in the week, sentiment is likely to take a further blow without any action from the ECB.

The euro has already fallen away from yesterday’s highs against the dollar, lingering around 1.2294 from yesterday’s high of 1.2324 on currency charts. 

Sarah Cox, Markets Writer. ForexSpace.com