Thursday's data boosts prime minister Mariano Rajoy's claim the economy should exit its two-year recession this quarter
Spain's unemployment rate has fallen for the first time in two years, figures released on Thursday showed.
The data came as some of the country's biggest firms said business was looking up, boosting the government's claim the economy is climbing out of recession.
The dip in the joblessness – from 27.2% in the first quarter to 26.3% in the second – nonetheless highlighted how far the country has to go to full recovery. Economy minister Luis de Guindos said the level of work were still "totally unacceptable".
Jobs have been the main issue for Spain's economy. The unemployment rate has risen relentlessly since 2011, with some 3.8 million people joining the jobless lines since the first quarter of 2008, the year the global financial crisis erupted and property prices collapsed.
The real estate meltdown left Spanish banks heavily exposed to soured assets and loans, which have since weighed on their balance sheets and soaked up €42bn (£36bn) of European Union aid.
On Thursday, three banks including bailed-out lender Bankia, reported that bad debts were still rising. But they also posted big jumps in first-half profits, on lower writedowns on property assets and trading gains.
Telecoms firms Telefónica and oil major Repsol – two heavyweight Spanish firms with more exposure to foreign economies – also gave encouraging trading updates.
Supported by a central bank report earlier this week showing Spain's economy came close to stablising in the second quarter, Thursday's run of encouraging news added weight to prime minister Mariano Rajoy's belief the economy should exit its two-year recession as soon as the current quarter.
"Even seasonally adjusted (unemployment) data is better than we expected, which is in line with the economic improvements forecast by the Bank of Spain," Angel Laborda, economist at thinktank Funcas, said.
De Guindos repeated the forecast for third quarter growth on Thursday and said he was convinced the worst was over for the economy.
"The Spanish government has undertaken a bitter battle to stabilise growing unemployment, and it seems to be gaining ground," Nancy Curtin, chief investment officer of Close Brothers Asset Management, said in a written note.
Despite government projections, many economists believe the country's second recession in three years is unlikely to end in 2013, and joblessness remains the weakest link.
Seasonal tourism accounted for most of the drop in the latest unemployment rate, and the sector is expected to be strong this year as cash-strapped Europeans look for budget vacation spots while avoiding Egypt and other Middle Eastern troublespots.
But Spain, along with Greece, still has a far greater share of its population out of work than other eurozone states.
Around half of Spain's near six million unemployed have not held a job for more than one year, while 1.8 million homes have no one in work, the data showed.
After a decade of above average economic growth, the long recession prompted hundreds of thousands to leave the country in 2012, including immigrants returning home and Spaniards in search of work elsewhere.
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