(RTTNews) - Spanish unemployment dropped for the fourth consecutive month in July and the decline was the biggest for the month since 1998.

The number of unemployed decreased by 73,790 or 1.9% in July from the previous month to 3.91 million, the Labor Ministry reported Tuesday. The decline in unemployed was just 20,794 in July 2009. On a yearly basis, the number rose 10.3%.

The number of unemployed is expected to ease back further during August, with the tourism season providing a fillip to short-term service-sector employment, said Raj Badiani, an economist at IHS Global Insight. "Beyond the summer tourism season, the outlook for employment remains very challenging."

The tourism sector raised hiring, which led to a strong fall in unemployment in the services sector. Among the major sectors, a 2.6% fall was recorded in industry. Unemployment dropped 2.2% in construction and by 1.9% in services. Male unemployment fell 2.2% in July and female unemployment was down 1.5%. Unemployment among under 25s fell 3.7%.

Unemployment could stabilize in the months ahead before peaking up again after summer, said Philippe Sabuco, an economist at BNP Paribas. The jobless rate could average 20.5% in 2011, after 20% in 2010, the economist added.

The Euro area jobless rate in June was 10%, the largest since August 1998. Spain has the highest unemployment rate in the euro area, at 20% in June. According to statistical office INE, the Spanish unemployment rate was 20.09% in the second quarter. The number of unemployed increased by 32,800 during the quarter to total 4.65 million.

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