After five years of stop-start recession sparked by a 2008 property crash, Spain began to show economic growth in the third quarter of 2013 but activity has been too meagre to deliver a significant number of new jobs.
Spain's unemployment rate rose to 26.03 percent in the last three months of the year from 25.98 percent in the previous quarter, the National Statistics Institute said.
The deterioration, though minor, spoilt an otherwise brightening picture for the battered economy, which grew by 0.1 percent in the third quarter of 2013, signalling the end of a double-dip recession.
Prime Minister Mariano Rajoy's conservative government and the Bank of Spain both estimate that the economy grew by a still-meagre 0.3 percent in the final quarter of 2013, though official figures have yet to be released.
Such slow rates of growth generated comparatively few jobs, said Catalonia-based independent economist Edward Hugh.
"This is what was expected," Hugh said in an interview.
The latest report showed that the number of people in work declined by 65,000 to 16.76 million in the final quarter of 2013.
The Spanish unemployment queue shrank by 8,400 people to 5.90 million in the quarter, however. Over the whole year, the jobless numbers were down by 69,000 — the first annual decline since mid-2007.
But in a sign that many people simply gave up searching for employment in Spain and were therefore no longer showing up as job-seekers, the number of people either in a job or actively seeking one fell by 73,400 in the quarter to 22.65 million.
That amounted to 59.43 percent of the working-age population, the lowest ratio since early 2008.
"The rate of people leaving the labour force — the same as we are seeing in the United States — more than accounts for the drop in unemployment," Hugh said.
Spain is still struggling to overcome the aftermath of a decade-long property bubble that imploded in 2008, throwing millions of people out of work, and racking up huge debts for the government, banks and people.
Rajoy's government, which took power in December 2011, says its labour market reforms, which made it easier for firms to change work practices and cheaper to lay off workers, have stopped the rot in the jobs market.
But his government's efforts to rein in yawning public deficits with a spending squeeze, combined with high unemployment and a slew of corruption scandals, have sparked angry street protests.
The government had tipped an unemployment rate of 26.6 percent of the workforce for 2013, dipping to 25.9 percent in 2014.
In a total of 1.83 million households, everyone in the workforce was unemployed — up by 24,600 from the previous quarter.
The International Monetary Fund has warned that Spain faces five more years with unemployment rates topping 25 percent unless it enacts yet more reforms including measures to help firms slash wages instead of axing staff.
Spain has two sets of unemployment figures, providing different estimates.
Employment Ministry figures are based on the number of unemployed persons registered in their offices.
Spain's stats office, the INE, however, conducts a survey (the EPA) of 65,000 Spanish households to obtain its results. The EPA includes responses from some people who want to work but who are not registered in the employment offices.
The responses also include those who fall into other special working categories which are not recorded by the Ministry.
The EPA results are considered Spain's official unemployment rate.