Spanish retail sales bounce in June, underpinning recovery

Spanish retail sales rose more than expected in June, data showed on Wednesday, signalling a sustained rebound in consumer spending that is helping to underpin an economic recovery.

Spain has been in political deadlock for seven months, failing to form a government after national elections in December and June that both delivered hung parliaments, obliging parties to press on with thus far fruitless coalition talks.

The impasse has yet to markedly dent Spain's three-year turnaround from a deep recession, however. Low inflation, a recovery in an ailing job market and a record number of tourists are fuelling spending.

The 5.6 percent seasonally adjusted year-on-year gain in retail sales was driven by spending on clothes, shoes and household goods, the National Statistics Institute (INE) data showed.

Analysts polled by Reuters had expected a rise of 3.3 percent. May's reading of a 2.3 percent annual increase had missed forecasts.

Also in June the number of people registering as unemployed fell to the lowest since September 2009, data from July 4 showed, helped by extra hires in hotels and restaurants at the start of what is expected to be another bumper tourist season.

Spain's consumer confidence indicators have been mixed in recent months, with some pointing to a souring mood at a time when surveys in other European countries including Germany are showing sentiment knocked by Britain's vote to leave the European Union.

But the Bank of Spain signalled earlier this week that strong domestic consumption fuelled growth in the second quarter, after the economy expanded by 0.8 percent from a quarter earlier.

Some of the country's retailers are faring better too, with discount supermarket chain DIA reporting a return to like-for-like sales in its home market in the second quarter for the first time in three years.

Preliminary INE figures on second quarter gross domestic product are due on July 29.

Economists have warned that a prolonged vacuum in government would start taking a greater toll on the economy, in part as worries mount over delayed reforms in the job market and other measures aimed at fixing a gaping budget deficit.