Spanish unemployment fell to its lowest in almost five years, giving a boost to Acting Prime Minister Mariano Rajoy as he struggles to form a government following an inconclusive election.

The jobless rate dropped to 20.9 percent from 21.2 percent the previous quarter, the National Statistics Institute said in Madrid on Thursday. Economists had forecast the rate would be little changed, according to the median of nine estimates in a Bloomberg News survey.

Unemployment is slowly declining across the euro area, reaching a four-year low of 10.5 percent in November.

The number of people without a job in Spain fell by 71,300 to 4.78 million in what is traditionally a challenging quarter given the labor market’s seasonal dynamic, which sees tourism-oriented staff being laid off until the summer.

New Jobs

On an annual basis, Spanish unemployment has fallen by 678,200 people, the biggest drop since records began, the INE said, with most of the new jobs being created coming from services and agriculture.

Reacting to the data, Acting Economy Minister Luis de Guindos told Onda Cero radio unemployment is falling at a solid pace with the economy adding more than half a million new jobs last year. De Guindos predicted a strong government could lead to even better job figures, reiterating his party’s goal to create 2 million new jobs in the next term.

Separate data showed retail sales on a seasonally adjusted basis rose 2.2 percent in December from the same period a year ago.

The latest unemployment report comes as officials in Madrid struggle to form a government after an inconclusive election left a fragmented parliament and deprived Rajoy of his overall majority. With the 60-year-old taking a step back after refusing to seek a confidence vote in the first round, the alternative scenario is either a Socialist-led coalition with anti-austerity party Podemos or fresh elections in the spring.

Data due Jan. 29 are expected to show the Spanish economy maintained the pace of growth in the fourth quarter, matching a 0.8 percent reading in the third quarter, according to an estimate by the Bank of Spain. Separate preliminary data could show consumer prices continued to fall in January, according to a Bloomberg News survey.