Spain's fledging economic recovery came to a stop in the third quarter amid tough austerity measures, official data showed Thursday, hindering government efforts to slash the soaring jobless rate.
Gross domestic product showed zero growth in the three months to September 30 from the previous quarter, the National Statistics Institute (INE) said in a preliminary estimate.
It followed growth of 0.2 percent in the second quarter and 0.1 percent in the first when Spain emerged from one of its worst recessions for decades.
Spain, a member of the eurozone, has the fifth-biggest economy in the European Union.
A recession is defined as two quarters running of shrinking growth from output in the immediately previous quarter, so a month of zero growth is a cause of concern for policymakers.
The data also comes at a time of renewed concern in eurozone bond markets about high debt and low growth in weaker eurozone members Ireland and Portugal, following the Greek debt crisis earlier this year.
On occasions this year, Spanish bonds have also been affected by strains on the bond market where there is concern that austerity needed to control overspending could tip some countries back into recession, cutting tax revenues and adding to their problems in controlling budgets.
On a 12-month comparison, Spanish gross domestic product expanded by 0.2 percent after seven months running of declines by this long-term measure.
The government said the flat growth would impede its battle to slash the unemployment rate of more than 20 percent, the highest in the 16-nation euro zone.
"It is not possible to create employment" with zero growth, Employment Minister Valeriano Gomez said.
"Spain still needs to grow by 2.0 percent to create employment," he told Cadena Ser radio.
He forecast that employment would pick up in the second half of 2011, with an additional 40,000 and 50,000 jobs created in the year.
The INE said the latest figure reflects lower national consumption compared with previous quarters.
The figures confirmed estimates by the Bank of Spain last week, which forecast "a weakening of economic activity, of a transitory nature, due in large part to the depletion of some expansive factors."
"These include the impact on national demand of the budget austerity measures adopted in May," it added.
The government has suspended dozens of road and rail projects and cut civil servants' wages as part of deep spending cuts aimed at reining in the massive public deficit.
It has forecast the Spanish economy will shrink by 0.3 percent this year, following a fall of 3.7 percent in 2009.
In May it lowered its growth forecast for next year to 1.3 percent from 1.8 percent due to the impact of the tough new austerity measures.
The government aims to bring the public deficit down to 6.0 percent of GDP in 2011 and to the eurozone limit of three percent in 2013. The deficit hit 11.1 percent of GDP last year, the third highest in the eurozone after Greece and Ireland.
The measures were introduced at a time of rising fears that Spain and other southern members of the eurozone could follow Greece into a financial crisis.
The Spanish economy slumped into recession in 2008 as the bubble burst on a decade-long property boom and amid the global financial meltdown.
The INE is to release definitive figures for the third quarter on November 17.