By Sarah White
MADRID (Reuters) - Spain has posted its biggest fall in unemployment ever recorded in May as resorts hired staff ahead of a record influx of tourists, a potential boost for acting Prime Minister Mariano Rajoy in an election re-run in three weeks.
Unemployment has been gradually receding in Spain since a recession ended nearly three years ago, but many jobseekers are still struggling to find work, fuelling frustrations among voters.
Spain returns to the ballot box on June 26 after an inconclusive December election stripped Rajoy's center-right People's Party (PP) of its absolute majority. Opinions polls show the vote could produce another political stalemate, forcing parties to once again try and form a coalition.
The number of Spaniards registering as unemployed last month fell by 3 percent from April, dipping below the 4 million threshold for the first time in six years to 3.89 million, data from the Labour Ministry showed on Thursday.
Nearly 120,000 fewer people signed on as jobless, the biggest drop for a month of May on record. Job creation, meanwhile, progressed at a slightly slower pace than a year ago but was still strong, growing by over 1 percent from an already solid April. One in six jobs was in hotels and restaurants.
Spain's dysfunctional labor market played a major role in December's political upset, as support for upstart parties advocating stronger workers' rights or an overhaul of job contracts fragmented the vote.
According to voters polled so far, the PP will still come in first place but well shy of a parliamentary majority.
Surveys showed that a quarter of voters made up their minds in the very last days of December's campaign, meaning the undecided could still be swayed at the last minute.
"If the campaign is important, then these (job) numbers are important, especially for the PP as it's the only issue they can campaign on," said Teneo Intelligence analyst Antonio Barroso.
Anti-austerity party Podemos ("We Can"), now teaming up with a smaller left-wing force, is expected to place second or third thanks to strong backing from millions of Spaniards who have yet to benefit by the economic recovery.
Mass layoffs during a six year downturn left Spain with the second-highest unemployment rate in Europe. Though it has fallen sharply since 2013 it still stands at 21 percent of the workforce, according to a National Statistics Institute (INE) survey.
(Editing by Julien Toyer and Raissa Kasolowsky)