Spain's unemployment rate shot up to a record 26 per cent in the fourth quarter of 2012, leaving almost six million people out of work, the National Statistics Institute said.

The rate rose from 25 per cent in the third quarter as the country's recession deepened.

Over the year, 691,700 more people lost their jobs, the institute said, adding that there were now 1.8 million households in which no one was employed.

Spain is in the throes of its second recession in just over three years following the collapse of its once-booming real estate sector in 2008.

Battling to reduce a swollen deficit and avoid a bailout, the year-old conservative government has made major financial and labour reforms and applied severe austerity measures such as cutbacks in wages and spending as well as tax increases.

The austerity measures are aimed at lowering the deficit, but are hurting the economy in the short-term, while the reforms will only help growth in the longer-term. That means the economy will suffer more before it recovers.

The central bank this week estimated that the recession deepened in the fourth quarter of last year, the economy shrinking by 0.6 per cent compared with the previous three-month period.

It was the sixth consecutive quarterly contraction. The economy contracted by 0.4 per cent in the third quarter.

The bank estimated economic activity was down 1.7 per cent in the fourth quarter from the year-earlier period and down 1.3 per cent for the whole of 2012.

The statistics institute will announce official economic growth figures on January 30, while Europe's main statistics office Eurostat unveils its estimate on February 14.

- AP