Madrid, Nov 1 (IANS/EFE): The Spanish economy did not grow at all in the third quarter compared with the previous three months and expanded only 0.7 percent in the 12 months ending Sep 30, the central bank said in its latest bulletin.

The absence of growth was due to a 0.7 percent decline in total domestic demand, the Banco de Espana said, citing further contraction in the construction sector and sharp cuts in public spending.

Household consumption remained "sluggish" in the July-September period, advancing by a meager 0.1 percent, according to the bank.

The external sector, comprising exports and revenue from international tourism, climbed 0.8 percent in the third quarter.

Productivity rose 2.5 percent compared with the third quarter of 2010, though some of the increase can be explained by a 1.8 percent climb in joblessness, Banco de Espana said Monday.

The Spanish economy is feeling the impact of public-sector layoffs and a reduction in government outlays for goods, services and infrastructure projects.

Prime Minister Jose Luis Rodriguez Zapatero's government embarked last year on an austerity programme aimed at cutting Spain's total public deficit to 3 percent of gross domestic product by 2013, in line with European Union mandates.

While the initial reductions were mainly at the national level, traditionally free-spending regional administrations have made significant cuts in 2011.

Spain's unemployment rate rose to 21.5 percent in the third quarter, its highest level since the last three months of 1996, the government said last Friday.

Nearly 145,000 Spanish residents joined the ranks of the unemployed in the July-September period, bringing the total to more than 4.9 million people.

Spain's jobless rate is the highest in the 27-member EU.

The effects of the global recession were aggravated in Spain by the collapse of a long construction and property boom that made the country's economy the envy of most of Madrid's European partners.