Tuesday, October 20, 2009

HK's Economy Turning A Corner, China's Chugging Along

Twin rays of hope flickered through the economic gloom yesterday: Hong Kong's jobless rate has fallen for the first time in 13 months and pay levels are on the rise.

The number of unemployed during the July-September period fell by 7,700 - from 216,800 in June-August to 209,100. That means an unemployment figure of 5.3 percent against the previous 5.4 percent, which is modest at best.

But economists are cheered by the data. They see more falls in jobless figures unless there is another reverse in the wake of last year's crash. The good news about pay came after a Baptist University survey between July and September featuring 104 companies and covering 66,000 employees.

High on the list of key findings is the indication that people are likely to receive pay rises of 1.2 to 1.3 percent in the coming year. That is only a slight improvement on last year, when rises rounded out at 0.4-0.7 percent, but again it is seen as a turn for the better.

In 49 companies, researchers found, 3,000 employees were made redundant. But firms added 5,035 new posts, with the construction sector accounting for 38 percent of them. The figures were in tune with government data on employment, pointing to better job prospects in construction, information and telecommunications, arts and recreational and leisure services in particular. The jobless rate for the construction sector, which has been among the most troubled in recent times, dropped 0.7 percentage points to 9.4 percent.

Bank of East Asia chief economist Paul Tang Sai-on said an improvement in the trading sector is expected to support the labor market for the next three to six months at least. "Slower declines in trading volumes over recent months show that the core industry in Hong Kong is recovering."

Secretary for Labour and Welfare Matthew Cheung Kin-chung preached caution, however, pointing out that the recovery path may still be bumpy as the global economy remains unstable. "The government will remain vigilant."

Still, government officials say efforts to boost youth employment have begun to take effect, pointing to the jobless rate of 15- to 19-year-olds dropping by 2.7 percentage points to 25.7 percent.

Hang Seng Bank senior economist Irina Fan Yuen-yee attributes the employment improvement to a shrinking labor force - it decreased by around 7,400 during the three-month period - and the government's spending stimulus and subsidy programs for graduates.

Citi economist Cheng-Mount Cheng said: "We expect the jobless rate to remain elevated in the coming months when the labor force resumes expansion, but jobs are likely to become more plentiful."

China's economy expanded more than 7 percent in the first nine months, making Beijing's full-year target of 8 percent growth more achievable, according to the state planning agency.

Three days before official figures are released, Xiong Bilin, a senior official of the National Development and Reform Commission, said the mainland's gross domestic product for the first three quarters was around 7.1 percent. This was lower than a Reuters poll showing the average forecast was 8.9 percent.

CCB International said China's third- quarter growth would be about 8.9 percent, while consumer prices fell marginally by 0.8 percent from a year ago. But the investment bank expects inflation to rise 0.3 percent in September from August, reflecting a steady growth momentum. Fixed direct investment in September also rose, soaring 33.2 percent year on year and higher than the 22 percent in August, CCBI said.

In a bid to curb potential asset bubbles caused by overspending under Beijing's stimulus plans and ensure steady economic growth, the NDRC and nine industry department heads will try to prevent overcapacity in six sectors. They will do this by withholding approval for any new investment that does not follow procedures and is not in line with government policies.

The sectors are steel, cement, plate glass, coal chemicals, polysilicon and windpower equipment.

p/s photo: Yasuda Misako

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