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9.
The revival in investment in plant and machinery by the manufacturing sector was in line with the buoyant domestic export performance in most
of 1986. This resulted in a tightening up of the
labour market and a high degree of capacity utilization particularly during the second half. Improvements in business prospects and in the order book positions have clearly increased manufacturers'
confidence to invest. Moreover, anticipation of
increases in the import prices of industrial machinery, due to the strengthening of the Yen (Japan being Hong Kong's largest supplier of capital
goods) and the Deutschemark, may have induced some
manufacturers to bring forward their investment
plans. Low interest rates and easier access to
credit facilities during the second half of 1986
have also helped to increase investment, although
much of it was probably financed by the
manufacturers themselves out of retained earnings.
10.
(d) Retained imports of capital goods
other than those for manufacturing use
In view of the heterogeneous nature of
retained imports of capital goods other than those
for use by manufacturing industry, the changes in
real terms shown in the data on them are not
sufficiently reliable to be quoted. The series is
included in this report only as a rough indication
of the overall trend. Retained imports of capital
goods other than for manufacturing use increased by about 1% in real terms in 1986, after a decline of
3% in 1985. There was, however, a rapid growth of
about 28% in real terms in the fourth quarter of
1986 (Table 2).
G.F. 326
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