THE ECONOMY
Domestic Demand
Indicative of a generally buoyant economy, domestic demand rose by 10 per cent in real terms in 1992, following a nine per cent growth in 1991. Private consumption expenditure grew by nine per cent in real terms in 1992, and government consumption expenditure by eight per cent in real terms. Their corresponding growth rates in 1991 were eight per cent and seven per cent. Investment demand, measured in terms of gross domestic fixed capital formation, grew by 11 per cent in real terms in 1992, having increased by 10 per cent in 1991. Among its major components, expenditure on plant and machinery was higher by 23 per cent in real terms, while expenditure on building and construction showed a marginal increase of one per cent in real terms.
The Labour Market
The labour market, after showing some easing in the early part of 1992, tightened up again in the latter part of the year. The seasonally adjusted unemployment rate rose to around 2.4 per cent in the first half of 1992, before falling to about 2.0 per cent in the second half. The underemployment rate exhibited a broadly similar trend. It rose to 2.2 per cent in the first half of the year, and then fell to 2.0 per cent in the second half.
Between September 1991 and September 1992, employment in the manufacturing sector decreased by 13 per cent to 571 200, while employment in the service sectors as a whole increased by four per cent to 1 621 800. Labour resources thus continued to shift from manufacturing to services. Among the various service sectors, employment in water transport, air transport and services allied to transport increased by eight per cent; that in finance, insurance, real estate and business services by six per cent; that in restaurants and hotels by four per cent; and that in the wholesale, retail and import/export trades by three per cent. On building and construction sites, employment decreased by one per cent. However, for the building and construction industry as a whole, employment of site workers and non-site workers taken together still showed an increase of two per cent. As the employment situation in the manufacturing sector remained slack, vacancies in this sector declined markedly, by 18 per cent over a year earlier to 19 100 in September 1992. Nevertheless, vacancies in the service sectors as a whole rose by 10 per cent to 54 100.
Local manufacturing output, as measured by the index of industrial production, increased by two per cent in the first three quarters of 1992 over the same period in 1991. This compared with an increase of one per cent in 1991 over 1990. The attainment of this level of performance, notwithstanding a significant reduction in manufacturing employ- ment, showed that labour productivity in the manufacturing sector had risen significantly. This was attributable partly to the marked increase in investment in machinery and equipment, and partly to the relocation of the more labour-intensive production processes to China.
The generally tight labour market conditions boosted labour incomes. Average earnings in all major sectors recorded further significant increases in money terms during the twelve months ending September 1992. When expressed in real terms, earnings in all major sectors except restaurants and hotels increased.
Between September 1991 and September 1992, average earnings of manufacturing workers increased by 15 per cent in money terms. After adjusting for inflation, this amounted to an increase of four per cent in real terms. Average earnings for the service
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