THE ECONOMY
surged by 13 per cent in real terms in 1994. This contrasted with a moderate growth of about four per cent in 1993. Among the major components, expenditure on building and construction intensified further, with a growth rate of 15 per cent in real terms in 1994, compared with a nine per cent increase in 1993. Work on a number of major infrastructural projects in the public sector was well under way. Activity in the private sector also staged a marked recovery, led mainly by a revival in building activity. Civil engineering activity also intensified during the year. Reflecting a rebound from the earlier consolidation, the growth rate of expenditure on machinery and equipment also accelerated to 14 per cent in 1994, compared to the five per cent increase in 1993.
Private consumption expenditure, after a marked increase in the first quarter of 1994, recorded slower growth in the ensuing quarters. But for the year as a whole, a growth rate of eight per cent in real terms was still recorded, which was broadly similar to the increase in 1993. The consolidation in the stock and property markets could have had some negative effects on consumer sentiment. The successive increases in interest rates from March onwards could have also affected the consumption pattern, particularly among households burdened with home mortgages. The slowdown in growth was concentrated largely in the purchase of consumer durables, especially motor vehicles which are often bought on instalment payment terms and are therefore more interest rate-sensitive. Nevertheless, spending on clothing and other non-durable goods remained strong. Government consump- tion expenditure (in national accounts terms) registered an increase of four per cent in 1994, compared with an increase of two per cent in 1993.
The Labour Market
The labour market remained generally tight in 1994. There was a continued marked increase in employment. Had it not been for a sustained net inflow of people to Hong Kong, resulting in a further significant growth of the labour force, the labour market could have become even tighter. In the fourth quarter, the seasonally-adjusted unemployment rate was two per cent - 0.3 of a percentage point lower than in the preceding quarter but virtually unchanged from the same quarter in 1993. The underemployment rate, at 1.5 per cent, was 0.4 of a percentage point lower than in the preceding quarter while remaining unchanged from the same quarter in 1993. Closer examination showed that utilisation of the employed work- force remained intense. The proportion of the employed population working longer hours was on an uptrend.
The shift in employment from the manufacturing sector to the services sector continued. Employment in the manufacturing sector decreased by 14 per cent from a year earlier to 438 400 in September 1994, while vacancies also declined by 14 per cent over the same period to 12 100. Offsetting this, employment in the services sector as a whole increased by nine per cent to 1 869 900, and vacancies by 11 per cent to 62 000. In the services sector, employment in the wholesale, retail and import/export trades increased by 12 per cent; that in water transport, air transport and services allied to transport by eight per cent; that in finance, insurance, real estate and business services by seven per cent; and that in restaurants and hotels by only one per cent.
On building and construction sites, employment surged by 16 per cent. For the building and construction industry as a whole, employment of site and non-site workers taken together rose more moderately by four per cent.
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