THE ECONOMY
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Amid sustained full employment, the local workforce generally enjoyed a continued rise in real income. Comparing September 1994 with September 1993, average earnings in the services sector as a whole registered increases of 11 per cent in money terms, or two per cent in real terms. Earnings in manufacturing also rose, by 12 per cent in money terms or three per cent in real terms. Construction wage rates showed a steady increase of nine per cent in money terms with little change in real terms.
Analysed by sectors, average earnings in the community, social and personal services reported the fastest increase, by 17 per cent in money terms in September 1994, over the average earnings of a year earlier. This was followed by the transport, storage and communication, and the manufacturing sectors, with increases in average earnings of 13 per cent and 12 per cent, respectively, in money terms. After discounting inflation, the increases in real terms for these sectors were seven per cent, four per cent, and three per cent, respectively. Average earnings in both the finance, insurance, real estate and business services sector, and in the sector for restaurants and hotels, rose by nine per cent in money terms, representing virtually no change in real terms. Average earnings in the wholesale, retail and import/export trades registered a more moderate increase of four per cent in money terms, equivalent to a decline of four per cent in real terms.
The Property Market
The residential property market experienced a significant downturn during the second - -half of 1994. In the first quarter, residential property prices escalated sharply amidst hectic trading. Market sentiment soon took a downturn, following the setting up of the -government's Task Force on Land Supply and Property Prices in April, and the subsequent announcement in June of a package of measures to dampen speculation and stabilise the market. The uptrend in interest rates and the banks' continued tight mortgage lending policy also contributed to cooling down the market. The market quietened further towards the end of the year, due to a further upward adjustment in the interest rate in November and the bearish performance of the stock market. Reflecting this downturn, flat prices eased from their peak in March/April. Speculative activities virtually disappeared. Flat rentals continued to rise steadily amidst sustained end-user demand. However, there were also some downward pressures towards the end of the year as more landlords, who were unwilling to sell at the prevailing price level, placed their flats on the rental market.
Amidst keen interest from investors and end-users, the sales and rental market for office space showed a robust performance during the first half of 1994. There were, nevertheless, pressures on prices in the latter part of the year, partly due to an abundant supply in the pipeline, and partly due to a turn in market sentiment amidst rising interest rates and some tightening of mortgage lending for office premises by the banks. The sales market remained soft towards the end of the year, despite the Task Force's announcement in November that the government did not intend to intervene in the market for office space. The increase in office rentals also moderated somewhat towards the end of the year as tenants became more resistant to the high rental levels. On shop premises, the rental market settled in the latter part of 1994, partly due to tenants' resistance to further rental increases, and partly due to a slower growth in local consumer and tourist spending, which affected retail business. Prices also eased amidst a generally subdued investment sentiment and a tighter mortgage lending policy by the banks on commercial property.