3
The Economy
Overall investment spending in terms of gross domestic fixed capital formation fell noticeably by 11.2 per cent in real terms in 2020 after a 14.9 per cent decline in 2019, notwithstanding some rebound in the fourth quarter against a low base of comparison. Expenditure on acquisitions of machinery, equipment and intellectual property products plummeted 18.0 per cent, as business sentiment worsened sharply and stayed generally weak through the year amid an exceptionally uncertain business outlook. Meanwhile, expenditure on building and construction recorded a steep fall of 7.7 per cent, as the noticeable fall in private sector spending more than offset the increase in public sector spending. Separately, the costs of ownership transfer fell for the year as a whole, despite the notable rebound in the second half amid a more active residential property market.
Labour Market
The labour market deteriorated sharply in 2020 as the economy experienced the most severe contraction on record due to the COVID-19 pandemic. The seasonally adjusted unemployment rate surged to 4.2 per cent in the first quarter of 2020 and further to 6.2 per cent in the second quarter and 6.6 per cent in the fourth quarter, the highest in 16 years. The underemployment rate also soared, to a post-SARS high of 3.8 per cent in the third quarter and stayed elevated at 3.4 per cent in the fourth quarter. For 2020 as a whole, the unemployment rate averaged 5.8 per cent, up 2.9 percentage points over 2019, while the underemployment rate averaged 3.3 per cent, up 2.2 percentage points over the preceding year (chart 8). Labour market conditions deteriorated in all major sectors in 2020, particularly in retail, accommodation and food services, construction, arts, entertainment and recreation, warehousing and support activities for transportation, and transportation.
Chart 8
Unemployment and Underemployment Rates
3
2
1
5
-
7
Per cent
Seasonally adjusted unemployment rate
Underemployment rate
T
T
Q1
2017
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2016 T
1
2018
Q2 Q3 Q4 Q1 Q2 Q3 Q4
2019
2020
The labour market deteriorated sharply in 2020.
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