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The labour sector
Labour market conditions continued to improve in recent months. The seasonally adjusted unemployment rate edged lower to 3.1% in the second quarter of 1996 (2.9% in the three months ending July), from 3.5% in the fourth quarter of 1995 and 3.2% in the first quarter of 1996.
Manpower utilisation for those in employment was intensive, with the underemployment rate falling further, to 1.8% in the second quarter of 1996, from 2.3% in the fourth quarter of 1995 and 2% in the first quarter of 1996. The proportion of the workforce working relatively longer hours per week also edged higher.
There was a rather broad-based increase in demand for labour, with employment in most of the major service sectors in March 1996 picking up to various extent when compared with a year earlier, and with employment in the building and construction sector also strengthening markedly.
However, the decline in employment in the local manufacturing sector showed no sign of abatement, affected by the weak performance of domestic exports and the on-going trends of relocation of production processes outside Hong Kong and mechanisation locally.
As labour supply became relatively more abundant, employers should have less difficulty in recruitment. Vacancies in the various major sectors in March 1996 thus remained on a downtrend, on a year-on-year comparison.
Earnings in most of the major sectors recorded further increases, both in money terms and in real terms in the first quarter of 1996 over a year earlier. Pressures on wages however continued to ease.
The significant increase in earnings, against the concurrent easing in wages, could also be manifestation of a high intensity of manpower utilisation for those in employment.
The property market
Sentiment in the residential property market showed a distinct improvement in the first half of 1996. The cuts in local interest rate, as well as the offer of more attractive mortgage rate and other mortgage terms by the banks amidst keen competition for mortgage business, lent support to the revival.
Intensive sales promotion and the offer of more flexible payment terms by developers also provided much stimulus. Primary sales of flats generally met with an enthusiastic response. Trading in the secondary market also showed a clear rebound.