XN000022-1977-09-12 — Page 4

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MONDAY, SEPTEMBER 12, 1977

IN THE SECTION ON MONEY AND BANKING, THE REPORT INDICATES A CONTINUED INCREASE IN BANK DEPOSITS AND IN THE MONEY SUPPLY. IT ADDS THAT REDUCTIONS IN INTEREST RATES AND THE INCREASING USE OF SAVINGS ACCOUNTS HAVE RESULTED IN A RAPID GROWTH IN SAVINGS DEPOSITS, WHICH AT THE END OF THE FIRST HALF OF THIS YEAR HAD GROWN TO A SIZE LITTLE DIFFERENT FROM THAT OF TIME DEPOSITS.

THE REPORT SHOWS THAT DOMESTIC BANK LENDING HAS ACCELERATED DURING THE SECOND QUARTER OF THIS YEAR AND THE ACCELERATION CAME MAINLY FROM LOANS FOR INDUSTRY, IN PARTICULAR BUILDING AND CONSTRUCTION.

THE REPORT ALSO SUMMARIZES MOVEMENTS IN THE HONG KONG DOLLAR EXCHANGE RATE OVER THE 12 MONTHS UP TO JUNE 1977.

AS REGARDS BUILDING AND CONSTRUCTION ACTIVITY, THE REPORT POINTS OUT THAT, IN 1976, THE CONSTRUCTION INDUSTRY MOVED RAPIDLY OUT OF THE RECESSION AND RECORDED AN INCREASE IN OUTPUT IN EXCESS OF 30 PER CENT. IT ADDS THAT THE HIGH LEVEL OF ACTIVITY HAS CONTINUED INTO 1977 BUT CAUTIONS THAT CONSTRUCTION COSTS HAVE BEEN INCREASING RAPIDLY.

THE REPORT INDICATES THAT ALTHOUGH CONSTRUCTION MATERIALS HAVE NOT SHOWN ANY DRASTIC INCREASES, THE LABOUR AND MATERIALS COST INDEX PREPARED BY THE ARCHITECTURAL OFFICE OF THE PUBLIC WORKS DEPARTMENT WENT UP BY 13 PER CENT DURING 1976 AND WAS, DURING THE FIRST FEW MONTHS OF 1977, INCREASING AT ABOUT THE SAME RATE.+

ON TEXTILE PRODUCTION, THE REPORT SHOWS THAT CAPACITY UTILIZATION IN THE TEXTILE INDUSTRY IN 1977 WAS CONSIDERABLY LOWER THAN IN 1976 AND THAT STOCKS WERE BUILDING UP RATHER RAPIDLY IN THE FIRST HALF OF THIS YEAR. THE INDEX OF PRODUCTION FOR THE SPINNING AND WEAVING SECTORS TAKEN AS A WHOLE WAS IN THE FIRST QUARTER 17 PER CENT BELOW THE PREVIOUS QUARTER AND 19 PER CENT BELOW THE CORRESPONDING QUARTER A YEAR AGO.

THE REPORT NOTES THAT THE ORDERS-ON-HAND POSITION FOR LARGE MANUFACTURING ESTABLISHMENTS DID NOT SHOW ANY IMPROVEMENT DURING THE SECOND QUARTER OF THIS YEAR. IT POINTS OUT THAT THIS WAS IN MARKED CONTRAST TO THE SUBSTANTIAL INCREASE IN ORDERS EXPERIENCED AT THE SAME TIME A YEAR AGO,

IN THE SECTION ON THE LABOUR MARKET, THE REPORT ANALYSES HOW THE SIZE OF THE LABOUR FORCE IS DETERMINED AT ANY POINT IN TIME.

IT SAYS THAT THE POPULATION'S DESIRE TO WORK WAS INFLUENCED BY THE LEVEL OF PROSPERITY IN THE ECONOMY.

/IT POINTS