XN000022-1980-08-19 — Page 4

TUESDAY, AUGUST 19, 1980

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IN SUPPORT OF THIS VIEW, THE REPORT INDICATES THAT THE SEASONALLY ADJUSTED UNEMPLOYMENT RATE FOR THE ECONOMY AS A WHOLE

INCREASED DURING THE TWELVE MONTHS ENDING MARCH 1980 AND WAGES, AT LEAST IN THE MANUFACTURING SECTOR WHERE THE DEPRESSING EFFECT OF IMMIGRANTS AND REFUGEES WAS PROBABLY MORE SERIOUS THAN IN OTHER SECTORS OF THE ECONOMY, DECLINED IN REAL TERMS ALTHOUGH IN MONEY TERMS THEY INCREASED SUBSTANTIALLY. ALSO DESPITE THE PERSISTENTLY STRONG DEMAND FOR LABOUR IN THE BUILDING AND CONSTRUCTION INDUSTRY, THE RATE OF INCREASE IN CONSTRUCTION WAGE RATES HAD BEEN SLOWING DOWN, PRESUMABLY BECAUSE A LARGE NUMBER OF IMMIGRANTS WERE ATTRACTED INTO THIS INDUSTRY.

PRODUCTION

ON PRODUCTION, THE REPORT GIVES PARTICULAR EMPHASIS TO THE BUILDING AND CONSTRUCTION INDUSTRY IN RELATION TO THE PROPERTY MARKET. IT POINTS OUT THAT WITH THE CONTINUATION OF STRONG DEMAND FOR BUILDING AND CONSTRUCTION OUTPUT BY BOTH THE PUBLIC AND PRIVATE SECTORS AND THE FACT THAT THE BUILDING AND CONSTRUCTION INDUSTRY HAS BEEN OPERATING AT ITS CAPACITY LIMITS, PARTICULARLY IN RESPECT OF SUITABLE LABOUR, THE GROWTH RATE OF OUTPUT OF THIS SECTOR IS DETERMINED LARGELY BY THE RATE OF EXPANSION OF THE INDUSTRY'S CAPACITY. THE REPORT ADDS THAT ALTHOUGH THE CONSTRAINT ON THE SUPPLY OF SKILLED LABOUR IS LIKELY TO CONTINUE IN THE NEAR FUTURE, THERE SHOULD NOT BE ANY UNDUE SHORTAGE OF UNSKILLED LABOUR.

THE REPORT SUGGESTS THAT EITHER BECAUSE DEMAND WAS BEING CURTAILED OR POSTPONED, OR BECAUSE SUPPLY HAD BEEN CATCHING UP WITH DEMAND OVERHEATING WHICH CHARACTERISED THE PROPERTY MARKET GENERALLY AND RESIDENTIAL ACCOMMODATION IN PARTICULAR IN 1979, HAD EASED CONSIDERABLY IN THE FIRST HALF OF 1980 WITH THE RESALE PRICES FOR SOME RESIDENTIAL UNITS 10 PER CENT TO 20 PER CENT BELOW THE IR PEAKS AT END OF 1979.

HOWEVER, THE REPORT ALSO INDICATES THAT THE PRICES FOR COMMERCIAL AND INDUSTRIAL PROPERTY HAVE CONTINUED TO INCREASE FAIRLY RAPIDLY BECAUSE OF GENERALLY KEEN DEMAND INCLUDING SOME SPECULATIVE DEMAND FOR THE FORMER AND A PERSISTENT DISCREPANCY BETWEEN SUPPLY AND DEMAND IN RESPECT OF TYPES AND LOCATIONS FOR THE LATTER.

AS FOR RENTALS, WITH THE EXCEPTION OF THOSE FOR RESIDENTIAL ACCOMMODATION, WHICH WERE UNDER RENT CONTROL EXCEPT IN RESPECT OF NEW LETTINGS, THEY HAD RECORDED QUITE SUBSTANTIAL INCREASES IN THE FIRST HALF OF 1980.

PRICES

THE REPORT EMPHASIZES THAT ALTHOUGH THE VARIOUS PRICE INDEXES, INCLUDING THE UNIT VALUE INDEXES OF IMPORTS AND DOMESTIC EXPORTS AND CONSUMER PRICE INDEXES WERE SIGNIFICANTLY HIGHER IN THE FIRST HALF OF 1980 THAN IN THE FIRST HALF OF 1979, THE RATES OF INCREASE HAVE BEEN SLOWING DOWN. WITH THE PREVIOUS EXCESS DEMAND ON DOMESTIC RESOURCES BEING SATISFIED TO A LARGER EXTENT, DOMESTICALLY GENERATED INFLATION BECAME MUCH LESS IMPORTANT IN THE FIRST HALF OF 1980 THAN IT WAS A YEAR AGO, AND IMPORTED INFLATION HAS BEEN DAMPENED TO SOME EXTENT BY THE STRENGTHENING OF THE HONG KONG DOLLAR IN THE SECOND HALF OF 1979 AND THE FIRST THREE MONTHS OF 1980.

/ALTHOUGH IT