XN000022-1981-08-28 — Page 4

FRIDAY, AUGUST 28, 1981

THE REPORT POINTS OUT THAT, IN CONSEQUENCE,

IN CONSEQUENCE, THE INCREASE IN WAGE RATES IN REAL TERMS IN THE MANUFACTURING SECTOR AND. TO A LESSER EXTENT IN THE BUILDING AND CONSTRUCTION (INCLUDING CIVIL ENGINEERING) SECTOR, WHERE A LARGE PROPORTION OF IMMIGRANTS TEND TO FIND EMPLOYMENT, CONTINUED TO BE INSIGNIFICANT. BUT IT ALSO EMPHASISES THAT MORE RECENT DEVELOPMENTS IN THE LABOUR SECTOR SUGGEST THAT THERE HAS BEEN SOME IMPROVEMENT IN THE EMPLOYMENT SITUATION IN THE SECOND QUARTER AND THAT LABOUR SHORTAGES WERE DEVELOPING IN SOME AREAS.

APART FROM THE NOTABLE EXCEPTION OF THE TEXTILES (EXCLUDING CLOTHING) INDUSTRY, ACTIVITY IN THE MANUFACTURING SECTOR AS A WHOLE CONTINUED TO GROW IN THE FIRST HALF OF 1981 AS SUGGESTED BY STATISTICS ON CONSUMPTION OF ELECTRICITY AND ON DOMESTIC EXPORTS. THE CLOTHING AND ELECTRONICS INDUSTRIES APPEAR TO HAVE DONE PARTICULARLY WELL.

ON THE PROPERTY SECTOR THE REPORT NOTES THAT IN TERMS OF TOTAL USABLE FLOOR AREA OF BUILDINGS COMPLETED, THERE WERE SUBSTANTIAL INCREASES IN THE ADDITIONAL SUPPLY OF ALL TYPES OF PROPERTY AND THE INCREASE WAS MOST MARKED IN THE CASE OF COMMERCIAL (OFFICES AND SHOPS) PROPERTY. PRICES AND RENTALS FOR PROPERTY IN GENERAL EITHER LEVELLED OFF OR INCREASED AT A MUCH SLOWER RATE IN THE FIRST HALF OF 1981 THAN IN THE SECOND HALF OF 1980.

IN RESPECT OF RESIDENTIAL PROPERTY, THIS WAS PROBABLY THE RESULT OF DEMAND BEING DAMPENED BY HIGH PRICES AND HIGH MORTGAGE RATES, BUT THE SLOW DOWN WAS MOST MARKED IN RESPECT OF PRICES AND RENTALS FOR COMMERCIAL PROPERTY WHERE PREVIOUS RAPID INCREASES APPEAR TO HAVE SUCCESSFULLY STIMULATED A SUBSTANTIAL RESPONSE IN TERMS OF SUPPLY.

THE SUPPLY OF INDUSTRIAL PROPERTY WAS ABUNDANT AND THE RATES OF INCREASE IN THEIR PRICES AND RENTALS, WHICH HAVE NOT BEEN RAPID FORMERLY, APPEAR TO HAVE SLOWED DOWN FURTHER.

ON ACTIVITY IN THE BUILDING AND CONSTRUCTION (INCLUDING CIVIL ENGINEERING) SECTOR, THE REPORT POINTS OUT THAT THE DEMAND FOR BUILDING AND CONSTRUCTION OUTPUT REMAINED STRONG IN THE FIRST HALF OF 1981. HOWEVER, THE RATE OF INCREASE IN BUILDING AND CONSTRUCTION COSTS REMAINED MODERATE IN THE FIRST HALF OF THIS YEAR.

ON PRICES, THE REPORT EMPHASISES THAT IN THE FIRST HALF OF 1981, DOMESTIC INFLUENCES ON PRICES WERE MODERATING AS THERE WAS NO OBVIOUS IMBALANCE BETWEEN THE SUPPLY OF DOMESTIC RESOURCES AND THE DEMAND FOR THEM. BUT PRICES IN HONG KONG IN THE FIRST HALF OF 1981 WERE AFFECTED UNFAVOURABLY BY WORLD PRICES WHICH INCREASED FAIRLY RAPIDLY AND THE DELAYED EFFECT OF THE DEPRECIATION OF THE EXCHANGE VALUE OF THE HONG KONG DOLLAR DURING THE LAST EIGHT MONTHS OF 1980. REFLECTING THESE DEVELOPMENTS, CONSUMER PRICES IN HONG KONG INCREASED FAIRLY RAPIDLY DURING THE FIRST HALF OF 1981.

THE HALF-YEARLY ECONOMIC REPORT 1981 IS NOW ON SALE AT $14 A COPY.

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