XN000022-1983-08-25 — Page 6

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THURSDAY, AUGUST 25, 1983

COMPARING THE FIRST HALF OF 1983 WITH THE FIRST HALF OF 1982, THE REPORT POINTS OUT THAT THE GROWTH RATE OF THE VALUE OF TOTAL EXPORTS (DOMESTIC EXPORTS PLUS RE-EXPORTS), AT 13 PER CENT, WAS FASTER THAN THAT OF IMPORTS, AT 11 PER CENT. THE VISIBLE TRADE GAP THUS NARROWED TO 12 PER CENT, FROM 14 PER CENT IN THE FIRST HALF OF 1982.

ON THE FINANCIAL SECTOR, THE REPORT NOTES THE FOLLOWING DEVELOPMENTS DURING THE FIRST HALF OF THIS YEAR.

FIRST, THE GROWTH RATE OF THE MONEY SUPPLY WAS SLOWING DOWN, REFLECTING SLOWER GROWTH OF LOANS AND ADVANCES. BUT THE FOREIGN CURRENCY COMPONENT OF THE MONEY SUPPLY, WHICH WAS BUOYED BY +SWAP+ DEPOSITS AND BY THE WEAKNESS OF THE HONG KONG DOLLAR, GREW AT A FASTER RATE THAN ITS HONG KONG DOLLAR COMPONENT.

SECOND, THE SWITCH OF DEPOSITS FROM REGISTERED DEPOSIT-TAKING COMPANIES TO BANKS CONTINUED, ALBEIT AT A SLOWER RATE THAN DURING 1982, AS THE TWO-YEAR TRANSITIONAL PERIOD FOR THE ESTABLISHMENT OF THE THREE-TIER STRUCTURE CAME TO AN END.

THIRD, AFFECTED BY NERVOUS POLITICAL SENTIMENT, THE GENERAL STRENGTH OF THE US DOLLAR AND SPECULATIVE ACTIVITIES, THE HONG KONG DOLLAR WAS UNDER CONSIDERABLE DOWNWARD PRESSURE, PARTICULARLY DURING THE SECOND QUARTER. THE EXTENT OF THE DEPRECIATION WAS GENERALLY CONSIDERED TO BE EXCESSIVE IN TERMS OF THE UNDERLYING ECONOMIC FUNDAMENTALS WHICH HAVE BEEN CLEARLY INDICATING AN EXPORT-LED RECOVERY.

FOURTH, TO LEND SUPPORT TO THE HONG KONG DOLLAR, LOCAL INTEREST RATES WERE ADJUSTED UPWARDS TWICE IN THE SECOND QUARTER.

ON THE LABOUR SECTOR, THE REPORT SAYS THAT BOTH THE UNEMPLOYMENT RATE AND THE UNDEREMPLOYMENT RATE FELL IN THE SECOND QUARTER, FROM THE PEAKS RECORDED EARLIER IN THE YEAR.

REFLECTING THE RECOVERY OF THE EXPORT SECTOR, MANUFACTURING EMPLOYMENT HAS CEASED TO DECLINE SINCE THE BEGINNING OF THIS YEAR.

EMPLOYMENT ON BUILDING AND CONSTRUCTION SITES, HOWEVER, CONTINUED TO FALL IN THE SECOND QUARTER.

THE REPORT FURTHER NOTES THAT DURING THE TWELVE MONTHS ENDING MARCH 1983, MANUFACTURING WAGE RATES AND CONSTRUCTION WAGE RATES INCREASED IN MONEY TERMS, BUT DECLINED IN REAL TERMS WHEREAS WAGES AND SALARIES IN THE TERTIARY SERVICES SECTORS, IN TERMS OF PAYROLL PER PERSON ENGAGED, ROSE IN BOTH MONEY TERMS AND REAL TERMS.

THE REPORT OBSERVES THAT THERE WAS A CONSIDERABLE REVIVAL IN MANUFACTURING ACTIVITY IN THE FIRST HALF OF THIS YEAR, AS SHOWN BY THE LATEST STATISTICS ON DOMESTIC EXPORTS, RETAINED IMPORTS OF RAW MATERIALS AND SEMI-MANUFACTURES, OUTWARD CARGO MOVEMENTS BY SEA AND BY AIR, AND THE QUANTITY OF ELECTRICITY CONSUMED BY THE MANUFACTURING SECTOR.

/A QUALITATIVE