XN000022-1987-05-18 — Page 13

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MONDAY, MAY 18, 1987

AS REGARDS EXPECTATIONS OF THE GENERAL

BUSINESS SITUATION IN THE SECOND QUARTER, WIDESPREAD OPTIMISM IS REFLECTED AMONG FIRMS ACROSS ALL MANUFACTURING INDUSTRIES. THE MAJORITY OF FIRMS IN THE MAJOR MANUFACTURING INDUSTRIES EXPECT BUSINESS IMPROVEMENT IN THE SECOND QUARTER.

ON BALANCE, FIRMS IN THE WHOLESALE, RETAIL AND IMPORT/EXPORT TRADES SECTOR EXPERIENCED LITTLE CHANGE IN BUSINESS IN THE FIRST QUARTER WHILE THOSE IN THE RESTAURANTS SECTOR EXPERIENCED A SLIGHT IMPROVEMENT. DUE LARGELY TO SEASONAL FACTORS, THE RESPONDING HOTELS EXPERIENCED A DECLINE IN BUSINESS IN THE FIRST QUARTER.

IMPROVEMENTS IN BUSINESS IN THE SECOND QUARTER ARE GENERALLY EXPECTED BY RESPONDENTS IN THE WHOLESALE, RETAIL AND IMPORT/EXPORT TRADES AND HOTELS SECTORS, IN CONTRAST, THE RESTAURANT BUSINESS EXPECT A DECLINE DUE TO SEASONAL FACTORS.

THE SURVEY ALSO COVERED BUSINESS PROBLEMS FACED BY FIRMS.

AS REGARDS PROBLEMS FACED BY THE MANUFACTURING SECTOR, FIRMS CONTINUED TO BE AFFECTED BY PRICE COMPETITION FROM FIRMS IN HONG KONG, HIGH MATERIAL PRICES AND SHORTAGE OF SKILLED LABOUR IN THE FIRST QUARTER. IN ADDITION, A GENERAL SHORTAGE OF LABOUR WAS ALSO REPORTED BY FIRMS AS A MAJOR PROBLEM AND THE SIGNIFICANCE OF THE PROBLEM OF HIGH MATERIAL PRICES HAS INCREASED CONSIDERABLY. THESE PROBLEMS ARE EXPECTED TO REMAIN SIGNIFICANT IN THE SECOND QUARTER.

FOR THE CONSTRUCTION SECTOR, THERE WAS A LARGE PROPORTION OF FIRMS CITING PRICE COMPETITION FROM LOCAL AND FOREIGN FIRMS IN HONG KONG AS PROBLEMS FOR BOTH THE FIRST AND SECOND QUARTERS.

FIRMS IN THE WHOLESALE, RETAIL AND IMPORT/EXPORT TRADES, RESTAURANTS AND HOTELS SECTOR WERE VERY MUCH AFFECTED BY THE PROBLEM OF PRICE COMPETITION IN THE FIRST QUARTER. OTHER MORE SIGNIFICANT PROBLEMS INDICATED BY RESTAURANTS WERE INSUFFICIENT BUSINESS, SHORTAGE OF STAFF GENERALLY, HIGH STAFF COSTS AND HIGH STAFF TURNOVER. HIGH STAFF TURNOVER WAS ALSO COMMON AMONG HOTELS. THESE PROBLEMS ARE EXPECTED TO PREVAIL IN THE SECOND QUARTER.

PRICE COMPETITION WAS A COMMON PROBLEM FACED BY THE TRANSPORT, STORAGE AND COMMUNICATION AND BANKS BUSINESSES FOR BOTH THE FIRST AND SECOND QUARTERS OF 1987. BANKS WERE ALSO AFFECTED EXTENSIVELY BY HIGH STAFF TURNOVER, THOUGH THE EXTENT OF THE PROBLEM IS EXPECTED TO DIMINISH IN THE SECOND QUARTER.

ACCORDING TO THE CENSUS AND STATISTICS DEPARTMENT, THE SURVEY RESULTS, OBTAINED WITH A MINIMUM TIME LAG, ARE INTENDED TO PROVIDE ONE SOURCE OF REFERENCE FOR MAKING A QUICK ASSESSMENT OF THE CURRENT ECONOMIC SITUATION OF HONG KONG.

IN THE SURVEY, PARTICIPATING FIRMS WERE ASKED TO INDICATE WHETHER, IN THEIR OPINION, THE GENERAL BUSINESS SITUATION AND LEVEL OF CAPACITY UTILISATION HAD IMPROVED, REMAINED THE SAME OR DETERIORATED IN THE QUARTER JUST ENDED AS COMPARED WITH THE PRECEDING QUARTER.

/FOR THE