XN000022-1988-08-25 — Page 5

THURSDAY, AUGUST 25, 1988

THIRDLY, LOCAL INTEREST RATES WERE ON A GRADUAL UPTREND SINCE JANUARY, ELIMINATING THE DIFFERENTIAL BETWEEN THE HONG KONG DOLLAR AND THE U.8. DOLLAR INTEREST RATES TOWARDS THE END OF JUNE.

FOURTHLY, FOLLOWING THE OUTFLOW OF SPECULATIVE FUNDS, HONG KONG DOLLAR DEPOSITS AND THE HONG KONG DOLLAR MONRY SUPPLY SHOWED MORE MODERATE GROWTH DURING THE FIRST HALF OF 1988.

LASTLY, THE STOCK MARKET STABILISED IN THE FIRST HALF OF 1988, WITH MODEST RALLIES IN APRIL AND JUNE.

ON THE LABOUR SECTOR, THE REPORT NOTES THAT WHILE EMPLOYMENT IN THE MANUFACTURING SECTOR SHOWED A DECLINE BETWEEN MARCH 1987 AND MARCH 1988, EMPLOYMENT IN FINANCIAL AND RELATED BUSINESS SERVICES, IN THE WHOLESALE, RETAIL AND IMPORT/EXPORT TRADES, AND IN TRANSPORT SERVICES INCREASED SIGNIFICANTLY.

EMPLOYMENT ON BUILDING AND CONSTRUCTION SITES ALSO SHOWED SOME INCREASR OVER THE SAME PERIOD. REFLECTING TIGHT LABOUR MARKET CONDITIONS, THE NUMBER OF VACANCIES IN ALL MAJOR SECTORS WAS SUBSTANTIALLY HIGHER IN MARCH 1988 THAN A YEAR EARLIER.

WHILE NOMINAL EARNINGS CONTINUED ΤΟ INCREASE SIGNIFICANTLY BETWEEN MARCH 1987 AND MARCH 1988, RISING INFLATION RESULTED IN SMALLER RATES OF INCREASE IN REAL TERMS.

NEVERTHELESS IN THE BUILDING AND CONSTRUCTION SECTOR, THE YEAR- ON-YEAR RATE OF INCREASE IN WAGES, BOTH IN MONEY TERMS AND IN REAL TERMS, REMAINED SUBSTANTIAL.

AN

THE REPORT SHOWS THAT THE INDEX OF INDUSTRIAL PRODUCTION, INDICATOR OF LOCAL MANUFACTURING OUTPUT, INCREASED BY 6 PER CENT IN THE FIRST QUARTER OF 1988 OVER A YEAR EARLIER.

THIS REPRESENTS A SIGNIFICANT SLOW-DOWN FROM THE CORRESPONDING GROWTH RATES OF 9 PER CENT IN THE PRECEDING QUARTER AND OF 19 PER CENT IN THE FIRST THREE QUARTERS OF 1987 COMBINED.

SLOWER PACI

MANUFACTURING PRODUCTION HAS PROBABLY GROWN AT A IN THE SECOND QUARTER OF 1988, AS REFLECTED BY THE FIGURES ON DOMESTIC EXPORTS AND ON THE QUANTITY OF ELECTRICITY CONSUMED BY INDUSTRY.

THE PROPERTY MARKET WAS LEFT RELATIVELY UNSCATHED BY THE STOCK MARKET CRASH OF LAST OCTOBER. AFTER A SHORT PERIOD OF CONSOLIDATION IN THE LATTER PART OF 1987, PRICES AND RENTALS FOR ALL CATEGORIES OF PROPERTY CREPT UP AGAIN DURING THE FIRST HALF OF 1988.

THE MARKET FOR SMALL AND MEDIUM-SIZED FLATS WAS SUPPORTED BY INCREASED HOUSEHOLD INCOMES AND A GENERAL DESIRE TO ACQUIRE PROPERTY FOR SELF-OCCUPANCY. MOREOVER, THERE WERE SOME SPECULATIVE ACTIVITIES ON A SELECTIVE BASIS.

/THE DEMAND