XN000022-1996-05-31 — Page 8

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Labour market conditions continued to stabilise in recent months. The seasonally adjusted unemployment rate edged down

to 3.2% and the underemployment rate to 2% in the first quarter, from 3.5% and 2.3% in the preceding

quarter.

The growth in total employment accelerated, but this was outstripped by an even faster growth in total labour supply. For those in employment, work intensity was generally greater in the first quarter than a year earlier.

Along with the pick-up in activity in both the stock and property markets, sentiment in the local economy improved in recent months. Prices and turnover in the stock market were significantly higher in the first quarter than in the preceding quarter.

The residential property market continued to rebound, with more active trading and rises in price during the first quarter. Activity in the market for office space also showed some revival.

CPI(A) rose by an average of 6.5% in the first four months of 1996. This was much slower than the average increase of 8.7% recorded in 1995, and was also below the forecast increase of 7.5% for 1996 as a whole.

A continued easing in both domestically-generated inflationary pressures and imported inflation contributed to the recent trend of moderating inflation.

There was a further deceleration in export growth in the first quarter of 1996. Total exports of goods grew by about 5% in real terms, as compared to increases of 7% in the fourth quarter of last year and of 12% for 1995 as a whole.

While the strengthening of the US dollar and hence the Hong Kong dollar in the latter part of last year continued to affect export competitiveness in the more recent months, consumer demand in some of the overseas markets also remained slack in the early part of this year.

Moreover, the strong export growth recorded in the first quarter of last year gave a high base of comparison for the first quarter of this year. The particularly weak export performance in March aggravated the situation. Nevertheless, the latest trade statistics show that export performance has returned to normal in April.

Analysed by major market, total exports to Japan continued to show the fastest growth, by about 25% in real terms in the first quarter of 1996 over a year earlier. Total exports to the United Kingdom also showed a notable increase of about 13% in real terms in the first quarter.