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EMPLOYMENT
6.
The unemployment rate has fallen further from 3% in Q2 to 2.8%. Employment in manufacturing has started to rise, reversing a declining trend. Labour incomes in manufacturing had risen by 9% in real terms by June 1986, largely due to increases in overtime.
PRICES
7. The annual rate of increase in prices, as measured by the CPI(A) remains at about 2.6%. While many import prices have risen as the HK$ fell in value, these effects have yet to reach final consumers, and the substantial volumes of foodstuffs and consumer goods from China have actually fallen in price due to the devaluation of the Renminbi against the HK$.
COMMENT
8. This is overall a very satisfactory picture. While longer term structural worries about the technology content of domestic exports remain, export growth this year may well be double the rate forecast at the time of the Budget. The outcome for GDP growth is likely to substantially exceed the 4.5% prediction made then.
3 December 1986
Nick Hallott.
NO Hallett
Economic Advisers
WH 426B
233-5335
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