- 2
1
V! +
FINANCIAL
7. Following very weak demand for loans in 1985, lending has picked up somewhat in Hl 1986, with outstanding loans for use in Hong Kong growing by about 5% over this period. Loans to the manufacturing sector grew by 13%, though the evidence from import data suggests this is financing stocks of raw materials and parts rather than capital investment.
UNEMPLOYMENT
8.
Very little change in levels of un- and under-employment (at 3% and 1.9% respectively). Increased reported job vacancies indicate a rise in demand for labour relative to supply. With the rise in exports, the decline in total manufacturing employment seen during 1985 and early 1986 seems to have been halted. Per capita incomes in manufacturing have risen by about 10% over the year to March 1986 as overtime has increased.
PRICES
9. The rate of increase in the CPI (A) remains low at 2.5% in Q2 1986, but the inflation rate is set to increase as the effects of HK $ depreciation work through. The value index for imports was 5% higher in Q2 1986 than the corresponding quarter of 1985, despite continued weakness in commodity prices.
OUTLOOK
10. The Budget forecast for 1986 real GDP growth was 4.5%, with domestic exports growing at 7.5%. First half growth of domestic exports was 8%, comprising 1% in the first quarter and 14% in the second. If the recent rate of growth continues the outcome for GDP will be higher than forecast.
24 September 1986
Nick Hallott.
N O Hallett
Economic Advisers
WH 426B
233-5335
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