ENG-1984 — Page 130

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THE ECONOMY

re-exported through Hong Kong were raw materials and semi-manufactures and consumer goods, representing about 42 per cent and 37 per cent of the total value of re-exports respectively. In terms of major product categories, industrial machinery, textile yarn, fabrics and made-up articles, clothing and miscellaneous manufactured articles, which accounted for about 25 per cent, 15 per cent, seven per cent and six per cent of the total value of re-exports respectively, showed substantial increases in real terms.

In 1984, imports grew by 27 per cent in money terms or about 15 per cent in real terms. Much of the overall increase was due to substantial increases in imports of raw materials and semi-manufactures and of capital goods. As the growth rate of the value of total exports (domestic exports plus re-exports), at 38 per cent, was faster than that of imports, at 27 per cent, the visible trade gap narrowed significantly to one per cent in 1984, from eight per cent in 1983.

The growth rate of domestic demand was four per cent in real terms in 1984, and compared favourably with the two per cent recorded in 1982 as well as in 1983. Private consumption expenditure grew further, by five per cent in 1984, partly reflecting the improved employment and earnings situation. Investment, measured in terms of gross domestic fixed capital formation, increased by one per cent in real terms in 1984, after a fall of 10 per cent in 1983. Overall expenditure on building and construction decreased, with most of the fall occurring in the expenditure by the private sector. On the other hand, overall expenditure on plant, machinery and equipment staged a significant recovery and increased by 21 per cent in real terms in 1984, after a decline of 14.3 per cent in 1982 and a marginal increase of one per cent in 1983.

Labour Market

Reflecting increases in both the labour force participation rate and the population of working age, the supply of labour increased in 1984. The buoyant export sector and the generally improved economic situation, however, also resulted in an increase in the demand for labour. Thus for the labour force as a whole, the employment situation improved. The seasonally adjusted unemployment rate and the underemployment rate fell to an estimated 3.9 per cent and 0.8 per cent respectively in the fourth quarter of the year, from 4.0 per cent and 1.5 per cent in the first quarter. Full employment in Hong Kong is probably represented by an unemployment rate of between 3.0 and 3.5 per cent.

The quantity index of industrial production increased by around 16 per cent in the first three quarters of 1984 compared with the same period in 1983, indicating that industrial activity has been maintained at a relatively high level during this period. The high level of manufacturing activity and exports in 1984 was probably accompanied by a further improvement in labour productivity, measured in terms of either manufacturing output per person engaged or domestic exports per person engaged in manufacturing. This improvement was in part due to increased overtime work.

Manufacturing employment in September 1984, at 904 710, was five per cent higher than in September 1983. Employment in the wholesale, retail and import/export trades, and in restaurants and hotels increased by six per cent and five per cent respectively. Employment in the finance, insurance, real estate and business services sector also increased, by three per cent. Employment on building and construction (including civil engineering) sites, however, declined. The decrease was concentrated mainly on public sector building sites. However, employment in the building and construction industry (covering both site workers and non-site workers) remained fairly stable, suggesting that additional off-site jobs were largely able to absorb the redundant on-site workers.