ENG-1989 — Page 77

THE ECONOMY

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equipment grew by 1.5 per cent in real terms, compared with an increase of 15 per cent in the preceding year. Public sector expenditures on these two components recorded relatively faster growth than the corresponding private sector expenditures in 1989.

The Labour Market

Conditions in the labour market remained generally tight throughout 1989, with the unemployment and underemployment rates staying at very low levels. In the fourth quarter, the seasonally adjusted unemployment rate was 1.3 per cent and the under- employment rate was 0.8 per cent. The corresponding figures in the fourth quarter of 1988 were 1.3 per cent and 0.7 per cent.

Between September 1988 and September 1989, manufacturing employment decreased by five per cent to 803 000, while employment in the service sectors as a whole increased by eight per cent to 1 366 000. Thus labour resources continued to shift from manufacturing to services in 1989. Among the various service sectors, employment in water transport, air transport and services allied to transport rose by 13 per cent; that in the wholesale, retail and import/export trades by nine per cent; that in finance, insurance, real estate and business services by eight per cent, and that in restaurants and hotels by eight per cent in September 1989, over a year earlier. Employment on building and construction (including civil engineering) sites decreased by eight per cent over the same period. For the building and construction industry as a whole, employment (covering both site workers and non-site - workers) decreased by two per cent. In line with the moderation in economic growth, vacancies in manufacturing decreased by 20 per cent from September 1988 to 44 000 in September 1989, and those in the service sectors as a whole by four per cent to 53 700.

Despite the decrease in manufacturing employment, local manufacturing output, as measured by the index of industrial production, was two per cent higher in the first three quarters of 1989 than in the same period in 1988. The increase in 1988 over 1987 was six per cent. At least part of these increases in output were derived from a general improvement in labour productivity, given the substantial investment in plant and machinery over the past few years. Relocation of the more labour-intensive production processes across the border has also helped to increase labour productivity in the local manufacturing sector.

Labour incomes were boosted by the sustained demand for manpower. Comparing September 1989 with September 1988, earnings in the manufacturing sector and in most service sectors, in terms of payroll per person engaged, showed significant gains in money terms and in real terms. Among the various sectors, earnings in the manufacturing sector were higher by 16 per cent in money terms or six per cent in real terms; those in financial institutions by 21 per cent in money terms or 10 per cent in real terms; those in restaurants and hotels by 13 per cent in money terms or three per cent in real terms; those in transport, storage and communications by 16 per cent in money terms or six per cent in real terms, and those in the wholesale, retail and import/export trades by 19 per cent in money terms or eight per cent in real terms. In the building and construction sector, wage rates continued to increase substantially in 1989, by an average of 23 per cent in money terms or 11 per cent in real terms, over a year earlier.

The Property Market

Continuing the trend in 1988, demand for most types of property remained strong and trading was active in the first few months of 1989. There were, however, signs of consoli- dation in the property market given the rapid increases in property prices and rentals