ENG-1993 — Page 81

THE ECONOMY

finance, insurance, real estate and business services by nine per cent; and that in water transport, air transport and services allied to transport by seven per cent, but employment in restaurants and hotels fell by two per cent. On building and construction sites, employment decreased by 18 per cent. However, for the building and construction industry as a whole, employment of site and non-site workers taken together showed a smaller decline of five per cent.

The generally tight labour market conditions continued to boost labour incomes. Comparing September 1993 with September 1992, average earnings in all major economic sectors, in terms of payroll per person engaged, continued to show significant increases in money terms. Average earnings in the wholesale, retail and import and export trades recorded the fastest increase, up by 14 per cent in money terms between September 1992 and September 1993. This was followed by finance, insurance, real estate and business services, up by 13 per cent; restaurants and hotels, up by 12 per cent; and manufacturing, up by 10 per cent. After adjusting for inflation, the increases in real terms for these sectors were six per cent, five per cent, three per cent and two per cent, respectively. Earnings in transport, storage and communications recorded a more moderate increase of eight per cent in money terms, giving virtually no change in real terms.

The Property Market

After a brief consolidation in the first quarter of 1993, trading in the residential property market picked up markedly, along with a price upsurge, in the second quarter. Market sentiment was boosted by the success of a number of pre-completion sales exercises by the major developers, and the resumption of the Sino-British talks on Hong Kong's constitutional development and on financing arrangements for the new airport. Trading remained active during most of the third quarter with flat prices rising further. But activity contracted somewhat towards the end of the quarter. Notwithstanding a sustained low mortgage rate, reduced affordability following the large price increases and the tightening of mortgage lending by the major banks during the third quarter had set in to dampen demand. The market turned quieter during most of the fourth quarter as flat prices softened slightly. But trading activity revived again towards the end of the year, stimulated this time by the price fetched in the auction of a residential site in Kowloon Tong in mid-December, which was substantially above expectations. Meanwhile, the rental market for residential property was on a steady course, with rentals showing a less rapid increase than sale prices. The average rental yield for residential flats thus fell further in 1993.

In the market for shopping space, demand remained firm due to the rapid increase in visitor arrivals and the steady growth in spending by local residents. Sale prices and rentals for shop premises continued to rise significantly. For office space, rentals were on a general uptrend due to a sustained growth in end-user demand as the economy became more and more service-oriented. Trading in office strata in prime office premises also attracted considerable investment interest, and prices rose significantly. The market for industrial property, however, remained soft. Prices and rentals for conventional flatted factory space were generally static. But the market for modern industrial premises designed also for ancillary office use fared better, with prices and rentals picking up continuously.

The response to the various government land auctions conducted in 1993 was generally good.

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