Chart 8
Percent
20
15
THE ECONOMY
Main components of domestic demand (year-on-year rate of change in real terms)
Private
10
consumption
expenditure
Government
5
consumption expenditure
0
-5
-10
1988
Investment expenditure
in terms of GDFCF
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
In 1998, domestic demand fell markedly, due to the significant setback in both consumer spending and investment spending.
The Labour Market
After a year of general tightness in 1997, the labour market slackened markedly during the course of 1998, when the economy suffered a severe downturn upon the impact of the regional financial turmoil. The seasonally adjusted unemployment rate rose sharply, from 2.5 per cent in the fourth quarter of 1997 to 5.7 per cent in the fourth quarter of 1998, as did the underemployment rate, from 1.3 per cent to 3.0 per cent. For those in employment, some had to work longer hours. Thus the proportion of persons employed working for 50 hours or more per week went up from 25.4 per cent in the fourth quarter of 1997 to 26.0 per cent in the fourth quarter of 1998. Yet the median hours of work per week for all persons employed held stable, at 45 throughout the year.
The surplus of labour supply over labour demand became more distinct in the latter part of 1998, when total employment registered a decrease and vacancies fell substantially across the board consequential to the downturn in the economy. Yet the labour force kept on growing, albeit at a less rapid pace towards the end of the year, mainly due to the sustained large inflows of returning emigrants and immigrants from the Mainland.
Analysed by sector, construction had the most significant rise in unemployment rate in the fourth quarter of 1998 over the same quarter in 1997. This was mainly due to completion of the Airport Core Programme, as well as a slow-down in private sector building and interior decoration activity along with the downturn in the property market. Also having a sharp rise in the unemployment rate were restaurants,
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