ENG-2002 — Page 92

THE ECONOMY

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Analysed by economic sector, labour earnings drifted lower across all the constituent sectors. Taking all the service sectors surveyed together, earnings decreased by 1.8 per cent in money terms in the third quarter of 2002 over a year earlier, larger than the 1.2 per cent decline in the second quarter. In real terms, earnings nevertheless rose in both quarters, by 1.8 per cent and 2.1 per cent respectively. Amongst the various service sectors, earnings in restaurants and hotels had a more distinct decrease, by 3.0 per cent in money terms in the third quarter of 2002 over a year earlier, though still higher by 0.5 per cent in real terms. Earnings in transport, storage and communications, in community, social and personal services, and in the wholesale, retail and import/export trades were down by around 2.1–2.5 per cent in money terms, albeit up by around 1.0-1.5 per cent in real terms. Earnings in financing, insurance, real estate and business services fell by 1.4 per cent in money terms, but rose by 2.2 per cent in real terms. As to the local manufacturing sector, earnings declined by 1.1 per cent in money terms in the third quarter of 2002 over a year earlier, after a 0.6 per cent fall in the second quarter. Yet in real terms, there were still increases of 2.6 per cent and 2.7 per cent respectively in the two quarters.

As for labour wages in the service sectors, those in personal services, in restaurants and hotels, and in the wholesale, retail and import/export trades went down by 3.0 per cent, 2.7 per cent and 2.0 per cent respectively in money terms in September 2002 over a year earlier. These nevertheless corresponded to increases of 1.3 per cent, 1.6 per cent and 2.4 per cent in real terms. Wages in transport services and in financing, insurance, real estate and business services were unchanged in money terms in September 2002 over a year earlier, but were up by 4.4 per cent in real terms. In the local manufacturing sector, wages declined by 1.5 per cent in money terms in September 2002 over a year earlier, yet rose by 2.8 per cent in real terms.

The Property Market

The property market as a whole underwent further consolidation in 2002. Acquisition and lease demand generally fell short of absorbing the abundant supply, both existing and in the pipeline, and this led to a continued softening in property prices and rentals. Yet the markets for different types of property faced somewhat different circumstances and difficulties.

The sales market for residential property remained generally slack in 2002. While flat prices went down visibly further, there was a modest revival in transaction volume from 2001. The market began the year with trading activity being sustained at a relatively high level. Market sentiment was lifted by the encouraging results of the two land auctions held in April and June, as well as the Government's announcement that it would resume the sale of subsidised flats, in a cautious and orderly manner, after expiry of the 10-month moratorium at end-June. But acquisition interest dwindled during most of the ensuing months, amidst renewed concern about job security and income instability, falling share prices and, in particular, the ample supply of new flats. The brief revival in trading volume seen in September was mainly stimulated by a fresh round of sales promotion by developers, through offering even larger price discounts and other more generous concessions to prospective purchasers. As a result, the primary market diverted the demand further and the secondary market was weakened even more. Towards the year-end, market activity again showed some pick- up, mainly spurred by the Government's promulgation of nine policy measures to stabilise the housing market.