ENG-2004 — Page 87

The Economy 1 57

increase, led mainly by the improved performance of the banking sector. Fees and commission earned by banks showed particularly strong growth, along with the rapid development in various personal banking services and fund management. Net output in community, social and personal services firmed up to 3.9 per cent growth, with a particularly distinct rebound in recreation and entertainment services, in line with better consumer sentiment and improved labour market conditions.

For the manufacturing sector, under the support of a highly favourable trading environment, net output posted a 2.9 per cent growth in real terms in 2004, as against a 9.1 per cent drop in 2003. To promote wider use of design and innovation in industries to help them move up the value chain, and ultimately turn Hong Kong into a focal point of design excellence in the region, the Government set up the DesignSmart Initiative in June 2004, which includes a Design Support Programme and establishment of an Inno Centre. As to the construction sector, overall construction activity remained slack, with net output in this sector falling by 8.5 per cent in 2004 after a 4.6 per cent decline in 2003. The fall-off was the combined result of the completion of some prominent private sector building projects, a further drop in output under the Public Housing Programme, and the completion or winding down of railway projects.

The Labour Market

The labour market improved progressively on a broad front throughout 2004, as economic growth gathered momentum and extended scope. The seasonally adjusted unemployment rate and the number of unemployed both fell steadily during the year, to 6.5 per cent and 226 900 respectively in the fourth quarter. These represented the lowest levels since November 2001 to January 2002. For 2004 as a whole, the unemployment rate and the number of unemployed averaged 6.8 per cent and 241 400 respectively. Though still high by historical standards, they were lower than those of 7.9 per cent and 277 200 in 2003. This decrease, whilet Occurring extensively across many economic sectors, was most apparent in construction and the tourism and consumption-related sectors. Furthermore, the median duration of unemployment shortened from 109 days at end-2003 to 99 days at end-2004.

The underemployment rate also came down during 2004, albeit less visibly, to 3.1 per cent. So did the number of underemployed, to 110 800. For 2004 as a whole, the underemployment rate and the number of underemployed averaged 3.3 per cent and 116 200, respectively, below those of 3.5 per cent and 123 300 in 2003. The decrease was concentrated in the restaurants, hotels and transport sectors. This was partly due to a shift in the employment composition from part-time and temporary workers to full-time workers, as more full-time jobs became available amid continued pick-up in business activity (Chart 10).