ENG-2011 — Page 96

60 The Economy

as a whole, PCE grew by 8.6 per cent, further to the already strong growth of 6.7 per cent in 2010. Meanwhile, government consumption expenditure expanded steadily further in 2011, by 1.8 per cent in real terms, following the 2.8 per cent growth in 2010.

Overall investment spending in terms of gross domestic fixed capital formation posted a notable 7.2 per cent growth in real terms in 2011, following the 7.7 per cent expansion in 2010. Machinery and equipment acquisition, which tends to be rather volatile, displayed fluctuations during the year, relapsing to a year-on-year decline in the first quarter before rebounding to double-digit growth in the second through the fourth quarters. Meanwhile, public sector construction works continued apace throughout the year, offsetting the slack in private sector building activity, thereby rendering another important growth driver of domestic demand (Chart 10). However, with the global economic outlook clouded by the euro debt crisis, business sentiments saw some deterioration in the latter part of the year.

Chart 10

Main Components of Domestic Demand (year-on-year rate of change in real terms)

Per cent

20

Private

15

consumption

expenditure

10

5

0

Government

-5

consumption expenditure

-10

-15

-20

Overall investment spending

in terms of gross domestic fixed capital formation

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2007

2008 |

2009 | 2010

2011

Domestic demand fared remarkably well in 2011, on the back of strong consumption and investment spending.

The Labour Market

The labour market continued to show broad-based improvements for the second consecutive year in 2011. With persistent strength in labour demand, total employment was on a strong uptrend during the year, reaching a historical high of 3 618 900 in the fourth quarter. In tandem with the tightening in manpower balance, the seasonally adjusted unemployment rate fell to a low of 3.2 per cent in the third quarter, and despite some subsequent slowdown in economic growth, remained at a low level of 3.3 per cent at the year-end, still signifying a full employment situation. Thanks to the hectic creation of full-time jobs in the business sector, the underemployment rate fell to 1.4 per cent at the end of 2011 (Chart 11).