ENG-2013 — Page 74

The Economy

similar to the combined trade surplus of $23 billion in 2012 (or 0.5 per cent of the total value of imports of goods and services).

Domestic demand

The domestic sector held firm in 2013. Thanks to the favourable labour market conditions, private consumption expenditure (PCE) grew by 4.2 per cent in real terms in 2013, similar to the 4.1 per cent growth in the previous year. On a seasonally adjusted quarter-to-quarter comparison, PCE expanded strongly in the first quarter, then fell back in the second and third quarters, before picking up in the fourth quarter. Government consumption expenditure increased by 2.7 per cent in real terms in 2013, following the 3.6 per cent growth in 2012.

Overall investment spending, in terms of gross domestic fixed capital formation, posted a modest growth of 3.3 per cent in real terms in 2013, moderating from the 6.8 per cent growth in 2012. Machinery and equipment acquisition grew notably by 10.5 per cent in 2013, largely in line with the positive business sentiment. Public sector construction works also grew solidly further, on the back of continued hectic infrastructure works. Yet, private sector building activity fell back, thereby leading to a slight decline of 1.2 per cent in overall building and construction expenditure in real terms (Chart 10).

Chart 10

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

Per cent

20

15

10

5

0

-5

-10

Investment expenditure

in terms of gross domestic

-15

fixed capital formation

-20

Private consumption expenditure

Government

consumption expenditure

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

2009 T 2010 I 2011

2012

2013

Domestic demand maintained solid growth on the back of favourable job conditions and positive business sentiment.

The Labour Market

The labour market remained tight in 2013, thanks to sustained moderate economic growth and vibrant job creation in the private sector. Total employment grew strongly for the third straight year to a record high of 3,728,000 in 2013. The unemployment rate remained at a low level of 3.4 per cent in 2013, broadly on par with the 3.3 per cent in 2012, signifying another year of full employment. Meanwhile, the underemployment situation was generally stable, with the underemployment rate averaging 1.5 per cent in 2013, unchanged from 2012 (Chart 11).

46