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Tuesday, February 23, 2016, 18:40

Weak growth seen as jobless rate stays flat

By Oswald Chan

Weak growth seen as jobless rate stays flat
A woman arranges vegetables at a wet market in Hong Kong on July 23, 2012. (AFP PHOTO / Philippe Lopez)

On the eve of Hong Kong’s 2016-17 Budget, the city’s latest unemployment and inflation rates have held fairly stable, with an economist warning that local economic growth will be anemic this year.

Chong Tai-leung, an economics professor at the Chinese University of Hong Kong, sees the jobless and inflation rates in 2016 as roughly being the same as last year’s.

“Strong demand for labor in Hong Kong will ensure the overall stability of the labor market, meaning that the unemployment rate will remain at the current level this year,” he told China Daily.

According to the Census and Statistics Department, Hong Kong’s labor market has held stable, with the jobless rate from November 2015 to January this year standing at 3.3 percent for the seventh consecutive three-month period.

The underemployment rate also remained unchanged at 1.4 percent.

By comparison, the city’s unemployment rate in 2014 stood at 3.3 percent while the Composite Consumer Price Index (CPI) rate was 4.4 percent during the same period.

“Lower commodity prices, rental costs and the strengthening of the Hong Kong dollar will also keep inflation low this year,” Chong predicts. “This year’s inflation rate may be 1 percentage point lower than last year’s.”

“Put it in another way … the stable unemployment and inflation figures show that our economic growth will be anemic this year.”

The latest data show that unemployment was mainly found in the accommodation services sector, while a decrease was mainly seen in the insurance industry.

Secretary for Labour and Welfare Matthew Cheung Kin-chung also warned that the near-term employment outlook remains clouded by a sluggish global world economy and slackening inbound tourism.

“The recent easing of the growth momentum in local consumption warrants particular concern,” he said.

The number of unemployed persons fell by about 1,800 to 119,800 in the period under review, while the number of underemployed persons stood at 53,200 for the same period.

The city’s CPI surged 2.7 percent year-on-year last month — up from a corresponding increase of 2.5 percent in December last year.

The uptick in the inflation rate was attributed mainly to faster increases in food prices amid exceptionally cold weather in January and the difference in the timing of the Spring Festival holidays.

“The upside risks of inflation should remain limited in the near term ... while local cost increases will likely be restrained by the subpar economic conditions and the retreat in rental cost pressures,” a government spokesman said.

January’s underlying inflation rate (netting out the effects of all of the government’s one-off relief measures) was 2.6 percent — higher than the 2.4 percent registered the previous month, mainly due to smaller decreases in the charges for package tours and bigger increases in prices of fresh vegetables.

oswald@chinadailyhk.com
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