EXTERNAL TRADE: 9% growth in first quarter
Total merchandise exports grew 6.9% year-on-year in value terms in March. The growth rate for the first three months of 2007 was an impressive 9%. This extends the successive run of rapid growth that began in the second half of 2006. The growth momentum was mainly supported by continued strong performance in exports to the Mainland on the back of vibrant domestic demand.
The near-term trade outlook is subject to considerable uncertainties, although by and large, the global economy has maintained reasonably strong momentum till now. While the weak U.S. economy continues to cast a shadow over the external environment, the widely expected launch of further macro-tightening measures in the Mainland and/or a new export policy that may rein in its surging exports also have increased concern.
RETAIL SALES: Modest increase
Retail sales grew 3.5% in March, culminating in 6.6% growth for the first quarter of 2007, compared to 6.2% the previous quarter. This extended the general trend of solid growth in retail sales in recent months. Part of the moderation in March is due to the moderation in inbound tourism; the March stock market correction also could have dented consumer sentiment somewhat. In general, consumer sentiment seems boosted by rising labor earnings and improving job prospects.
LABOR MARKET: Unemployment rate steady
The unemployment rate remained at 4.3%, the lowest in 8½ years. Improvements were mainly seen in service industries such as amusement and recreational services, communications and real estate sectors.
The underemployment rate also held steady — 2.2% in the same period — the lowest in more than 5½ years. Total employment maintained strong growth at 2.5% in the first quarter, outpacing the 1.7% growth in the labor force.
COMPOSITE CPI: 2.4% increase
The year-on-year rate of increase in the Composite Consumer Price Index grew to 2.4% in March. This is approximately on par with the underlying inflation in January and February after taking into account the one-month public housing rent waiver in February and the difference in timing of the Lunar New Year.
Looking ahead, price pressures from the external front are expected to increase due to the recent weakening of the Hong Kong dollar. However, the sustained increase in labor productivity should help contain such pressure to a certain extent. Such budget measures as the rates waiver for the upcoming two quarters, as well as various other one-off measures, also will help keep down inflation.
PROPERTY: Improvements seen
The residential property market showed more vigor in March with the number of agreements for sale and purchase edging up for the fifth consecutive month. However, the number in general still fell short of the 2004 and 2005 peaks. Prices for residential property generally showed slight increases with improving sentiment. The reduction in the stamp duty on transactions of properties valued between HK$1 million (US$128,205) and HK$2 million (US$256,410) also provided support to the relevant segments of the market. Residential rentals continued to edge up across all properties, with rentals for larger apartments continuing to register higher increases.
Prices for retail premises remained broadly stable in March, while rental rates for retail premises showed some increases. Rentals for offices also remained stable in March, compared to February. Their prices show some gentler increases after successive surges seen in 2005 and 2006.
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