Export of goods shrinks by 8.3%
 With global trade flows shrinking considerably, Hong Kong’s merchandise exports in value terms showed a contraction of 8.3% in November and December combined, compared to a year earlier.
Looking forward, the intensifying global economic downturn will continue to hamper short-term trade performance. The prospect of a turnaround will largely hinge on when the situation among advanced economies starts to improve.
Residential property market wilts
The residential property market deteriorated significantly in November, with prices and rentals declining 9.4% and 6.9%, respectively, from the previous month. The number of transactions also fell to its lowest in more than a decade. The market showed some signs of stabilization in December and January; however, the number of transactions in these two months was still markedly lower than the previous year.
Unemployment rate rises to 4.1%
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Note: (*) Figures used are 3-month averages |
The seasonally adjusted unemployment rate rose to 4.1% in October-December as the global financial tsunami hit the local economy. More than 20,000 financial services, trading and logistics jobs were lost between June-August and October-December. The underemployment rate also increased, to 1.9%. In September, wages and earnings in nominal terms increased 4% and 5.2%, respectively, over the previous year. The local labor market is expected to worsen further amid the adverse external economic environment and slackening local economic activities.
Underlying inflationary pressure eases
Inflationary pressure receded considerably with the collapse of global commodity prices and much-slackened domestic demand. Tapering food price inflation, slower increases in private residential rentals and the decline in energy prices moderated underlying consumer price inflation to 4.6% in December, down from 5.6% in November. Meanwhile, with the October expiration of the government’s one-off payment of public housing rentals, headline consumer price inflation was at 3.1% and 2.1% in November and December, respectively, up from 1.8% in October.
With the fall-off in international commodity prices and the deepening economic downturn, local and global inflationary pressures will continue to recede.
December retail sales offer slight respite
Consumer spending remained weak in the fourth quarter of 2008. With hampered local consumer sentiments and weak inbound tourism, retail sales in volume terms shrank 2.4% compared to a year earlier. Nevertheless, the decline in retail sales volume narrowed in December amid some stabilization of inbound tourism and consumer spending.
For 2008 as a whole, retail sales grew 5% year-on-year in volume terms. Looking ahead, the global crisis will continue to cloud retail business. Nevertheless, the government’s measures to create employment and stimulate inbound tourism should render some support to retail businesses.
Imports of capital goods decrease 34%
The dim economic outlook and tight credit conditions also weighed on investment sentiments. Capital goods imports fell 34% year-on-year in value terms in November and December combined. In the latest Quarterly Business Tendency Survey, business establishments indicated pessimism in the large private sector for the near term.
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