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Decline in exports improves slightly
 Exports of goods fell 12.4% in real terms year-on-year in the second quarter, much smaller than the 22.7% decline in the first quarter. The relative improvement was most evident in exports to the mainland China market, and to a lesser extent in some other Asian markets, while the performance of the U.S. and EU still lagged behind others. Exports of services declined 5.7% in real terms in the second quarter compared to a year earlier, likewise narrowed from the 6.3% decline in the first quarter, benefitting from the lesser decline in trade related services and the active financial market. However, the notable decline in visitor arrivals in May and June put a drag on the overall export of services.
Property market rebounds
The residential property market rebounded sharply, with both the transaction volume and apartment price showing increases in recent months. The number of transactions in July was up 61.8% compared to a year earlier. Apartment prices posted the sixth consecutive monthly increase in June and apartment rentals likewise saw some month-to-month increases.
Unemployment rate tapers
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Note: (*) Figures used are 3-month averages. |
The increase in unemployment rate began to taper as the pace of job losses slowed. The seasonally adjusted unemployment rate edged up to 5.4% in April-June 2009. Employment stabilized during the period. The relative stability in external trade and domestic sector as compared to that early this year, coupled with the effect of the government’s relief measures, have helped to contain the rise in unemployment.
The underemployment rate edged up further to 2.3%. The unemployment rate may continue to face upward pressure in the near term as employers may remain cautious in hiring new hands at the initial stage of recovery, leading to slower employment creation than labor supply growth.
Underlying inflation recedes further
Price pressures, measured in terms of both the headline Consumer Price Index (CPI ) and underlying CPI remained on an easing trend, as local wages and rentals continued to adjust to the weakened economic conditions while external price pressures were largely absent.
On a year-on-year comparison, the headline and underlying inflation rates in June were -0.9% and 0.4% respectively. The decline in headline Composite CPI mainly reflected the effect of the electricity subsidy. On inflation outlook, with the slack in the economy and with many of Hong Kong’s trading partners also experiencing price declines, price pressures from both the local and external fronts are likely to subside further in the period ahead.
The headline Composite CPI inflation is forecast at 0.5%, revised downward from that of 1% in the May round (reflecting the effects of the additional relief measures announced by the Government in late May). The corresponding underlying inflation rate (netting out the Government’s one-off measures) is forecast at 0.9%.
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