City's jobless figure to rise due to export contraction
Updated: 2012-09-19 06:55
By Sophie He(HK Edition)
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The city's labor market could weaken toward the year end, with the jobless rate likely to climb to 4 percent next year from the current low level of 3.2 percent, as the local economy heads for a technical recession dragged by sagging exports.
"As Hong Kong's GDP growth in the third quarter of this year is expected to see a contraction, companies in Hong Kong may have to layoff some staff during the next few months," Kevin Lai, economist at Daiwa Capital Markets, told China Daily.
Financial Secretary John Tsang said on last Friday that Hong Kong might see negative growth again in the third quarter this year, after a slight contraction of 0.1 percent in the second quarter, amounting to a technical recession.
Tsang warned the public not to overlook the increasing risk of the employment situation deteriorating in the coming quarters.
Kevin Lai said that he believes the unemployment rate will climb up to 3.5 percent by the end of this year, and to around 4 percent by early next year.
Lai sees financial companies, trading firms and even retail industry companies in Hong Kong to come under more pressure to reduce staff.
The city's unemployment rate remained unchanged at 3.2 percent for the three months to August, compared with the previous three-month period (May to July 2012), data released by Census and Statistics Department on Tuesday showed.
The total employment in Hong Kong decreased by around 4,400 to 3.671 million in the three months to August after recording several months of upsurge, and the labor force also decreased by around 1,200 over the same period.
"On the short-term outlook, the employment situation hinges on the overall economic performance, and in particular the pace of job creation in the corporate sector," said the secretary for Labour and Welfare Matthew Cheung Kin-chung.
But Cheung pointed out that despite the number of job vacancies being at a relatively high level, some employers had adopted a more cautious attitude towards staff hiring.
"Moreover, increasing downside risks in the external environment will add further uncertainties to the overall economic outlook in Hong Kong," he added.
Contradicting Cheung's views, Paul Tang Sai-on, chief economist at Bank of East Asia, told China Daily that the city had recorded such a low rate of unemployment during the past three months mainly because of a reduced labor force rather than an increase in hiring.
"We can see that the momentum of employment growth in the city is weakening," said Tang.
He pointed out the Hong Kong's export recorded significant contractions in June and July while the retail sales growth was also slowing down, weighing down on Hong Kong's labor market in the up coming months.
Echoing Lai's words, he also expects the city's unemployment rate to increase to 3.5 percent by the year end.
sophiehe@chinadailyhk.com
(HK Edition 09/19/2012 page2)