Financial Capsule

Unemployment Rate Registers Slight Decline
The seasonally adjusted unemployment rate declined from 7.3% in November 2003 – January 2004 to 7.2% (provisional) in December 2003 – February 2004. The underemployment rate remained stable, at 3.3% for both periods.

Comparing December 2003 – February 2004 with November 2003 – January 2004, decreases in the unemployment rate were observed in the finance, insurance, business services, restaurants, communications and amusement and recreational sectors, more than off-setting the increase seen in the construction sector. As to the underemployment rate, decreases were found in the retail trade, manufacturing and amusement and recreational services sectors, while an increase was seen in the construction sector.

Total employment went up by around 9,500, from 3.240,500 in November 2003 - January 2004 to 3,250,000 (provisional) in December 2003 - February 2004. The total labour force by around 10,000, from 3,485,000 to 3,495,000 (provisional) between the two periods.

A Government spokesman said that the increase in total employment indicated that the labour market was continuing to improve. The number of job vacancies received by the Labour Department from the private sector has stayed at a high level of approximately 1,000 a day since early February this year, as compared with the daily average of 700 previously. 

Exports and Imports Values Rise 
In February 2004, the values of Hong Kong's total exports and imports of goods both resumed strong year-on-year increases. 

The value of total exports of goods (comprising re-exports and domestic exports) soared by 28.2% over a year earlier to HK$134.8 billion, after a year-on-year increase of only 0.2% in January. Within this total, the value of re-exports leaped by 29.5% to HK$126.9 billion in February, while the value of domestic exports increased by 10.5% to HK$7.8 billion. Concurrently, the value of imports of goods surged by 33.3% over a year earlier to HK$154.6 billion in February 2004, after a year-on-year increase of only 0.9% in January.

A visible trade deficit of HK$19.9 billion, equivalent to 12.8% of the value of imports of goods, was recorded in February 2004. This was larger than the corresponding deficit of HK$10.8 billion, equivalent to 9.3% of the value of imports of goods, recorded in February 2003.

For the first two months of 2004, the value of total exports of goods rose markedly, by 12.5% over the same period in 2003. Within this total, the value of re-exports surged by 13.7%, but the value of domestic exports fell by 3.4%. Concurrently, the value of imports of goods also increased distinctly, by 16.0%. A visible trade deficit of HK$19.0 billion, equivalent to 6.6% of the value of imports of goods, was recorded in the first two months of 2004. This was larger than the corresponding deficit of HK$9.1 billion, equivalent to 3.6% of the value of imports of goods, recorded in the same period in 2003.

A Government spokesman noted that imports of goods for local use continued to surge in the first two months of 2004 combined, signifying strong growth in domestic demand in tandem with the economic recovery.

Foreign Currency Reserve Assets Figures Released
The Hong Kong Monetary Authority (HKMA) announced that Hong Kong’s official foreign currency reserve assets amounted to US$123.5 billion at the end of February 2004.

Including unsettled forward contracts, the foreign currency reserve assets of Hong Kong at the end of February 2004 also stood at US$123.5 billion.

In terms of foreign currency reserves ranking, Hong Kong is the world's fifth largest holder of foreign currency reserves, after Japan, Mainland China, Taiwan and Korea.

The total foreign currency reserve assets of US$123.5 billion represent about seven times the currency in circulation or 44% of Hong Kong dollar M3.


2003 Gross Domestic Product Figures Released
The preliminary figures of Gross Domestic Product (GDP) for the fourth quarter of 2003 and the whole year of 2003 were released on 10 March 2004 in the Budget’s supporting documents, specifically the 2003 Gross Domestic Product, the 2003 Economic Background and the 2004 Economic Prospects. The latest GDP figures were also published in the Gross Domestic Product, Fourth Quarter 2003.

The publications 2003 Gross Domestic Product and Gross Domestic Product, Fourth Quarter 2003 are now on sale. 

Retail Sales Rise
The value of total retail sales in January 2004, provisionally estimated at HK$18.2 billion, increased by 4.1% over a year earlier. After netting out the effect of price changes over the same period, the overall volume of retail sales increased by 2.9% in January 2004 over a year earlier.

However, the timing of the Lunar New Year on January 22 this year, but on 1 February last year, may have affected the above year-on-year comparison to a certain extent.

The revised estimate on the value of total retail sales in December 2003 was HK$16.6 billion, up by 6.8% in value or 5.8% in volume over a year earlier.

These retail sales statistics are primarily intended to measure the sales receipts of goods sold by local retail establishments, for gauging the short-term business performance of the local retail sector. They cover consumer spending on goods but not on services and include spending on goods by visitors in Hong Kong but not by Hong Kong residents outside Hong Kong. Hence they should not be regarded as a comprehensive indicator of overall consumer spending. In this context, it may be noted that the share of consumer spending on services `has been increasing over time.

Sales of furniture and fixtures increased the most, by 32.7% in volume. This was followed by sales of electrical goods and photographic equipment (by 27.7% in volume); footwear, allied products and other clothing accessories (8.4%); commodities in department stores (6.1%); miscellaneous consumer goods (6.0%); miscellaneous consumer durable goods (4.9%); commodities in supermarkets (3.1%); and food, alcoholic drinks and tobacco (1.5%).


Consumer Price Indices Fall 
The Census and Statistics Department has released the Consumer Price Index (CPI) figures for February 2004. According to the Composite CPI, overall consumer prices fell by 2.0% in February 2004 from a year earlier, enlarged from the 1.5% decrease in January.

The larger year-on-year decline in the Composite CPI in February 2004 was mainly attributable to renewed declines in the charges for package tours and for inbound and outbound transport, and a larger decrease in the charges for meals bought away from home after the Lunar New Year holidays. Another factor was a smaller increase in the price of jewellery.

Housing continued to register the largest year-on-year decline in prices in February 2004 (-7.7% in the Composite CPI and -6.6% in the CPI(A)). This was followed by miscellaneous services (-5.1% in the Composite CPI and -5.8% in the CPI(A)), durable goods (-3.3% in the Composite CPI and -3.0% in the CPI(A)), meals bought away from home (-0.9% in the Composite CPI and -0.4% in the CPI(A)), transport (-0.8% in the Composite CPI and -1.4% in the CPI(A)), and alcoholic drinks and tobacco (-0.1% in both the Composite CPI and CPI(A)).

Year-on-year increases in prices were recorded in February 2004 for electricity, gas and water (33.3% in the Composite CPI and 44.0% in the CPI(A)), clothing and footwear (7.8% in the Composite CPI and 6.3% in the CPI(A)), miscellaneous goods (2.9% in the Composite CPI and 1.6% in the CPI(A)), and food (excluding meals bought away from home) (1.0% in the Composite CPI and 1.1% in the CPI(A)).

Throughput Increase in 2003 and Q1 2004
Hong Kong Air Cargo Terminals Limited (Hactl) handled a total volume of 2,009,918 tonnes in 2003, up 5.6% year-on-year. The uptrend continued in the first quarter of 2004, with combined January-February throughput registering 213,582 tonnes, up 16.6% against the same period last year. 

Fuelled by strong growth in export volume to major trading partners, export volume grew 21.3% year-on-year in December 2003 to 102,425 tonnes. Aggregate export tonnage for the fourth quarter stood at 336,401 tonnes, up 11.9% year-on-year. Exports to Europe, which accounted for more than 30% of total export volume, continued to be the key driver for growth, with a year-on-year increase of 28.7% in December and 31.9% in the fourth quarter recorded. Cumulative export tonnage for the whole year of 2003 was 1,093,949 tonnes, up 8.8% compared with the export tonnage in year 2002. 

Aggregate import volume for the fourth quarter was 176,205 tonnes, up 2.7% year-on-year. Growth in import volumes from Asian countries was strong in December 2003 : Mainland China (+30.4%), South Korea (+30.1%), and Japan (+20.7%). Total import volume for year 2003 was 649,318 tonnes, with a moderate growth of 1% recorded. 

For the transshipment sector, a total of 24,418 tonnes were handled in December, and 75,843 tonnes in the fourth quarter - up 10.6% and 4.8% respectively. Aggregate transshipment volume for year 2003 was 266,651 tonnes, up 4.7% year-on-year.

Export tonnage for the first two months of 2004 was 165,778 tonnes, representing a growth of 23% compared with the same period a year ago. Import volume grew 9.8% year-on-year for the first two months of 2004 to 104,175 tonnes. 


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