Financial Capsule

Unemployment Declines in Hong Kong; Underemployment Rises
The seasonally adjusted unemployment rate in Hong Kong declined slightly from 7.1% in February – April 2004 to a 26-month low of 7.0% (provisional) in March – May 2004. Meanwhile, the underemployment rate rose slightly from 3.4% to 3.5% (provisional).

Comparing March – May 2004 with February – April 2004, decreases in the unemployment rate (not seasonally adjusted) were mainly seen in the decoration and maintenance, insurance, hotels, manufacturing and wholesale trade sectors. Increases in the underemployment rate were concentrated in the amusement and recreational services, foundation and superstructure construction and retail trade sectors. 

Total employment in Hong Kong went up by around 13,300, from 3,255,700 in February – April 2004 to 3,269,000 (provisional) in March – May 2004. The total labour force increased to a smaller extent, by around 8,000, from 3,505,000 to 3,513,000 (provisional) between the two periods.

A Hong Kong Special Administrative Region Government spokesman noted that the labour market situation had continued to improve and that overall sentiment remained generally buoyant.


Hong Kong's Latest Foreign Currency Reserve Assets Figures Released
The Hong Kong Monetary Authority (HKMA) announced in June that Hong Kong’s official foreign currency reserve assets amounted to US$120.1 billion at the end of May 2004.

Including unsettled forward contracts, the foreign currency reserve assets of Hong Kong at the end of May 2004 also stood at US$120.1 billion.

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


Import and Export Figures Strong 
In April 2004, the values of Hong Kong's total exports and imports of goods both continued to show strong year-on-year increases. 

The value of total exports of goods (comprising re-exports and domestic exports) increased by 19.3% over a year earlier to HK$160.0 billion. Within this total, the value of re-exports increased by 20.1% to HK$151.0 billion in April, while the value of domestic exports increased by 6.6% to HK$9.0 billion. Concurrently, the value of imports of goods increased by 24.6% over a year earlier to HK$176.0 billion in April 2004, after a year-on-year increase of 15.4% in March.

A visible trade deficit of HK$16.0 billion was recorded in April 2004. This was larger than the corresponding deficit of HK$7.2 billion recorded in April 2003.

For the first four months of 2004, the value of total exports of goods rose markedly, by 14.6% over the same period in 2003. Within this total, the value of re-exports surged by 15.6% and the value of domestic exports increased by 1.1%. Concurrently, the value of imports of goods also increased distinctly, by 18.0%. A visible trade deficit of HK$49.6 billion, equivalent to 7.7% of the value of imports of goods, was recorded in the first four months of 2004. 

Comparing the three-month period ending April 2004 with the preceding three months on a seasonally adjusted basis, the value of total exports of goods rose by 9.1%. Within this total, the value of re-exports increased by 9.5%, and the value of domestic exports went up by 4.7%. Meanwhile, the value of imports of goods increased by 7.2%.


Consumer Price Indices for May 2004
Year-on-year, the pace of decline in consumer prices in Hong Kong has narrowed distinctly further to 0.9% in May 2004 from 1.5% in April, according to the Composite CPI (Consumer Price Index).

This smaller year-on-year decline in the Composite CPI was mainly attributable to moderated decreases in the charges for telephone and other communications services and in private housing rentals, as well as enlarged increases in the charges for package tours and in the prices of clothing and footwear. 

Amongst the various CPI components, housing continued to register the largest year-on-year decline in prices in May 2004 (-6.7% in the Composite CPI and -5.8% in the CPI(A)). This was followed by durable goods (-1.3% in the Composite CPI and -0.5% in the CPI(A)).


Retail Sales Volume Up In April 2004
The value of Hong Kong’s total retail sales in April 2004, provisionally estimated at HK$15.6 billion, increased by 23.0% over a year earlier. After netting out the effect of price changes over the same period, the overall volume of retail sales increased by 19.9% in April 2004 over a year earlier.

The revised estimate of the value of total retail sales in March 2004, at HK$15.5 billion, increased by 9.3% in value or 9.0% in volume from a year earlier.

Taking the first four months of 2004 together, retail sales increased by 11.6% in value or 10.1% in volume over a year earlier

Analysed by type of retail outlet and comparing April 2004 with a year earlier, sales of jewellery, watches, clocks and valuable gifts increased the most, by 71.4% in volume. This was followed by sales of footwear, allied products and other clothing accessories (by 41.2% in volume); wearing apparel (40.2%); electrical goods and photographic equipment (35.9%); commodities in department stores (31.0%); motor vehicles and parts (31.0%); miscellaneous consumer goods (20.9%); miscellaneous consumer durable goods (15.9%); furniture and fixtures (6.9%); fuels (1.4%); and food, alcoholic drinks and tobacco (0.8%).

On the other hand, sales of commodities in supermarkets decreased by 10.3% in volume in April 2004, when compared with a year earlier.

Based on the seasonally adjusted series, the overall volume of retail sales increased by 6.4% in the three months ending April 2004 as compared to the preceding three-month period.

Air Cargo Throughput Continues to Rise
Hong Kong Air Cargo Terminals Limited (Hactl) has announced that tonnage throughput for May 2004 showed continued volume growth. 

A total of 183,356 tonnes were handled in May 2004, up 16.7% year-on-year. Cumulative tonnage from January to May 2004 was up 16.2% compared with last year's figures. 

Export volume in May 2004 grew 19.0% year-on-year to 98,658 tonnes. Aggregate export tonnage for the period January to May 2004 was up 21.6% year-on-year. 

The import sector showed a growth of 17.1% in May 2004, with a total of 62,008 tonnes handled. Total import tonnage for the first five months in 2004 was 288,517 tonnes, up 12.1% year-on-year.


Visitor Arrivals Exceed 1.7m in April
Visitor arrivals to Hong Kong in April 2004 totalled 1,736,496, the highest-ever April figure by more than 330,000, the Hong Kong Tourism Board (HKTB) announced on June 8.

Compared with the result for April 2003, when tourism was severely affected by the SARS outbreak, this represents a remarkable year-on-year increase of 251.8%. A fairer comparison with the 2002 figures nevertheless confirms that the recovery remains well on track, with April 2004 arrivals standing at 23.8% above those of April 2002.

For the first four months of 2004 combined, total arrivals now stand at 6.67 million, a 39.1% increase over the same period in 2003 and a 33.5% increase on the 2002 figure.

HKTB Executive Director Clara Chong said that the figures kept Hong Kong well on track to meet its target of 20.5 million arrivals, which assumed growth of 31.8% on the 2003 total of 15.54 million. “Arrivals are now consistently ahead of pre-SARS levels in Australia, Europe and Southeast Asia, while the Mainland China market continues to grow strongly, boosted by the Individual Visit Scheme,” she said. “We are also encouraged to see that only a small gap remains to be bridged in North America.”

Port Cargo Throughput Up 12% 
Hong Kong’s total port cargo throughput rose to 55.5 million tonnes in the first quarter of 2004, up 12% on the same period last year.
 
Within this total, inward port cargo rose 9% to 34 million tonnes, while outward port cargo rose 18% to 21.5 million tonnes.
 
On a seasonally-adjusted quarter-to-quarter comparison, total port cargo throughput rose 8%. Within this total, inward port cargo rose 7%, while outward port cargo rose 11%.
 
Within port cargo, seaborne and river cargo rose 11% and 17% to 39.4 million tonnes and 16.1 million tonnes.
 
Within inward port cargo, imports rose 5% to 21.5 million tonnes, while inward transhipment rose 18% to 12.5 million tonnes.
 
For outward port cargo, exports (including domestic exports and re-exports) and outward transhipment rose 22% and 15% to 8.9 million and 12.6 million tonnes.

In the first quarter, the port of Hong Kong handled 5.2 million TEUs of containers, a rise of 11% over a year earlier. Within this total, laden containers rose 16% to 4.4 million TEUs, but empty containers fell by 9% to 800,000.

 
Q1 GDP Up 2.2% 
Hong Kong's Gross Domestic Product (GDP) for the first quarter rose 2.2% over a year earlier to HK$301.9 billion, while Gross National Product rose 0.2% to HK$312.1 billion. According to Hong Kong’s Census & Statistics Department, a net external factor income inflow of HK$10.1 billion was recorded.
 
Compared with GDP, the value of GNP was up HK$10.1 billion, representing a net external factor income inflow of the same amount, and equivalent to 3.4% of the quarter's GDP.
 
After netting out the effect of price changes, the quarter's GNP rose 4.5% in real terms, slower than the 6.8% year-on-year increase in real terms in GDP. This was mainly attributable to a steeper rise in earnings by multi-national enterprises from their direct investment in Hong Kong.
 
External factor income inflow and outflow both leaped remarkably further, mainly driven by significant double-digit increases in direct investment income both from Hong Kong and from overseas economies, upon further robust recovery in the local economy and a sustained pick-up in the global economy.
 
Total factor income inflow into Hong Kong surged by 16.6% over a year earlier to HK$94.7 billion, equivalent to 31.4% of GDP. Total factor income outflow increased substantially by 29.6% to HK$84.5 billion, equivalent to 28% of GDP.
 
Taking the inflow and outflow together, a net external factor income inflow of HK$10.1 billion was recorded.
 
Analysed by country and territory, the British Virgin Islands was the largest source of Hong Kong's external factor income inflow, accounting for 28.9% of the total inflow in that quarter. This was followed by Mainland China at 23.7%.
Other major sources were the US and UK at 9.5% and 8.9%.  
 


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