FINANCIAL CAPSULE

Unemployment Eases Further
The seasonally adjusted unemployment rate declined distinctly further, from 8.0% in August-October 2003 to 7.5% (provisional) in September-November 2003, while the underemployment rate also edged down, from 3.5% to 3.4% (provisional).

Comparing September-November 2003 with August-October 2003, decreases in the unemployment rate (not seasonally adjusted) were more notable in the wholesale/retail trades, construction, restaurants, import/export trades, and amusement and recreational services sectors. As to the underemployment rate, decreases were concentrated in the construction and transport sectors.

Total labour force decreased slightly by around 2 600, from 3,484,600 in August-October 2003 to 3,482,000 (provisional) in September-November 2003. On the other hand, total employment increased by around 14,400, from 3,202,600 to 3,217,000 (provisional) between the two periods.

The number of unemployed persons (not seasonally adjusted) decreased markedly by around 18,000, from 282 000 in August-October 2003 to 264,000 (provisional) in September-November 2003. Concurrently, the number of underemployed persons went down by around 3 500, from 120,500 to 117,000 (provisional).

The unemployment situation improved further in September-November 2003. The decrease in unemployment rate was most apparent in the consumption-related sectors, in tandem with the recent rebound in local consumer spending and surge in inbound tourism. More visible declines were also seen in construction and the import/export trades, in line with a more active property market and sustained robust performance of external trade.

GDP Up 3.3%, Exports Surge 11%
After experiencing modest growth in the second quarter, the Hong Kong economy picked up visibly further in the third quarter of 2002. On a year-on-year comparison, GDP accelerated to a 3.3% growth in real terms in the third quarter of 2002, from a 0.8% growth in the second quarter (latter revised from the 0.5% figure released earlier). On a seasonally adjusted quarter-to-quarter comparison, GDP rose for the third quarter in a row, by 2.5% in real terms in the third quarter of 2002, following a 0.7% increase in the second quarter (latter figure also revised from the 0.4% rise put out earlier).

Total exports of goods (comprising re-exports and domestic exports) surged by 11.4% in real terms in the third quarter of 2002 over a year earlier, the first double-digit growth recorded since the fourth quarter of 2000. Together with a 1.8% rise in the first half of the year, total exports of goods grew by 5.3% in real terms in the first nine months of 2002 over a year earlier. On a seasonally adjusted quarter-to-quarter comparison, total exports of goods leaped for the third consecutive quarter, by 4.0% in real terms in the third quarter of 2002, after increases of 6.7% in the first quarter and 5.3% in the second quarter. 

On the trade balance, with the value of exports of goods increasing distinctly faster than the value of imports of goods, the visible trade deficit reckoned on a BoP basis narrowed significantly to HK$34.4 billion (C$5.8 billion) or 2.9% of the value of imports for the first nine months of 2002 as a whole. The invisible trade surplus rose markedly to HK$110.5 billion (C$18.7 billion) or 77.8% of the value of imports of services for the first three quarters of 2002 as a whole. Taken together, the combined surplus reckoned on a BoP basis surged to HK$76.1 billion (C$12.9 billion) or 5.8% of the total value of imports of goods and services in the first three quarters of 2002, as compared to HK$33.4 billion (C$5.6 billion) or 2.5% in the same period in 2001. 

On a year-on-year comparison, the Composite CPI decreased by 3.5% in the third quarter of 2002 (and by 3.6% in October), an increase on the 3.2% fall in the second quarter. For the first nine months of 2002, the Composite CPI was lower by 3.1%; nearly double the 1.6% decline in 2001. On a seasonally adjusted quarter-to-quarter comparison, the Composite CPI moved lower by 0.7% in the third quarter of 2002, slightly larger than the 0.6% decline in the second quarter. 

Retail Sales Up 4% 
The value of total retail sales in October 2003, provisionally estimated at HK$14.6 billion (C$2.5 billion), increased by 3.8% compared with October 2002. After netting out the effect of price changes over the same period, the overall volume of retail sales increased by 4.6% in October 2003 over a year earlier. 

Total Exports Up 9.5% 
In October 2003, the value of total exports of goods (comprising re-exports and domestic exports) increased by 9.4% over a year earlier to HK$164.8 billion (C$27.9 billion), after a year-on-year increase of 6.4% in September. Within this total, the value of re-exports increased by 10.7% to HK$154.0 billion (C$26 billion) in October, but the value of domestic exports fell by 5.8% to HK$10.8 billion (C$1.8 billion). Concurrently, the value of imports of goods rose by 10.2% over a year earlier to HK$169.0 billion (C$28.6 billion) in October 2003, after a year-on-year increase of 7.3% in September. 

For the first ten months of 2003, the value of total exports of goods rose markedly, by 11.5% over the same period in 2002. Within this total, the value of re-exports surged by 13.4%, but the value of domestic exports shrank by 8.5%. Concurrently, the value of imports of goods also increased distinctly, by 10.6%. A visible trade deficit of Hk$44.7 billion (C$7.6 billion), equivalent to 3.0% of the value of imports of goods, was recorded in the first ten months of 2003. This was smaller than the corresponding deficit of HK$50.8 billion (C$8.6 billion), equivalent to 3.8% of the value of imports of goods, recorded in the same period in 2002. 

Comparing the three-month period ending October 2003 with the preceding three months on a seasonally adjusted basis, the value of total exports of goods decreased by 2.2%. Within this total, the value of re-exports decreased by 2.3%, while the value of domestic exports fell by 1.4%. Meanwhile, the value of imports of goods increased by 1.3%. 

Foreign Currency Reserve Figures Released 
The Hong Kong Monetary Authority announced that the official foreign currency reserve assets of Hong Kong amounted to US$114.1 billion at the end of November 2003 (end-October 2003: US$112.4 billion). 

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

GDP Up 4%
In the third quarter of 2003, the Gross Domestic Product (GDP) increased by 4.0% in real terms over a year earlier, compared with the decline of 0.5% in the second quarter of 2003.

On a seasonally adjusted quarter-to-quarter comparison, GDP recorded an increase of 6.4% in real terms in the third quarter of 2003.

Analysed by major GDP components, private consumption expenditure (PCE) grew by 2.0% in real terms in the third quarter of 2003 over a year earlier, compared with the 2.6% decline in the second quarter of 2003.

October Arrivals Sets Record
The number of visitor arrivals in Hong Kong during October 2003 was the highest ever recorded for a single month, according to the Hong Kong Tourism Board. Total arrivals of 1,695,633 showed a 7.0% growth on the October 2002 figure of 1.58 million, and were more than 27,000 ahead of the previous monthly record of nearly 1.67 million, achieved in December 2002.

Arrivals for the first ten months of 2003 stand at 9.5% down, compared with the same period in 2002, due to the four consecutive months of substantial negative growth from April to July when Hong Kong received 2.34 million fewer visitors than in 2002. 

Average hotel occupancy rate in October was 85%, the same as for October 2002. High Tariff A hotels averaged 86% occupancy while hotels in Central and Admiralty were the busiest in October with a 91% occupancy rate. 

Hactl Sets Tonnage Records in November
In November 2003, Hong Kong Air Cargo Terminals Limited (Hactl) handled a total of 202,045 tonnes of air cargo, the highest monthly throughput ever, reaching the 200,000 tonne level for the first time in a single month. 

Export volume to Europe registered a surge of 35.1% in November to 42,942 tonnes, and remained as the key driver of growth in the export sector. A total of 117,801 tonnes of exported goods were handled in November 2003, up 8.6% year-on-year. Cumulative export tonnage from January to November was 991,524 tonnes, up 7.6% year-on-year.

For the import sector, a moderate growth of 0.1% was recorded in November, with a total of 57,631 tonnes handled. Import volume year-to-November was 588,461 tonnes, up 0.5% year-on-year.

Record Cargo Throughput for Second Consecutive Month
Cargo throughput at Hong Kong International Airport reached 267,000 tonnes in November, marking another monthly record.

Passenger traffic at HKIA has returned to pre-SARS level, with 2.73 million passengers passing through the airport in the same month. 

Cargo tonnage grew 5.8% compared with November last year, mainly driven by export growth of 7.2% in major markets of Mainland China and Europe.

In terms of passenger traffic calculated on a year-on-year basis, transfer traffic increased by 7.5%, attributed mainly to Europe and South East Asia routes. There was 4.4% rise in Hong Kong residents travelling by air. 

A total of 18,415 aircraft movements were recorded, up 2.3% year-on-year. Cargo flights increased by 7.4% with strong cargo demand during the month and passenger flights was also up 2.2%.

Over a rolling 12-month period from December 2002 to November 2003, passenger throughput fell by 19.8% to 27.4 million. Cargo throughput rose by 6.3% over the same period to 2.6 million tonnes. Cargo aircraft movement rose by 17%. Total aircraft movements for the period dropped by 9.1% to 186,335.

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