Fresh rise expected in number out of work
Hong Kong's unemployment rate is widely expected to rise when the latest figures are released today as the final effects of the Sars outbreak filter through.
Economists expect the rate to peak in the next few months and then fall as Hong Kong starts to see benefits from the Closer Economic Partnership Arrangement (Cepa), signed with the mainland in June, and further travel liberalisations for tourists from the mainland. A strengthening United States economy will also help.
'On the labour market, everybody is still worrying at the moment,' said Eddie Wong, chief strategist for ABN Amro. He said many struggling businesses were at a critical point. Having already laid off staff, some would be forced to close their businesses unless their sales and profits recovered, he said.
'Eventually, the room for further cuts in the labour force for different corporations will become increasingly limited. A lot of companies are faced with the choice: either you close down your business or not.'
The seasonally adjusted unemployment rate for the three months to June rose to 8.6 per cent, the highest since records began in 1981. About 300,000 of Hong Kong's 3.523 million-strong labour force were out of work in June.
Analysts expect the rate to rise, perhaps to 9 per cent in the coming months, before settling down. According to a Reuters poll of seven economists, the jobless rate will hit 8.8 per cent for July.
'The coming figure may still have a slight increase because of summer graduates, and things may get better in November,' said Terence Chong Tai-leung, an associate professor of economics at the Chinese University.
Professor Chong and Mr Wong said closer ties with the mainland would help Hong Kong in the long run.
