Jake's View

Stop ringing false alarms, there’s nothing wrong with Hong Kong’s construction job numbers

PUBLISHED : Wednesday, 18 May, 2016, 4:33pm
UPDATED : Wednesday, 18 May, 2016, 4:33pm

The unemployment rate in the construction sector surprisingly increased by 0.5 percentage points to 5.4 per cent ... The government attributed the increase to the recent property market consolidation and the fall-off in construction activity” – in addition to “the seasonality factor”.

City, May 18

Let’s parse this one, starting off, because I’m the chart guy, with a chart of both our overall and our construction sector unemployment rates.

The bottom line is the seasonally adjusted overall rate, 3.4 per cent in April, and if you see no difference from what it has been over the last five years, it’s because there really is no difference, just statistical noise.

Our unemployment rate is the envy of other developed economies. It is effectively full employment. If you want a job you can always find one. That 3.4 per cent mostly represents people between jobs, people who are more choosy than they ought to be for their qualifications or who feel they must say they are looking for work if they want to keep collecting welfare benefits.

The unemployment rate is admittedly higher in construction but I suspect an anomaly here. In a city that is always abuilding, men without skills tend to drift to occasional construction jobs or, when asked in what industry they work, answer, “I dunno. Construction, I guess.”

Notice a few things about this. The unemployment rate in construction rises much higher than the overall rate in difficult times but has not done so now. There are no serious troubles yet on this measure.

Then we have this talk of “the seasonality factor”. Our statisticians do not publish seasonally adjusted unemployment figures for construction. April, however, is a month in which it seasonally peaks. Make the seasonal adjustment and I doubt there was any increase at all in the construction jobless rate.

Next we get the bit that says “government attributed the increase to the recent property market consolidation”. If we are talking property market we are talking property transactions, which is an entirely separate matter from construction.

Construction and retail sectors the worst hit in Hong Kong’s latest unemployment figures

Specifically, property market jobs are not construction jobs. Except, of course, if you are a government spokesman looking for reasons to explain something that hasn’t happened and find it convenient to cite something that isn’t true.

There might still be a connection, of course. A soft property market will indeed eventually lead to a “fall-off in construction activity”.

Except that it has not yet done so. Construction is seasonal but, averaged on a yearly basis to eliminate seasonality, the second chart still shows private sector activity growing steadily.

And then we have the public sector. Our report quoted a Baptist University academic as saying that filibustering in the Legislative Council has delayed infrastructure projects and this took “its toll on the labour market”.

I don’t see much reason for that toll in the GDP figures. Although public sector construction was a touch down in the first quarter, it was still higher than in the same period last year and this was after an almost fourfold increase over the last eight years.

But why not ring an alarm bell if you have one handy?