Companies to boost staff by 0.7pc this year compared to cuts of 0.3pc in 2003 Companies in Hong Kong are set to expand their workforces this year after two years of staff cutbacks, a human resources survey has found. Businesses plan to increase their workforces by 0.7 per cent on average this year, after staff reductions of 0.3 per cent last year and 12 per cent in 2002, according to the Hong Kong Institute of Human Resource Management survey released yesterday. 'The findings indicate that hiring confidence among Hong Kong companies has returned, especially for [small and medium-sized enterprises] that expect to expand their business during the recent economic rebound,' Sara Cheung Fung-yee, the institute's research director, said in the report. The institute found that about 40 per cent of businesses planned to hire permanent staff this year, while the same amount planned to keep permanent staff levels steady. The remaining 16 per cent of responding companies said they would cut staff. Companies were not asked exactly how many jobs they would add or cut. The report comes after data released last week showed a strong economic performance in the first quarter. Hong Kong's gross domestic product surged 6.8 per cent in the first three months of this year, the fastest quarterly growth rate in three years. The data puts the economy on track to match the government's official full-year GDP growth target of 6 per cent. Economists, however, are also worried that job creation is lagging behind growth. The city's unemployment rate fell one-tenth of a point to 7.1 per cent in April from March. Economists say they do not expect the jobless rate to fall below 6 per cent in the near term because of a surplus of low-skilled labour and a lack of skilled professionals. Hiring intentions look better than at this time last year, when 39 per cent said they would cut permanent staff, 35 per cent said they would hire more and 27 per cent said there would be no changes. Small to medium-sized enterprises, employing fewer than 500 people, were the companies most willing to hire, the survey found. The institute, which has more than 3,600 members, polled 114 firms and 57,000 employees in January and February. The report also offered some good news for workers who are afraid of being laid off. Employers, who have been using layoffs and redundancies to cut unnecessary staff, say they will use other methods to deal with the situation in the next few years. Separately, the Hong Kong Purchasing Managers' Index, a monthly indicator of business activity, stayed above 50 in May, indicating that the economy is growing. The index hit 53.1 last month, which was slightly lower than the 54.8 in April.