Hong Kong's unemployment rate dropped to 4.3 percent for the May-July period from 4.6 percent in April-June, the lowest level since the period between November 2008 and January 2009.

The drop was the result of continued economic recovery that has boosted business confidence and led to more hiring, the government said Tuesday.

According to the latest report released by the Census and Statistics Department, 8,100 new jobs were added between May and July from the preceding three months. The labor force grew by around 3,600.

"This latest jobless rate has really come as a surprise," said Paul Tang, Chief Economist at Bank of East Asia, who had expected the unemployment rate to hover around 4.6 percent.

Improvement in employment was mainly observed in retail, hotels, information and communications, arts, entertainment and recreation, and manufacturing sectors. Notably, the construction sector saw its unemployment rate drop by 0.5 percentage points to 7.1 percent.

The number of private sector vacancies posted by the Labour Department rose by 8.9 percent in July from the preceding month, up 46.9 percent from a year earlier.

"The labor market has turned out to be better than we expected, in part because the export sector has fared well so far this year and in part because people have kept spending, which together has buoyed companies' confidence in business and (their) passion for hiring," said Irina Fan, Senior Economist at Hang Seng Bank.

Looking ahead, Secretary for Labour and Welfare Matthew Cheung remained positive.

"In light of the latest feedbacks from business surveys and job vacancy data, more new jobs are likely to be created in the next few months, providing favorable conditions for the labor market to improve further," he said.

He cautioned, however, that the fragile economic recovery seen in the US and Europe may pose a threat to overall economic growth, possibly slowing job growth.

Tang shared this concern: "The export sector will suffer if the economic momentum slows in the US and Europe, which will then dampen business confidence and dent the improvement in Hong Kong's job market."

China Daily

(HK Edition 08/18/2010 page4)