As more statistics now begin to emerge on the first half of the year it is becoming increasingly apparent that while the second quarter of the year was good, it was not as good as the exceptional first quarter.

In the figures available so far for May and June, it is apparent that the pace of the recovery is slowing as the economy works its way along the economic cycle and the comparative numbers make for a higher base last year.

This process will become all the more apparent in the current, second six months of the year, with the second half of last year being so much more economically buoyant that the recession-hit opening six months.

Even external trade, driven along powerfully by the exceptional China re-export performance, is beginning to show some signs of slowing as it comes up against the better numbers in the latter months of last year.

It is domestically, however, that the slowing is most apparent.

Retail sales, for example, came in at $15.9 billion in May, up only four per cent in value terms on last year, despite the apparent dramatic recovery in the rest of the economy and the share market.

Take into account continuing deflation, however, and the implied volume of retail sales was up 10 per cent on a year earlier.

A Government Secretariat spokesman noted that retail business continued to perform well, although the double-digit growth in volume had moderated in May compared with the earlier months of the year.

He said the increase in May remained broadly based, underpinned by both local consumer demand and inbound tourism.

For the opening five months of the year, retail sales were up an average 13.5 per cent in volume terms, but only seven per cent in nominal (or current dollar) terms ¡V that is before taking into account deflation.

Motor vehicles and parts continued to the lead the way in May with a real or volume increase of 46 per cent and a value increase of 40.4 per cent, meaning that there is not much new discounting in the motors sector.

The unemployment and underemployment figures also seem to be stuck in something of a rut.

As a percentage of the total labour force, unemployment eased back to 5 per cent on a seasonally adjusted basis in April-to-June three months, slightly better than the 5.1 per cent figure in March-to-May.

But the number of people out of work actually increased slightly by 600 to 178,000, although the number of underemployed persons was down by 3,300 to 113,000, possibly indicating a pick up in full time demand.

The percentage of underemployed eased to 3.1 per cent from 3.3 per cent.

The total number of employed persons actually increased by 800 between the three-month cycles to 3,386,000

A Government Secretariat spokesman said that while both the seasonally adjusted unemployment rate and the underemployment rate edged down, the total number unemployed had a small rise.

This was mainly due to fresh graduates and school-leavers beginning to enter the job market at this time of the year.

Nevertheless, the strengthened labour demand upon the on-going economic recovery should help absorb the additional labour supply, the spokesman said.

Decreases in the unemployment rate were evident mainly in the foundation and superstructure construction, manufacturing and import/export trades sectors, more than offsetting the increases observed in the decoration and maintenance, and business services sectors. Decreases in the underemployment rate occurred mainly in the retail trade, manufacturing and construction sectors.

On the other hand, the value of manufacturers' orders-on-hand, while still declining on a year earlier, have seen a moderation in the pace of decline.

Overall orders on hand for local production decreased by 6 per cent in May compared with a year earlier.

Orders-on-hand are usually regarded as a leading indicator of the performance of domestic exports. However, as orders placed for production outside Hong Kong are not included, manufacturers' orders-on-hand cannot be used to reflect the performance of re-exports.

Indicating greater levels of new corporate activity, the total number of companies registered under the Companies Ordinance at the end of June was 505,754, a 3.03 per cent increase on the December 1999 figure.

The number of new companies registered during the first six months of 2000 was 22,963, an increase of 36.38 per cent over the corresponding period of 1999.

Oversea companies which had established a place of business in Hong Kong under part XI of the Companies Ordinance were 5,884 at the end of June, an increase of 4.53 per cent over the total number at the end of December 1999.

The number of new oversea companies registered during the first six months of 2000 was 413, an increase of 51.28 per cent over the same period of 1999.