27 December 2002                                                                                  

Trading Up

Hong Kong's two-way trade rose 16.2 in November, from a year earlier, the strongest performance in over two years, and driving growth for the first 11 months of the year up 3.3 per cent after a very disappointing first quarter.

By segment, re-exports-the workhorse of Hong Kong��s trading economy-rose a robust 20.5 per cent, and 6.6 per cent in the first 11 months of the year. Domestic exports, accounting for just 7-8 per cent of total exports, fell 12.3 in the latest month and 14.6 percent since January. Total imports expanded 15.2 per cent in November, and 2.2 in January-November.

Hong Kong��s trade has picked up this year thanks to strong performance in the allied Pearl River Delta. Container through put is expected to rise 4.5 to 5 percent in full-year 2002, after contracting 1.5 per cent last year.

Strong New GDP Signs

Confirmation of Hong Kong��s economic recovery was evident in figures released on supply-side GDP today. The services sector, which accounts for over 80 per cent of the economy, rose 4.1 per cent in real terms in the third quarter, from the same 2001 period, up from a 1.8 per cent increase in Q-2. Within services, net output in the wholesale, retail and trade sector was up 6.8 per cent after a modest 1 per cent rise in April-June.

Financing, insurance, real estate and other business services rose 1 per cent in real terms in the July-September period (from Q-3 2001), off slightly from the 1.3 per cent recorded in the second quarter. Transport, storage and communications rose 5.2 per cent, from 3.3 per cent in Q-2.

Among the smaller sectors, manufacturing contracted 6.9 per cent (better than the -11.1 per cent on the books for Q-2) while construction rose 2.4 per cent (from 3.2 per cent). Utilities-electricity, water and gas-rose 2.9 per cent (6.9 per cent previously).

Pay Off

Wag and payroll figures for Q-3 were less promising: overall compensation for sub-supervisory level personnel was off 1.5 per cent, in nominal terms, from a July-September 2001, an acceleration from the second quarter��s 0.9 per cent decline.

Price adjustments, however, kept incomes firmly in the black: after subtracting Consumer Price Index A deflation, pay rose 2.8 per cent in Q-3.

For further information, contact: David O��Rear, Chief Economist, 2823-1242