HONG KONG: The unemployment rate in Hong Kong declined for the first time in nearly two years, falling 0.1 percent to 5.3 percent during the July to September period, compared with the figures between June and August, according to the Census & Statistics Department.

This is the first time the city's jobless rate has fallen since last year's financial crisis that threatened to swamp the global financial system, and the fall was from a four-year high, as slightly more jobs became available. The underemployment rate remained unchanged at 2.4 percent.

"As business conditions gradually improve and the labor market stabilizes, employers may adopt a more positive attitude towards recruitment. This is expected to ease the pressure on the unemployment rate in the near term, said Matthew Cheung, Secretary for Labour & Welfare.

However, he warned that the recovery path may still be uneven as overseas markets have yet to show visible improvement. A sustained and solid recovery will depend on a fundamental improvement in the external environment.

He said the government will promote employment on all fronts through training, retraining and skills upgrading.

The figures surprised the market, as the median estimate of 12 economists surveyed by Bloomberg was for the rate to stay at 5.4 percent.

"It's a nice surprise. But the numbers have to be looked at carefully," said Irina Fan, Senior Economist at Hang Seng Bank, pointing out that "the decline in the jobless rate is mainly due to a decrease in the labor force rather than an increase in the number of jobs."

Total employment in July-September was 3,495,500, slightly higher than the figure for June-August which stood at 3,495,300. The labor force fell 7,400 to 3,704,700 in July-September.

The number of unemployed fell 7,700 to 209,100 in July-September. Meanwhile, the number of underemployed rose 1,700 to 89,900.

Falls in the unemployment rate were mainly found in the construction, information and communications, arts, entertainment and recreation sectors.

What percentages of the declines were due to retirements,the unemployed returning to school or adult training programs, simple giving up, emigration, repatriation, deregistration for unemployment benefits, government work programs, deaths, etc., is unclear.

"The government launched some infrastructure projects that created jobs. Anyway, the worst is over. In coming months the unemployment rate will stay at these levels and ease near Christmas. We'll see a slight downtrend next year," said Daniel Chan, Senior Investment Strategist at DBS Bank.

"The worst is over for the economy but we will not see a strong recovery because the global environment still needs monitoring. There will not be a V-shaped recovery in the global economy; we'll see very modest growth next year," Mr Chan added.

The unemployment rate for people aged 15 to 19 fell 2.7 percent, to 25.7 percent, showing the government's efforts to boost youth employment have begun to take effect.

For the underemployment rate, decreases were noted mainly in the decoration and maintenance, and insurance sectors, offsetting increases in the services sectors.

The number of private-sector vacancies the Labour Department posted increased to 60,998 in September, up 15.6 percent on August. The number of successful placements also rose 14.1 percent to 11,172.

Chief Executive Donald Tsang said October 14 the city's jobless rate has stabilized and he sees signs it will decline. Hong Kong's economy will keep improving this year on China's stimulus and "gradually improving" Asian demand, Tsang said.

However, Financial Secretary John Tsang said on October 6 that he saw a "bumpy road ahead" for the city's recovery.

Agencies contributed to the story

(HK Edition 10/20/2009 page4)