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Hong Kong's unemployment rate fell to an 11-month low of 4.9% for the October-December period, representing the fourth consecutive decline since the unemployment rate peaked at 5.4% in mid-2009, according to Moody's Economy.com, citing statistics released early this week.

"While a declining headline jobless rate presents a positive first impression, the detailed statistics aren’t particularly rosy," says Matt Robinson, senior economist at Moody's Economy.com. In his commentary, Robinson notes that an 8,700 decline in the overall workforce was the driver behind the falling unemployment rate. He adds that employment contracted by 500 jobs on net in the three month period, to be down nearly 50,000 compared to a year ago. "The underemployment rate remains near a three-year high," he says. Meanwhile, the participation rate fell to a record low in the October-December period, as disenfranchised workers displaced by the financial crisis and ensuing downturn exit Hong Kong’s workforce.
 
According to Robinson, Hong Kong’s recovery remains heavily dependent on a broad-based recovery in the U.S. He says that the outlook for the city—which is a major Asian financial centre and entrepot hub processing goods into and out of China—remains inextricably linked to an improving global financial system and recovery in international trade. "The Hong Kong government is wary of the potential for an aborted recovery in the U.S. and the impact such an outcome would have on Hong Kong, with recent statements by officials indicating the government stands ready to roll out additional stimulus measures if required to secure the city’s recovery," writes Robinson.
 
Robinson says that with the worst of the global downturn apparently in the past, labour market conditions in Hong Kong should continue to gradually improve. Planned infrastructure spending—such as the construction of a train line linking Hong Kong with China’s high-speed rail network—will create construction jobs, while improved business confidence will support broader employment growth over the medium term, says Robinson.

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