Hong Kong employers expect staffing levels to increase at a steady pace during the next three months, according to the Quarter 3 results of the 2016 Manpower Employment Outlook Survey (MEOS).
Hiring intentions declined by 3 and 4 percentage points quarter-over-quarter and year-over-year, respectively, resulting in the weakest Outlook since 2Q 2013. However, after removing seasonal variations from the data, Hong Kong’s Net Employment Outlook still stands at a respectable +12%.
Eighteen percent of the 744 employers surveyed forecast an increase in staffing levels in 3rd quarter 2016, while 5 percent predict a decrease. Seventy-five percent of overall employers surveyed expect no employment changes in Q3 2016.
Employers in all six industry sectors expect to increase payrolls during the coming quarter. When compared with the previous quarter, hiring intentions decline in four of the six industry sectors.
The most noteworthy decreases of 5 percentage points are reported in both the Services sector and the Transportation & Utilities sector, while outlooks are 4 percentage points weaker in the Finance, Insurance & Real Estate sector and the Mining & Construction sector.
Service sector: Most favorable hiring climate
The most favorable hiring climate over the next three months is anticipated in the Service sector, with employers reporting a Net Employment Outlook of +19%. However, the outlook is the weakest reported since 1Q 2014, declining by 5 and 6 percentage points quarter-over-quarter and year-over-year, respectively. Demand in IT talent boosts the hiring pace in the service sector.
“Buoyant IT development across industries deepens the demand of talent, especially in data analysis, cloud computing, and app development," says Lancy Chui, Senior Vice President, ManpowerGroup Greater China region. "We observe that staff possessing technology and communications skills are the hardest for employers to find."
Aside from technology, employers are also seeking professional services talent in audit, risk and compliance to meet regulatory requirements and to minimize risks, especially in a slowing economy, according to Chui.
“In hotels employers are also facing uncertainty due to a drop in the numbers of inbound tourists and the state of the overall economy. As such, declining room rates will add pressure on company profitability and, by extension, to increase payrolls,” Chui added.
With a Net Employment Outlook of +16%, employers in Mining & Construction sector forecast steady job gains during the July-September period. However, hiring intentions decline both quarter-over-quarter and year-over-year, decreasing by 4 and 5 percentage points, respectively, resulting in the weakest outlook reported since Q1 2014.
Decreasing construction activity and property market consolidation has created a slowdown of hiring in construction sector. Moreover, the effort of industries and government to build the branding of industry has lowered the hiring pressure of construction employers. However, workforce demand - fueled by numerous infrastructure projects - is challenged by the ongoing aging problem of construction workers in the industry. Chui also noted that steady hiring to complete projects is required to replace retiring workforce.
Weakest hiring pace: Finance, insurance, and real estate sector
Job seekers in the Finance, Insurance & Real Estate sector can expect the weakest hiring pace since Q1 2014 in the upcoming quarter, according to employers, who report a Net Employment Outlook of +14%. Hiring prospects decline by 4 percentage points when compared with the previous quarter and 6 percentage points weaker year-over-year.
“Despite this, there is still demand for talent in AML compliance and private banking due to tightened regulations. Continued global financial concerns continue to prompt many international banks and financial institutions to reduce staffing levels or implement restructuring in order to lower costs, and these ongoing efforts are evidenced by the sector’s slightly weaker third-quarter Outlook,” added Chui.
Job seekers can expect a respectable hiring pace in the Wholesale & Retail Trade sector in the July-September time frame, according to employers who report a Net Employment Outlook of +11%. The Outlook remains relatively stable quarter-over-quarter and unchanged year-over-year.
“In the retail sector over the near term, the sluggish global market remains difficult and the uncertainty of levels of spending from tourism is still bringing pressure to retail employers, who keep a cautious employment outlook,” she said.
“Looking ahead, an uncertain business environment and the declining purchasing power of Mainland visitors continue to heighten Hong Kong retailer’s uncertainty as sales drop in luxury goods such as jewelry and watches. Nevertheless, high staff turnover rates may still stimulate employers to build on part-time and short-term staff to support their daily operations,” she added.
The weakest labor market in over three years in the Transportation & Utilities sector is forecast for Q3 2016, with employers in the sector reporting a Net Employment Outlook of +9%. Hiring intentions decline by 5 percentage points both quarter-over-quarter and year-over-year.
“A year-to-year downward trend in total import and export of goods has rattled hiring confidence in logistics and transportation employers. We are seeing a hiring slowdown in the aviation industry, however, despite weakened forecasts, the growth in passenger traffic and aircraft movements earlier this year was encouraging and the hiring outlook within the transportation sectors remain positive,” explained Chui.
Modest hiring activities: Manufacturing sector
Employers in manufacturing continue to forecast modest hiring activities, reporting a Net Employment Outlook of +5% for the second consecutive quarter. Year-over-year, the Outlook declines by 2 percentage points.
“The PMI slipped to 45.3 in April from March's 45.5 where client demand, especially across Mainland China, both in outputs and new business continues to fall. We believe this significant adverse effect is reflected in weaker hiring intentions reported among employers in the manufacturing sector,” she explained.
Hong Kong is one of 43 countries and territories that take part in the Manpower Employment Outlook Survey. In the Asia Pacific region, employers in India and Japan report the strongest third-quarter hiring plans, while those in China and Australia report the weakest.
Globally, staffing levels are expected to grow in 40 of 43 countries and territories report positive during the July-September time frame. However, a number of employers also indicate that overall payroll growth is likely to proceed at a more conservative pace than in the prior quarter or last year at this time.
Notable upturns in overall employer confidence are few, and some declining trajectories reported previously—most notably in Brazil and China—continue unabated. Third-quarter hiring confidence is strongest in India, Japan, Taiwan, Guatemala, Romania and the United Sates, while employers in Brazil, Italy and Switzerland report the weakest hiring plans.