Hong Kong unemployment rises to highest level since 2004

[HONG KONG] Hong Kong's unemployment rate rose in December to the highest level in 16 years as the city struggled under stiff social distancing measures to control new waves of Covid-19 cases.

The jobless rate jumped to 6.6 per cent in the October-to-December period from 6.3 per cent previously, returning to levels not seen since December 2004, according to a government report Tuesday. The reading was worse than the 6.4 per cent median forecast in a Bloomberg survey of economists.

The number of unemployed rose by about 1,500 to 245,800, while the underemployment rate remained at 3.4 per cent. The labour force was also largely unchanged, according to the report.

Local businesses are struggling under strict social distancing measures and a lack of tourism, with restrictions on group gatherings, early restaurant closures and shuttered bars weighing on consumer spending. Hong Kong's chief executive Carrie Lam said Tuesday the city will extend social-distancing measures, expand mandatory testing and introduce new restrictions in certain neighborhoods after a surge in cases.

"The labour market deteriorated again due to the fourth wave of local epidemic, which started in the latter part of November," Labour and Welfare Secretary Law Chi-kwong said in the report. "The labour market will remain under notable pressure in the near term." Unemployment in the consumption and tourism-related sectors, including retail, accommodation and food services, remained above 10 per cent.

The economy will likely continue to struggle through the first half of the year before a recovery emerges in the second half, depending on the global rollout of vaccines, Financial Secretary Paul Chan said at the Asian Financial Forum earlier Tuesday.

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"The Lunar New Year is usually a time when businesses such as retail and restaurants are the most prosperous and highest earning, but currently they are being severely affected by the epidemic," Mr Chan wrote on his blog on Sunday.

BLOOMBERG