H.K. Jobless Rate Unexpectedly Fell in July Amid Virus Wave

(Bloomberg) -- Hong Kong’s unemployment rate fell in July to halt nine straight months of increases as more people returned to the workforce even as the city’s economy grappled with a resurgent third wave of coronavirus infections and renewed social-distancing measures.

The jobless rate dropped to 6.1% for the May-to-July period, down slightly from 6.2% the previous month, a 15-year high.

The surprise reading was lower than the median forecast of an increase to 6.4% among surveyed economists.

Total employment rose 16,600 to 3.64 million while the overall labor force also increased 18,400 to 3.88 million in the period as more people sought work and many found it, according to the government statement.

The underemployment rate also fell 0.2 percentage points to 3.5%.

The labor market “showed some improvement” as the city was able to keep the virus situation largely under control in May and June, while government relief measures also helped support employment, said Secretary for Labour and Welfare Law Chi-kwong.

“The labor market will remain under significant pressure in the near term,” Law said in the report. “The recent surges in infected cases both worldwide and locally have further clouded Hong Kong’s economic outlook for the rest of the year.”

Unemployment in consumption and tourism-related sectors and construction edged higher in the period, while there was an improvement in the information and communications sector, professional and business services and education, the report said.

Brief Respite

Hong Kong’s brief respite from the virus outbreak, which allowed officials to loosen some pandemic measures, ended in July as the number of confirmed cases more than doubled to almost 3,300 by the end of the month.

“The brief period of loosening coupled with the job stabilizing measures seemed to be helpful,” said Raymond Yeung, greater China chief economist with Australia & New Zealand Banking Group Ltd. “With social distancing tightening again, the figure in August might have risen again.”

The spike in infections led to the tightest measures yet, including bans on restaurant dining after 6 p.m. and strict limits on public gatherings. This has inflicted more financial pain on the city’s beleaguered restaurant, retail and service industries.

Imposition of the national security law by Beijing on July 1 also escalated the conflict between China and the U.S., raising questions about Hong Kong’s future as an Asian financial hub.

The Hong Kong government last week revised its 2020 forecast for the economy to a record low range of -6% to -8% because of the coronavirus and rising trade tensions.

The government also provided an unchanged final GDP reading for the second quarter of -9% on a year-on-year basis, and -0.1% from the prior quarter. Hong Kong has been in recession since the latter half of 2019 due to a sustained period of political unrest before the pandemic.

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