Hong Kong unemployment rate rose to 5.4% during Covid wave

(Bloomberg) – Hong Kong’s unemployment rate rose to 5.4% in the three months to April as the city’s Covid restrictions continued to strain businesses and keep people at home.

The unemployment rate was worse than the 5% expected by economists in a Bloomberg poll. This is the highest rate since June 2021, when unemployment also hit 5.4%. The underemployment rate rose to 3.8% from 3.1%, the Census and Statistics Department said in a report Thursday.

While the labor market continued to deteriorate, “the situation showed some stabilization in the second half of the period, along with the decline in the local epidemic and the revival of local economic activities,” Labor and Social Law Minister Chi-kwong said in the press release.

The elevated unemployment rate, recorded for a moving three-month period, is one of several challenges for Hong Kong’s economy, which is also grappling with rising global interest rates, difficult exports due to China lockdowns and higher global commodity prices. Last week the government lowered its annual growth forecast to a range of 1% to 2% from an earlier expectation of 2% to 3.5% growth.

Read more: Hong Kong cuts GDP growth forecast on Covid, trade risks

Finance Minister Paul Chan warned on Sunday that the unemployment rate is expected to fall further as the February-April period reflects the “peak of the epidemic” in Hong Kong.

“Nonetheless, over the past month or so, the epidemic has been gradually brought under control and social distancing measures have been eased in phases,” he wrote in a blog post, adding that the unemployment rate “will gradually improve if infections remain stable.” ”

Last week, government economist Adolph Leung told reporters at a news conference that the job market was under “severe pressure.” However, he pointed to supportive measures designed to improve the situation, such as a temporary unemployment benefit program and the issuance of consumer vouchers to stimulate demand.

Hong Kong also continues to ease its virus restrictions, despite the city seeing hundreds of cases a day. From Thursday, restaurants can remain open until midnight, an extension of the previous 10pm closing time. Bars will be allowed to stay open until 2am, while mask requirements for indoor exercise will be lifted.

However, quarantine and testing requirements for entry remain in place.

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