Recruiting in China

HONG Kong's jobless rate fell for a fifth straight month in November to the lowest in almost six years, helping sustain the longest economic expansion in a decade, the government said yesterday.

The seasonally adjusted unemployment rate for the three months ended November declined to 4.4 percent from 4.5 percent in October, the government said on its Website. That was the lowest since January 2001 and matched the median estimate of 13 economists surveyed by Bloomberg News.

Banks, transport companies and retailers have stepped up hiring as the special administrative region piggybacked on booming growth on the Chinese mainland. Rising wages, and soaring stock and property prices are underpinning consumer confidence, helping Hong Kong withstand a slowdown in the United States economy.

"This reflects the healthy expansion in Hong Kong that has translated into the labor market," said David Cohen, an economist at Action Economics in Singapore. "It should be supportive to consumer spending."

Total employment jumped by 12,900 from a month earlier to a record 3.51 million. The number of unemployed slipped by 7,200 to 161,700, the lowest in more than five years, the report said.

The Brunswick Purchasing Mangers' Index, a gauge of economic activity in Hong Kong, climbed to 56.3 in November, the highest in three years. The index of employment rose to an eight-month high of 54.3, suggesting companies may step up hiring in coming months.

A tighter labor market has forced employers to raise salaries to keep workers and attract new ones. Wages rose 3.3 percent in the third quarter - an increase that may start to feed into inflation, economists said.

"Labor costs may push prices higher in the next two years," said Vivian Chiu, an economist at UBS AG in Hong Kong. Still, inflation "isn't a big crisis at the moment."

Hong Kong's consumer prices climbed one percent last year, the first annual increase since 1998. The government forecasts inflation will accelerate to two percent this year.

On November 21, the government raised its forecast for economic growth this year to 6.5 percent from as much as five percent previously, partly because of rising domestic demand. The economy expanded 6.8 percent in the third quarter.

The city has created about 311,000 new jobs since unemployment peaked at 8.6 percent in July 2003, the government estimates. The benchmark Hang Seng index almost doubled in the same period, breaking 19,000 for the first time last month.

As a result, residents are spending more on everything from clothes to transport. Sa Sa International Ltd, Hong Kong's biggest cosmetics retailer, on November 30 said first-half profit climbed 11 percent as sales jumped.