Hong Kong Unemployment Climbs to Highest Since March 2004

(Bloomberg) -- Hong Kong’s unemployment rate rose in February to the highest level in almost 17 years as the city remains under restrictions limiting tourism and commerce.

The jobless rate rose to 7.2% in the December-to-February period from 7% previously, the highest since March 2004, according to a government report Tuesday. That’s worse than the 7.1% median forecast among economists surveyed by Bloomberg. The underemployment rate also rose to 4%.

Total employment fell by about 20,500 to 3.61 million people in February as the labor force also shrank to 3.87 million. The number of unemployed meanwhile rose to 261,600.

Government officials moved to loosen social distancing restrictions in February, including the reopening of restaurants for evening dining. Hong Kong has also begun vaccine distribution, including expanding eligibility this week to more of the population. The government also announced a budget last month that included fiscal support measures such as HK$5,000 ($644) of spending vouchers to spur consumption.

“The labor market will still face challenges in the near-term as the epidemic has yet to be fully contained and inbound tourism remains frozen,” Secretary for Labour and Welfare Law Chi-kwong said in the report. The launch of the city’s vaccination program and easing threat of the pandemic will help “ease the pressure on the labor market later in the year.”

The jobless rate in the consumption and tourism-related sectors improved slightly, falling 0.2 percentage point to 11.1% last month. The unemployment rate in food and beverage fell to 14.1%.

The measures to open up the economy may be short-lived as a fresh virus outbreak has emerged in March, first centered on a gym and since spreading to international schools, other fitness centers and the banking community. Hong Kong’s economy has been mired in recession for the past two years amid political unrest and the global pandemic.

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