Labour market crumbles despite strong unemployment rate

Employment growth almost hit 0%.

The domestic sectors, in particular construction--due to the strong pipeline of infrastructure projects--and hospitality services, are still creating jobs.

According to a research note from UBS, however, in part reflecting tightening liquidity, job growth in the higher paid service sector will remain subdued.

The report also noted that the labour market has been weakening despite the steady unemployment rate.

In particular, employment growth has slowed very sharply to near 0%y/y in 1H14, driven in part by job cuts in the financial sector.

Further, changes in the labour market provide important clues about income growth and inflation in Hong Kong.

A rise in unemployment implies weaker wage growth and less pressure on inflation.