Hong Kong's unemployment rate predicted to stay at 3.3-3.5% this year

Is this good news?

According to DBS, the unemployment rate for October 2013 remains at 3.3% (full employment). In fact, the rate has consistently stayed between 3.2% and 3.5% since July 2011 even though GDP growth has decelerated.

Retail sales and real estate used to be fairly good predictors of the unemployment rate.

Here's more from DBS:

However, such parameters no longer shed much light on the direction of the unemployment rate. As cyclical demand-side factors cannot fully explain labor market tightness, we suspect supply-side factors are in force.

Some sectors face chronic labor shortages regardless of the state of the economy. According to a report by Manpower Group, some 57% of Hong Kong employers are having trouble finding the right staff, the most since 2008.

Demographic changes could be one factor behind this. For instance, the percentage of male employees aged below 50 have now decreased to 64% from 77% back in 2005, and this may have caused labor shortages in some sectors requiring intensive manual work.

Of course, this is just one possible reason. All things considered, the unemployment rate is likely to stay between 3.3%-3.5% for the rest of the year.