The weak performance was mainly weighed down by a fall-off in tourist spending and a concurrent slowdown in domestic demand.
Total exports of goods staged a modest pick-up in the second quarter, rising by 2.3% year-on-year in real terms, up from 0.5% in the preceding quarter, though the improvement over the period was brought about mainly by a notable rebound in June. Against this, however, exports of services slackened visibly to a 2.3% year-on-year decline in real terms, upon a double-digit plunge in exports of travel services, though other items showed some relative improvement. This marked the first decline since the second quarter of 2009.
Domestic demand also saw some growth slowdown. Private consumption grew only slightly by 1.2% year-on-year in the second quarter, after two quarters of subdued economic growth. Investment expenditure relapsed to a 5.6% decline, upon a distinct fall in machinery and equipment acquisition, the latter partly affected by an exceptionally high base of comparison a year ago.
The labour market held generally stable. The seasonally adjusted unemployment rate edged up to 3.2% in the second quarter, from 3.1% in the first quarter. Wages and earnings rose further, while average employment earnings for grassroots workers sustained real improvement. While overall employment and income conditions remained favourable in the second quarter, the slowdown in the tourism sector of late and its potential impact on the labour market going forward need to be closely monitored.
The local stock market rallied in recent period, as sentiment improved upon a reviving Mainland economy and the Federal Reserve's reiteration of its accommodative monetary stance. The residential property market firmed up again, with trading activity rebounding in the second quarter from the lows and prices bouncing back successively.
On a seasonally adjusted quarter-to-quarter comparison, real GDP dipped by 0.1% in the second quarter, after a 0.3% growth in the preceding quarter