Hong Kong's unemployment rate continued to fall on a downward trend, dropping to 6.9 per cent in the April-June period, or a 28-month low, it was revealed Tuesday.

The seasonally-adjusted jobless rate fell from 7 per cent in March-May period, the government figures showed.

Total employment rose by 13,300 to about 3.282 million, a record high, as compared to 3.268 million in March-May. The number of unemployed people dropped by around 4,100 to 240,000 last month, according to the latest figures.

The unemployment rate has been falling steadily from the peak of 8.7 per cent in July last year, after the SARS outbreak devastated Hong Kong's economy.

Financial Secretary Henry Tang Ying-yen said it has remained a great challenge to maintain a stable unemployment rate, particularly because new graduates from universities and school leavers are looking for jobs this summer.

Tang said, "The labour market will be under some pressure as more new graduates are joining the labour force in the summer.

"The government will closely monitor if the unemployment rate would bounce up again."

He noted the government will continue to aid the market to create more jobs. Tang predicted earlier that the jobless rate would fall below 7 per cent some time by the end of this year.

The government and economists expected that fresh graduates and school leavers could be gradually absorbed into the labour market as more jobs are created as a result of economic growth.

The government figures also showed decreases in the jobless rate were mainly recorded in the foundation and superstructure construction, retail trade, restaurants, transport and sanitary services.

The underemployment rate stood stable at 3.5 per cent in April-June. The number of underemployed people stood at 122,000, little changed from that of 121,900 between March and May.

A government spokesman said Tuesday that total employment continued to grow at a faster pace than that of the labour force, underpinned by sustained economic pick-up.

Standard Chartered Bank economist Kelvin Lau said Tuesday the decline in the jobless rate has been encouraging.

"The booming tourism and retail sales markets have created quite sizable jobs over the past few months," he said.

"It also helps offer more jobs for low-skilled workers."

Bank of East Asia economist Paul Tang estimated that the unemployment rate would fall between 6 and 6.5 per cent by the end of this year.

In another development, Tang revealed Tuesday that the central government has applied to subscribe the SAR government's first bond offer of HK$20 billion, but refused to disclose the exact amount.

(China Daily HK Edition July 21, 2004)