The jobless rate in Hong Kong has dropped to the lowest in five years, and total employment surged to an all-time high, according to the latest government statistics released yesterday.

The seasonally adjusted unemployment rate declined from 4.7 per cent in July-September to 4.5 per cent in August-October, the lowest since the second quarter of 2001.

The underemployment rate, on the other hand, rose from 2.3 per cent to 2.4 per cent.

Decline in the unemployment rate was sharpest in the decoration and maintenance, real estate, insurance, import/export and retail trades sectors. As to the underemployment rate, increases were primarily found in the decoration and maintenance, and manufacturing sectors.

Total employment increased by around 4,200 to an all-time high of 3,500,300. Over the same period, the labour force decreased by around 7,300, from 3,676,500 to 3,669 200.

The number of unemployed persons decreased by around 11,500 to 168,900, while the number of underemployed persons increased by around 3,300 to 89,500.

Meanwhile, a government spokesman said that the unemployment situation would continue to improve. The number of the unemployed fell below the 170,000 mark for the first time since mid-2001. This was, he said, the combined result of a further increase in total employment and a shrinking labour force.

The near-term outlook will, to a great extent, depend on the growth of business activity and job creation in the run-up to the Christmas and New Year holidays.

The spokesman noted that the labour market remained buoyant. In October, the Labour Department netted 39,261 vacancies from the private sector, an increase of 2.6 per cent over the same period last year. On average, the department received 1,900 private sector vacancies on each working day.

Furthermore, the department was able to help 100,660 people find their jobs in the first 10 months of this year, up 8.2 per cent over the same period last year.

"Despite steady improvements in the general employment scene, the mismatch in human resources brought by the structural change in the local economy still needs to be addressed," the spokesman warned.

Commenting on the lowest jobless rate in five years, Secretary for Economic Development and Labour Stephen Ip said it was the result of an improving economy and a slowdown in the growth of the labour force.

He said that with the year drawing to a close, some trades such as retail would create more job vacancies, but the growth would not be significant because Hong Kong is still being plagued by the problem of structural unemployment.