Hong Kong?s government expects economic growth this year to beat last year?s estimated growth of 3 per cent, Ming Pao Daily News said.

Estimated gross domestic product growth in the fourth quarter of 2003 exceeded the 4-per cent recorded in the preceding quarter on a year-on-year basis, the newspaper said, citing estimates in an internal government document.

Government officials were not immediately available to comment on the report.

Economists expect much stronger economic growth in Hong Kong in 2004 than 2003, backed by a surge in tourist arrivals from mainland China and more business generated by a Hong Kong-mainland free-trade pact.

Ming Pao also quoted the document as saying the forecast 3 per cent growth for 2003 was attainable.

Hong Kong?s leading daily The Standard quotes economic commentators and bankers saying various economic indicators have been improving noting that bankruptcy petitions, for example, are on a downward trend.

Unemployment figures released on Thursday show the jobless rate remained steady at 7.3 per cent in January and most economists expect the rate to fall to 7.1 per cent in coming months.

<B>Cautiously optimistic</B>

On the bright side, 8,200 fewer people were unemployed, with the total out of work falling to 245,000 in the three months to January, down from 253,000 in the quarter to December, the Census and Statistics Department said. That is the lowest number since March 2002.

The improving labour market was also reflected in total employment, which rose by around 4,700, from 3,235 million in December to 3,24 million in January. Total labour force, however, fell by around 3,500 to 3,485 million. The underemployment rate, which tracks part-time workers, remained steady at 3.3 per cent.

?The overall employment situation remains good and we are cautiously optimistic in the labour market,?? Financial Secretary Henry Tang said, adding the improvement wasn?t reflected in the jobless rate due to the adjustment for seasonal factors according to the International Monetary Fund?s formula.

A government spokesman said an increase in employment was seen in decoration and maintenance, retail, transport and external trade, but the rate was little changed after netting out the influence of a seasonal increase in employment around the Lunar New Year holidays.

Unemployment surged to a record of 8.7 per cent in July last year as companies cut staff amid the Sars crisis.

The improvement in the labour market since then helped revive consumer confidence and bolster retail and apartment sales. Consumer confidence last month rose to the highest level in six years, according to an ACNielsen survey.

Despite the disappointing January figure, economists said the general positive sentiment should translate into more jobs this year.

?There?s still growth in employment. As you walk around, you can still spot many recruitment ads in shops. It?s quite good especially as it?s just after the Lunar New Year,?? Core Pacific-Yamaichi economist CK Lee said.

However, the rate of improvement may slow as some of the government?s temporary and training jobs will end and people who had dropped out of the labour force earlier would start looking for jobs, economists said.

?Although the economic fundamentals are improving, it is unlikely to lead to a dramatic improvement as Hong Kong is still undergoing an economic transition,?? Hong Kong and Shanghai Banking Corp?s general manager Raymond Or said. ?Much production has been relocated to lower cost countries such as the mainland. This is the side effect of globalisation.??