Hong Kong's jobless rate climbed to a record 6.8 percent in February as falling consumer spending prompted retailers and restaurants to shed workers.
The increase in unemployment from January's 6.7 percent rate left 228,000 of the city's 3.5 million-strong labor force out of work, government's Census and Statistics Department said.
Economists expected the jobless rate to rise to 7 percent.
Hong Kong's job market may shrink further in coming months as exports extend a yearlong slide and companies move less skilled jobs to mainland China to escape the city's high costs.
"It will get worse," said Joe Lo, an economist at Citibank NA. "The unemployment rate will start to decline gradually after the summer as the US economy is expected to pick up."
Job losses at retailers, restaurants, real-estate companies and builders led the increase in unemployment last month, the government said. Retail sales fell a record 11.7 percent in January from a year earlier, and consumer prices have been falling for more than three years. Falling domestic spending is prolonging Hong Kong's economic slump. The economy will probably expand 1 percent this year after shrinking in the fourth quarter and growing just 0.1 percent last year, the government estimates. Still, officials have said growth may not return until the second half of the year and unemployment has further to climb.
Sun Television Cybernetworks, a Hong Kong-based company that broadcasts in China by cable and satellite, said last month it will slash its workforce by more than half to 85. Quam Ltd, publisher of financial Web site Quamnet.com, fired nine news staff last month as it tries to end losses.
Forty-three percent of Hong Kong companies expect to cut workers this year, and a third said they'll freeze hiring, the South China Morning Post reported last month, citing a survey by Pricewaterhouse Coopers. Last month's 6.8 percent jobless rate was the highest since the government began compiling the figures in 1981.