Pedestrians wear face masks as a precautionary measure against the COVID-19 coronavirus as they walk across a road in Hong Kong on May 14, 2020. (ANTHONY WALLACE / AFP)

Hong Kong’s unemployment rate rose in January to the highest level in more than 16 years as social distancing and travel restrictions from the pandemic continue to damage local businesses and destroy jobs.

The jobless rate rose to 7 percent in the November-to-January period from 6.6 percent previously, the highest since April 2004, according to a government report Thursday. The underemployment rate also increased, rising to 3.8 percent.

Hong Kong has struggled under an extended recession over the past two years amid social unrest and the global pandemic, with the economy shrinking a record 6.1 percent in 2020, according to advance estimates. Retail consumption, a key pillar of the economy, slumped first because of political demonstrations, and then continued to decline due to restrictive measures to contain the spread of the virus.

There was a slight increase in the number of people unemployed, up 7,500 people to 253,300 in January due to falls in both total employment and the labor force

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“Although the fourth wave of the local epidemic has shown signs of easing lately, the labor market will remain under pressure in the near term as it will take time for economic activities to return to normal,” Secretary for Labour and Welfare Law Chi-kwong wrote in the report.

There was a slight increase in the number of people unemployed, up 7,500 people to 253,300 in January due to falls in both total employment and the labor force.

The consumption and tourism-related industries were particularly hard-hit in January, with joblessness rising to 11.3 percent while underemployment hit a record 6.6 percent. Unemployment in food and beverage service activities surged to 14.7 percent, the report said.

READ MORE: China reports slightly higher unemployment rate in April

There is some cause for optimism on the horizon for the city, with vaccinations for Covid-19 to start later this month. In addition, there may be more stimulus in the annual budget, which will be announced next week.

The government this week announced plans to allow venues including gyms, beauty parlors, cinemas and theme parks to reopen from Thursday. Evening dine-in services at restaurants will also be allowed until 10 pm, officials said.