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% in the November-to-January period from 6.6% previously, the highest since April 2004, according to a government report Thursday. The reading was worse than the 6.9% median forecast in a survey of economists.

Hong Kong's jobless rate hits 7%, the highest since April 2004

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% 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 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 p.m., officials said.