HONG KONG - Hong Kong's unemployment rate rose to a seasonally adjusted 7.2% in the December-February period, the government said on Tuesday, as a surge in coronavirus infections late last year prompted new restrictions on a wide range of activities.

The figure compared with 7.0% in the November-January period, and was the highest since 2004.

The underemployment rate increased to 4.0% from 3.8% in the previous three-month rolling period. The number of unemployed rose by about 8,300 people to 261,600 in the three months ending in February.

Labour Secretary Law Chi-kwong said the labour market was under notable pressure in December-February but the situation slightly stabilised in the latter part of the period due to an improvement in the epidemic situation.

"The labour market will still face challenges in the near term as the epidemic has yet to be fully contained and inbound tourism remains frozen," Law said.

"With the launch of the COVID-19 Vaccination Programme, the threat of the epidemic may gradually recede and this will help ease the pressure on the labour market later in the year," he added.

The jobless rate for the consumption- and tourism-related sectors combined decreased 0.2 percentage points to 11.1% in December-February, the food and beverage sector fell to 14.1% from 14.7% in the previous three-month period, while the retail sector rose to 9.1% from 8.9%.

Hong Kong's retail sales in January fell 13.6% from a year earlier as coronavirus restrictions slowed business activity in the Asian financial hub, with hopes for a recovery largely pinned on the rollout of vaccines. 

The Chinese-ruled city plans to run a much lower budget deficit in the coming fiscal year as the economy is expected to recover from its longest recession on record, Finance Secretary Paul Chan said in February. 

Hong Kong's economy is forecast to grow between 3.5% and 5.5% in 2021 after a 6.1% contraction in 2020, Chan said.

(Reporting by Meg Shen and Donny Kwok; Editing by Jacqueline Wong) ((donny.kwok@thomsonreuters.com; +852 3952 5874; Reuters Messaging: donny.kwok.reuters.com@reuters.net))