to a half-term report unveiled yesterday by Minister of Finance Grant Gibbons.

And "positive signs'' are emerging in the key sectors of construction, restaurants, business services, transportation and international business.

The number of registered unemployed has also fallen -- by an annual rate of 23 percent, following on from an earlier decline in 1996.

Dr. Gibbons said the 443 jobless represented "well under 1.5 percent of the working population, a figure matched by few, if any, economies in the world.'' But Dr. Gibbons said developments in the tourism industry have been "disappointing'' with first quarter figures showing a drop in air visitors -- at 55,346 people down 1,175 compared to the same period in 1996.

And preliminary figures for the year to date suggest air arrivals are running around four percent lower than in the same timescale last year.

But Dr. Gibbons said first quarter surveys suggested the smaller number of visitors were spending more -- at $54 million, 0.7 percent up on the same period last year -- meaning expenditure per head has increased by almost three percent.

He added: "Although modest, this increase marks an important step in our efforts to increase per capita visitor expenditure.'' Cruise ship visitor numbers were hit by the cancellation of the first two arrivals of the year. But Dr. Gibbons said cruise arrivals went up in April by around 6.4 percent - which followed a 106 per cent in the previous year.

But Dr. Gibbons added: "Recent figures indicate that the cruise ship industry is living up to expectations.

"Taking air and cruise arrivals together, our latest preliminary figures indicate that so far this year, total visitor arrivals are around three percent lower than last year at around 228,000.'' Dr. Gibbons warned that pricing, marketing, service and value for money issues meant that Government could not revitalise the industry on its own and said that product improvement was needed.

The Minister added that overseas comparisons showed that disparities between the economies of other countries had valuable lessons for Bermuda.

Dr. Gibbons said: "The economies which are prospering, particularly the United States, tend to have flexible labour and product markets and have displayed a willingness to embrace economic change.'' Dr. Gibbons said the international business sector was "very healthy,'' with 323 exempted undertakings being registered in the first quarter of 1997 -- 40 percent up on the same period last year.

He added: "The number of active international businesses on the company register rose by 7.3 percent to 9,515, a first quarter growth rate that has only once been exceeded in previous years.'' And he said: "It is very encouraging to note, through employment indicators, that this sector continues to expand and create more jobs.'' GOVERNMENT GVT