Hong Kong January retail sales fall for 11th straight month
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Hong Kong retail sales, which suffered their worst decline in 13 years last year, saw weak sentiment extending into January on slumping tourist arrivals, weak local consumption and a strong local currency.
Retail sales in January slid 6.5 per cent from a year earlier to HK$43.6 billion (US$5.61 billion) in value terms, compared with an 8.5 per cent decline in December. In volume terms, January sales decreased 5.2 per cent.
“The near-term outlook for retail sales will remain constrained by the sluggishness in inbound tourism,” the government said in a statement. “External uncertainties, including a dimmer global economic outlook and US interest rate normalisation, may add further headwinds.”
The value of retail sales fell for a second year in 2015 – down 3.7 per cent – the biggest decline since 2002 when they dropped 4.1 per cent.
Hong Kong is confronting mounting economic challenges as the prospect of US interest rate rises drives fears of capital outflows that could put pressure on the financial hub at a time when China’s economy is growing at its slowest pace in 25 years.
Tensions that have rocked the city, including protests over the Lunar New Year that was sparked off by street vendors, have added to the strains on the retail and tourism industries already suffering from a drop in mainland tourists.
EXPENSIVE DESTINATION
The strong Hong Kong dollar, which is pegged to the US dollar, has made the city an expensive destination and China’s cash-rich tourists are heading for more exotic destinations.
“The near-term outlook for retail sales will remain constrained by the sluggishness in inbound tourism,”
Hong Kong tourist arrivals, which fell 2.5 per cent in 2015 in the first decline since 2003, dropped 6.8 per cent from a year ago to 5.23 million in January. Mainland visitors, which accounted for 77 per cent of the total, slumped 10 per cent to 4.04 million.
Hong Kong’s comparatively high rents also hurt retailers as fewer mainland tourists come to shop, forcing operators to close and scale back expansion.
January sales of jewellery, watches, clocks and valuable gifts in value terms fell 16.3 per cent, a 17th consecutive month of decline.
Department store sales slid 3.6 per cent on year, against a 12.3 per cent drop the previous month. Wearing apparel fell 4.9 per cent while medicines and cosmetics decreased 3.6 per cent.
Hong Kong’s top jeweler Chow Tai Fook Jewellery Group and cosmetics chain operator Sa Sa International Holdings saw sales declines at least 20 per cent during the key Lunar New Year shopping season in February.
Department store operator Lifestyle International also saw a double-digit decline in sales during the holiday.
Last week, Hong Kong rolled out a multi-billion dollar package of sweeteners to bolster its economy as a slowdown in China and rising political tensions deepen its economic woes.
Questions & Answers
Q.What were the main reasons for the continued decline in Hong Kong's retail sales in January?
What were the main reasons for the continued decline in Hong Kong's retail sales in January?
The weak sentiment in January was largely due to fewer tourist arrivals, subdued local spending, and the strength of the local currency. This followed a challenging year for retail in 2015.
Q.Which retail categories were most affected by the sales decline in January?
Which retail categories were most affected by the sales decline in January?
Sales of jewellery, watches, clocks, and valuable gifts saw a significant fall of 16.3 per cent. Department store sales, wearing apparel, and medicines and cosmetics also experienced declines.
Q.How did the strong Hong Kong dollar impact the city's appeal to tourists?
How did the strong Hong Kong dollar impact the city's appeal to tourists?
The strong Hong Kong dollar, being pegged to the US dollar, made the city an expensive destination. This led many cash-rich tourists from mainland China to choose other, more exotic places instead.
Q.What external factors are expected to further constrain the near-term outlook for retail sales?
What external factors are expected to further constrain the near-term outlook for retail sales?
The government stated that the sluggishness in inbound tourism would continue to be a constraint. External uncertainties, such as a dimmer global economic outlook and US interest rate normalisation, could also add further difficulties.
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