Hong Kong retail sales slump by widest margin since January

Retail sales in Hong Kong declined for a sixth straight month in August due to a slowdown in inbound tourism and sluggish economic conditions.

The value of total retail sales in August declined 5.4 per cent year on year to HK$37.9 billion, following a 2.8 per cent drop in July, according to the latest figures from the Census and Statistics Department.

The fall was the biggest since January’s year-on-year decline of 14.5 per cent.

The government said on Friday that the tourism downturn and recent stock market gyrations might have dented consumer sentiment.

The total number of visitors dropped 6.6 per cent to 5.6 million in August, while the largest source of visitors -from the mainland – declined by 7.1 per cent.

The spokesman also said the different timing of the MidAutumn Festival, which fell in late September this year but early September last year, pushed back some sales and added weakness to the performance in August.

Sales of Chinese drugs and herbs recorded the biggest drop of 17.4 per cent among the various sectors.

Apparel and department store sales suffered further retreats of 13.5 per cent and 8.6 per cent respectively, after dropping 13.1 per cent and 7.3 per cent in July. The value of jewellery, watches and clocks and valuable gifts dropped for an eleventh month, with a decline of 8.8 per cent in August.

Bank of Communications economist and strategist Kelvin Lau Gin-yip said the continued fall in retail sales was expected, and warned that the worst was yet to come.

“It is just the beginning,” Lau said.

“The tourism downturn results in downsizing for the retail sector, which further dents local consumer sentiment. This is reflected in the decline in apparel and department store sales.”

Lau also said the near-term outlook for retail sales remained subject to uncertainties, and he could not see any prospect for recovery in the short run because of the strong US dollar to which the local currency is pegged.

However, there was some positive news. Sales of miscellaneous consumer durable goods surged 50.2 per cent in August. No explanation was given.

Commerce minister Greg So Kam-leung said yesterday that the spending pattern of tourists, especially mainlanders, had changed.

He added that the government noted weakening Asian currencies had prompted tourists to visit alternative destinations, and economic uncertainties had dented tourist sentiment, which had led to slumping retail sales. He said the government would closely monitor the situation and consider possible strategies to help tourism.