Hong Kong: Larger decrease in retail sales in November puts an end to short-lived recovery
January 3, 2017
The drop in retail sales in Hong Kong steepened to 5.6% year-on-year in November, after recording the smallest decline in 2016 in October (-2.7% yoy). This ended retailers’ hopes of a belated recovery in the retail sector, after readings for September and October had marked milder decreases. Retailers have seen 21 consecutive months of declines in sales amid dwindling volumes of tourist arrivals and a strengthening U.S. dollar—to which the Hong Kong dollar is pegged. A government spokesman indicated that the larger decrease in November was “conceivably dragged by the reduced tourist spending on some big-ticket items.” According to disaggregated data, sales of consumer durable goods, particularly electrical goods and motor vehicles, and luxury products suffered the most in November.
Despite November’s figure, smaller declines in the previous two months boosted seasonally-adjusted volumes of retail sales in the three-month period ending in November, which grew 4.7% compared to the three-month period ending in August. This was the highest reading in two years and notably above the 1.5% increase seen in the three-month period ending in October.
A government spokesman indicated that, “the performance of retail sales will depend on whether inbound tourism would improve and whether the various external uncertainties would affect local consumer sentiment.”
Author: David Ampudia, Economist