Hong Kong: Retail sales continue to contract in January
Retail sales by volume declined 23.0% year-on-year in January, sharper than December’s revised 21.1% plunge (previously reported: -21.0% year-on-year). Ongoing civil unrest and the coronavirus outbreak kept tourists at bay, and are the key factors driving the downturn in retail sales.
In January, tourist arrivals dropped 52.7% year-on-year, after declining 51.5% in December. Tourism is expected to remain depressed in the first quarter as the recent outbreak of the coronavirus serves another blow to Hong Kong’s frail tourism sector and visitors from Mainland China represent over 75% of all tourists to Hong Kong.
While falling sales were broad-based, the slightly stronger deterioration in sales volume was mainly driven by more pronounced falls in sales of food, alcoholic drinks and tobacco; clothing and footwear; and consumer durable goods.
On a seasonally-adjusted, three-month moving average basis, retail sales by volume in the November–January period dipped 2.5% from the preceding three-month period, softer than the 5.6% decline in October–December. Overall, the annual average variation in retail sales volume fell 15.0% in January after contacting 12.5% in December.
Looking ahead, protests are expected to keep activity in the retail and tourism sectors anemic, but the coronavirus outbreak will likely also exacerbate the downturns in retail sales and tourism and drag significantly on private consumption in the first quarter.