Hong Kong: Retail sales contract for fourth consecutive month in May
July 2, 2019
Retail sales by volume fell 1.7% year-on-year in May, which was however an improvement from the 5.0% contraction logged in April. The print was driven by lower supermarket sales, as well as a sharp decline in sales of fuels and consumer durable goods. Sales of luxury goods as well as food, alcohol and tobacco (excluding supermarkets), and clothing and footwear also declined, albeit at a more modest pace. On the flipside, department store sales and sales of other consumer goods rebounded from the contraction logged in April.
On a seasonally-adjusted, three-month-moving-average basis, retail sales volume in the March–May period rose 0.5% from the preceding three-month period ending in February, down from the 0.9% increase recorded in the February–April period. Overall, the annual average variation in retail sales volume continued to fall, from 2.8% in the 12 months up to April to just 1.7% in the period ending in May. Looking ahead, the softening in private spending observed since the first quarter is likely to persist beyond Q2 due largely to a sustained slowdown in the mainland, and the ongoing effects of the U.S.-China trade war, which is still largely unresolved despite the rekindling of bilateral talks since the G20 meeting on 28-29 June.
Commenting on the reading, a government spokesperson noted that “the outlook for retail sales will likely be clouded by the still-cautious consumption sentiment amid an uncertain global economic environment. Nevertheless, the sustained expansion in inbound tourism and the largely stable local labour market should continue to provide some support.”
Author: Joffrey Simonet, Economist