Hong Kong Retail February 2019

Hong Kong

Hong Kong: Retail sales free fall in February on seasonal effect and economic slowdown

April 1, 2019

Retail sales by volume fell 10.4% in annual terms in February, markedly contrasting January’s 6.9% growth. The sharp tumble was largely due to holiday purchases related to the Lunar New Year, which fell on 5 February this year instead of on 16 February last year—and thus distorted retail sales statistics for January and February as consumers front-loaded their holiday purchases in January this year compared to the last. Thus, evaluating the January-February figures together yields a more accurate picture of private spending dynamics, with retail sales volumes declining 1.8% year-on-year in the period, after a meek 0.1% growth logged in December.

Looking at the details, the February print was led by a fall in sales of items associated with holiday purchases, such as food, alcohol and tobacco (excluding supermarket sales); consumer durable goods; luxury products; and clothing and footwear.

On a seasonally-adjusted, three-month-moving-average basis, retail sales volume in the December–February period fell 1.2% from the preceding three-month period ending in November. The decline was nonetheless softer than the 2.1% fall recorded in the November–January period.

Overall, the annual average variation in retail sales volume steeply fell from 8.3% in the 12 months up to January to just 5.1% in the period ending in February. Turning to the short-term prospects, the softer private spending observed in Q4 2018 and so far in Q1 should continue to be weighed by slowing growth in mainland China and the persistent drag of the trade spat with the United States. However, timely progress on a U.S.-China trade deal could be a key factor brightening the outlook.

Commenting on the February reading, a government spokesperson noted that:

“The weak performance of retail sales in recent months reflected that consumption sentiment remained cautious amid various external uncertainties. […] The near-term outlook for retail sales should continue to be affected by moderating global economic growth and various external uncertainties, but the full employment situation and the sustained growth in inbound tourism should provide some support.”

FocusEconomics Consensus Forecast panelists expect retail sales to increase 2.4% in 2019, which is up 0.5 percentage points from last month’s forecast. For 2020, the panel sees retail sales growing 3.1%.


Author:, Economist

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