Hong Kong: Retail sales freefall in June
August 1, 2019
Retail sales by volume fell 7.6% year-on-year in June, a marked worsening from the 1.7% contraction logged in May. Excluding the February 2019 print, which was due to seasonal effects related to the Lunar New Year, June’s reading represented the sharpest decline in retail sales in nearly three years.
The print was driven by a broad-based contraction in sales across all product categories aside from fuel and furniture, with particularly sharp declines for many consumer durable goods and luxury goods, suggesting that consumers were cautious about their spending and avoided making big-ticket purchases amid a rapidly deteriorating economic backdrop and civil unrest.
On a seasonally-adjusted, three-month-moving-average basis, retail sales volume in the April–June period fell 2.8% from the preceding three-month period ending in March, down from the 0.5% increase recorded in the March–May period. Overall, the annual average variation in retail sales volume continued to fall sharply, from growth of 1.7% in the 12 months up to May to growth of just 0.3% in the period ending in June. Looking ahead, the feebleness of private spending observed since the first quarter is likely to persist—and possibly even worsen—beyond Q2 as a prolonged slowdown in the mainland, compounded by the effects of the trade war between China and the U.S—which just escalated again on 1 August as President Trump announced a new round of tariffs on all previously unaffected Chinese imports—weighs heavily on the economic picture.
Commenting on the reading, a government spokesperson noted that “the near-term performance of retail sales will likely remain subdued, as the weakened global and local economic outlook and other headwinds continue to weigh on consumption sentiment. The recent mass demonstrations, if continued, would also dent the retail business further.”
Author: Joffrey Simonet, Economist