Hong Kong: Retail sales growth remains robust in March
Retail sales volumes rose a robust 10.0% in annual terms in March, down from a stellar 28.2% expansion in February, which had largely been due to the seasonal effects of the Lunar New Year holiday—the Lunar New Year was in February this year as opposed to January in the previous year. Despite the deceleration, strong consumer spending continues to be buoyed by favorable labor market dynamics and a growing tourism sector, and the March print indicates a solid Q1 performance for the retail sector.
The March reading came on the back of continued strong retail sales across a spectrum of outlets, with notable expansions in annual sales of department store products and other consumer goods. Sales growth of luxury items—typically tied to holiday spending and inbound tourism from mainland China—also remained very strong. On the other hand, growth in sales of consumer durable goods such as automobiles and washing machines sharply moderated from the double-digit figures recorded every month since last November. Additionally, supermarket sales; sales of fuels; and sales of food, alcoholic drinks and tobacco were largely flat year-on-year in March.
On a seasonally-adjusted, three-month moving average basis, retail sales in the period ending in March increased 6.2% from the preceding three-month period ending in December. The print marked an acceleration from the 3.7% increase seen in the three-month period ending in February. Meanwhile, annual average variation in retail sales volumes hit an almost four-year high of 5.8% in March, following the 5.1% figure logged in February.
A government spokesperson noted that:
“Looking ahead, the outlook for retail sales should stay sanguine in the near term, given the positive employment and earnings prospects, and the buoyant inbound tourism. The Government will monitor closely the situation, in particular how the evolving external uncertainties will shape local consumption sentiment going forward.” This last remark likely referred to the ongoing trade dispute opposing China and the United States, which could negatively impact confidence were it to escalate in the coming months.