Hong Kong: Retail sales plunge at the sharpest rate on record in February
Retail sales by volume declined 46.7% year-on-year in February, sharper than January’s revised 23.1% plunge (previously reported: -23.0% year-on-year). Containment measures, depressed consumer confidence and virtually no tourist arrivals were chiefly behind February’s downturn. Moreover, due to the timing of the Lunar New year, retail sales data tends to show significantly more volatility in the first two months of the year and should be interpreted together. In January-February retail sales by volume dropped 33.9% compared to the same period last year.
In February, tourist arrivals dropped 96.4% year-on-year—amounting to a mere 200,000 visitors—after declining 52.7% in January. Over the January-February period tourist arrivals were down 72.5%. The Hong Kong Tourism Board (HKTB), expects visitor arrivals to near zero in the coming months, after the government announced a ban in late March on non-residents entering Hong Kong.
The fall in sales were broad-based, but the deteriorations were noticeably more concentrated in non-essential goods. Department stores, jewelry and watches, and clothing and footwear were among the retail sectors hit the hardest in March.
On a seasonally-adjusted, three-month moving average basis, retail sales by volume in the December–February period dipped 11.7% from the preceding three-month period, softer than the 2.5% decline in November–January. Overall, the annual average variation in retail sales volume fell 18.0% in February from the 15.0% contraction in January.
Looking ahead, the retail sector is expected to suffer notably due to Covid-19 weighing on economic activity and tourism. That being said, a low-base effect due to protests which began around this time last year might muddle the data for the rest of the year. Nevertheless, the sector will likely only start to recover once the virus subsides, the government re-opens its borders and confidence is restored among citizens and travelers alike.