Hong Kong: Retail sales year-on-year post largest decline on record in August
October 2, 2019
Retail sales volume plunged 25.3% year-on-year in August, a significant deterioration from July’s revised 13.1% contraction (previously reported: -13.0% year-on-year). August’s print was battered by the effects of mass protests and marked the sharpest annual decline in retail sales since current records began in 1981.
The print was driven by a broad-based contraction in sales across all types of retail outlets, with particularly sharp decreases for luxury goods such as jewelry, watches and clocks, in addition to clothing and footwear.
On a seasonally-adjusted, three-month moving average basis, retail sales volume in the June-August period fell 13.9% from the preceding three-month period ending in May, which posted a 5.5% fall in the May-July period. Overall, the annual average variation in retail sales volume continued to dip, from a 1.3% decline in the 12 months up to July to a 4.1% fall in the period ending August. Moreover, tourist arrivals from mainland China were down roughly 42% year-on-year in August, compounding the woes of luxury good sales—which depend heavily on purchases from visitors.
Going forward, continued civil unrest in September and October will continue to keep foot traffic at major shopping centers and inbound tourism downbeat, and in turn batter private consumption.
Commenting on how protests are affecting retail spending and the economy, analysts at Goldman Sachs, noted:
“The ongoing street protests since June have continued to affect business and leisure travel and spending. We recently cut our forecast for HK real GDP growth in Q3 to -2% yoy, and our 2019 full year GDP growth forecast is now at -0.6% yoy.”
Author: Steven Burke, Economist