HK’s May retail sales record slowest progression since 2009
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The city’s retail sales growth eased notably to 8.8 percent in May — the slowest pace since 2009 — from 11.4 percent in the previous month. Economists expect both local and inbound expenditure to further slowdown for the rest of the year given that growth momentum has topped out.
The total retail sales value expanded to HK$36.0 billion last month, compared with a revised estimate of HK$35.7 billion in April, the Census and Statistics Department said on its website on Tuesday.
Compared with the median 9.4 percent estimate in a Bloomberg News survey of seven economists, the May figures were the smallest gain since September 2009, excluding seasonal distortions in the first two months of the year due to the Chinese New Year holidays.
Stripping out the inflationary effect, retail sales by volume jumped 5.8 percent in May from a year ago, compared with the 7.6 percent registered a month earlier.
Despite the difficult external environment, the city’s retail sales recorded a solid, albeit slower, growth last month, thanks to the fairly resilient local consumption demand and tourist spending, a government spokesman commented on the figures.
“While the job market conditions and inbound tourism would continue to render some support to the retail business, the rather adverse external environment amid the European debt crisis could weigh on consumer sentiment down the road,” the spokesman added.
Kevin Lai, economist from Daiwa Securities Group, expects the city’s retail growth to further cool off in the following months, given that the city is de facto on the verge of recession and its ongoing inflation hike will further reduce people’s purchasing desire.
On the other hand, when the inbound tourist expenditure growth continuously shrinks, and Hong Kong’s neighboring provinces, particularly Guangdong, are experiencing notable economic slowdown, Hong Kong’s retail sales for the whole year is likely to achieve only a single-digit growth, said Lai.
For the first five months of 2012, retail sales grew by an overall 13.5 percent from the same period last year, government data showed. In 2011, the sales expanded as much as 24.8 percent from the previous year due to strong local and tourist spending.
A Hang Seng Bank research note released in June expected the retail sales growth to ease at 14 percent this year as consumer spending in Hong Kong has showed signs of cooling after exceptionally strong growth in 2010 and 2011.
“The slowdown in spending growth reflects the cautiousness of local consumers on uncertain economic outlook and wealth losses in the asset markets. Weaker consumer confidence could put constraints on consumption in the quarters ahead,” wrote economists Ryan Lam and Joanne Yim from Hang Seng Bank in their notes.
