Improving income and job conditions amid an entrenched economic recovery have helped stoke consumer confidence, which coupled with the growth in inbound tourism, boosted the city's retail sales by 15.6 percent in April from a year ago, the government said Tuesday.

Local residents and visitors together snapped up goods worth HK$25.1 billion in April, up from HK$ 24.8 billion a year earlier.

After netting out the effect of price changes over the same period, the volume of total retail sales increased by 12.4 percent in April compared with a year earlier.

"The latest growth figures are a bit lower than what we have forecast, but they are still pretty good," Irina Fan, a senior economist at Hang Seng Bank, told China Daily.

However, she noted a slowdown in growth in retail sales.

Retail sales in March were up 19.0 percent to HK$24.8 billion over a year ago, and up 17.3 percent in volume terms, the government said Tuesday.

Meanwhile, retail sales in the first four months increased by 18.0 percent in value, or 15.0 percent in volume, over the same period a year earlier.

"The decline in growth was mainly due to a higher comparable base in April last year," Paul Tang, chief economist of Bank of East Asia, told China Daily.

Retail sales dropped 13.9 percent year-on-year in February 2009 and 9.2 percent in March 2009, but fell only 5.4 percent in April the same year, causing significant differences in the comparable bases, he explained.

However, looking ahead to the prospect for the city' retail sales, both the government and the private-sector economists are a bit cautious.

"The recently increased level of uncertainty in the external environment, together with the consolidation in the asset markets, may temper somewhat the growth momentum of local consumer demand," a government spokesman said.

"The negative wealth effect could have an impact on consumption if the slump in the equity market continues," Hang Seng Bank's Fan said.

The de-leveraging process in Europe could also curb demand for Hong Kong's exports, which in turn could weaken economic growth in the city, she said, noting that the European market accounts for 13 percent of the city's total exports and 12 percent of the mainland's total exports.

"Consumer confidence depends very much on prospects for job and income," Fan explained.

Analyzed by broad type of retail outlets, sales of motor vehicles and parts increased the most, by 54.0 percent in volume terms, in April over the same period last year.

This was followed by sales of electrical goods and photographic equipment, up 26.1 percent; jewelry, watches and clocks, and valuable gifts, up 22.1 percent; footwear, allied products and other clothing accessories, up 14.6 percent; miscellaneous consumer durable goods, up 12.5 percent; commodities in department stores, up 9.9 percent; furniture and fixtures, up 9.8 percent; food, alcoholic drinks and tobacco, up 8.5 percent; and wearing apparel, up 8.4 percent.

China Daily

(HK Edition 06/02/2010 page3)