Shoppers walk past stalls at the Ladies Market in Hong Kong. A government spokesman said the stellar sales growth reflect the prevailing upbeat local consumer sentiment helped by an improving job market. Mike Clarke / AFP

HK$37.6b sales receive shot from more visitors

Hong Kong's retail sales soared 28.2 percent year-on-year (YoY) in January, boosted by an increase in visitors and a decline in the jobless rate as well as a festival spending spree, figures released by the government on Thursday show.

The total value of retail sales amounted to HK$37.6 billion in January, up 28.2 percent from a year earlier. After taking out the inflationary effect, the volume of retail sales jumped 23.6 percent YoY in January.

The buoyant growth is in part the result of a "seasonal factor", Hang Seng Bank Senior Economist Irina Fan said. By "seasonal factor", she referred to the earlier arrival of the Chinese New Year this year compared with last year when it fell on Feb 14. This year, it arrived earlier on Feb 3.

Meanwhile, the spending spree usually seen immediately before the festival should have played its part in driving up retail sales growth in January, particularly towards the end of the month, according to Fan.

"The timing of the lunar new year, which fell in early February this year but in mid-February last year, could be a contributing factor to more robust growth in the latter part of January 2011," a government spokesman said in a statement after the release of the January figures.

The sales figures may very well "drop suddenly" for February and beyond as the effects of holiday spending fade out, Fan noted. However, "it doesn't mean a change of the trend," she added.

Among other things, the significant growth seen in the sales of durable goods underpinned the "strong purchasing power", said Fan. Sales volume of durable goods surged 86 percent in January from a year ago.

Above all, the stellar sales growth reflects a "prevailing upbeat local consumer sentiment", helped by an improving job market, according to the government spokesman.

The city's jobless rate fell to its lowest level in more than two years at 3.8 percent during the three months to January.

The improving job market, coupled with robust inbound tourism, will "continue to bode well for the retail business", said the spokesman.

Paul Tang, chief economist at Bank of East of Asia, expects the growth momentum to continue throughout the first half of this year.

"We expect to see double-digit growth for the first half," he said. For the second half, however, the growth will likely start to moderate, he added.

Still, the two economists agreed that the government's decision to hand out cash to citizens aged 18 and above will hold up the retail business in the near term. "This will boost consumer confidence," said Fan.

Approximately 3.6 million people visited Hong Kong in January, 21.5 percent more compared with the same period last year.

China Daily

(HK Edition 03/04/2011 page2)