A shopper selecting shampoos in Causeway Bay. The city's retail sales growth slowed in July. Daniel J. Groshong / Bloomberg

Retail sector to remain weak for rest of the year, analysts warn

The city's retail July sales value tumbled drastically as the local retail sales market was weighed by the global economic slowdown and the decrease in mainland tourists' spending. Economic analysts cautioned that the local retail sales will remain weak for the rest of the year.

According to the figures released by the Census and Statistics Department (C&SD) on Thursday, total retail sales value in July increased by 3.8 percent over a year earlier to reach the provisionally estimated value of HK$36.5 billion. However, the July figure is significantly lower to the 11 percent hike registered in June.

Total retail sales volume in July just grew by 1.3 percent, significantly lower than the 8.5 percent recorded in June.

For the first seven months of 2012, total retail sales increased by 11.7 percent in value and 7.8 percent in volume over the same period a year earlier.

A Government spokesman noted that retail sales volume expanded only modestly in July over a year earlier. While the visitor arrivals' growth moderated in that month, local consumer sentiment appeared to have also turned more cautious in view of the deterioration in the external economic environment.

"Looking ahead, the still-favorable job conditions and further expansion of inbound tourism should remain generally supportive to the retail business. However, we need to stay alert to the notable downside risks on the external front, which will continue to cast a shadow over the economic outlook and hence may increasingly weigh on consumer sentiments down the road," the government spokesman added.

"We predict that the retail sales value for the whole of 2012 will be significantly lower than in 2011, as the global economic conditions remain fragile and the mainland tourists may still curtail their consumption expenditure," Bank of China (Hong Kong) Head of Economic and Policy Research Tse Kwok Leung told China Daily.

On a yearly basis, the sales volume of miscellaneous consumer durable goods increased the most, by 69.5 percent. This was followed by sales of electrical goods and photographic equipment (+10.1 percent in volume); motor vehicles and parts (+5.9 percent); commodities in supermarkets (+5.7 percent); footwear, allied products and other clothing accessories (+4.1 percent); and commodities in department stores (+1.0 percent).

On the other hand, the sales volume of furniture and fixtures decreased by 15.0 percent in July 2012 compared with a year earlier. This was followed by sales of food, alcoholic drinks and tobacco (-6.2 percent in volume percent); jewellery, watches and clocks, and valuable gifts (-3.1 percent); wearing apparel (-2.9 percent); miscellaneous consumer goods (-1.9 percent); and fuels (-1.9 percent).

Based on the seasonally adjusted series, the volume of total retail sales slightly decreased by 0.9 percent in the three months ending July 2012 compared with the preceding three-month period.

oswald@chinadailyhk.com

(HK Edition 08/31/2012 page2)