Gloom deepens as retail sales figures slump

PUBLISHED : Wednesday, 07 November, 2001, 12:00am
UPDATED : Wednesday, 07 November, 2001, 12:00am

Retail sales slumped heavily in September according to government figures released yesterday, providing further evidence of deterioration in Hong Kong's economy.

Sales were down 4.4 per cent year-on-year by value and 1.7 per cent by volume, as growing unemployment took its toll on consumer spending.

Luxury goods and big-ticket items were the hardest hit, with motor vehicles and parts slumping 13.4 per cent by volume over the same period last year.

In the three months to September, the jobless total rose to 5.3 per cent, a figure analysts see rising sharply again before the end of this year.

The Government said the figures also reflected the steep drop-off in the number of tourists following the September 11 terrorist attacks in the United States.

The policy-setting US Federal Reserve Open Markets Committee was expected to announce another easing of interest rates last night with analysts expecting a 50 basis point cut to two per cent.

Interest rates have already been slashed by four percentage points since the beginning of the year in nine separate cuts as the Federal Reserve moves to keep the US out of recession.

US unemployment figures jumped half a percentage point to 5.4 per cent in October - the most jobs lost in a single month since May 1980 - while third-quarter US gross domestic product fell at an annualised rate of 0.4 per cent, its first contraction in eight years.

With the figures out after the market's close, Hong Kong stocks traded quietly ahead of the US interest rate decision, with some investors looking to take profits from recent gains.

Although the Hang Seng slipped 0.72 per cent to 10,356.05, the market was still 15.91 per cent up on its September 21 trough, as investors looked to an expected recovery in the second half of next year.