December surge by shoppers boosts yearly retail sales 7.3pc

Year-end growth of 11.5pc well above economists' prediction of 7.8pc for month

Retail sales grew 7.3 per cent in value last year compared to 2005 as spendthrift tourists and Christmas shoppers helped lift December sales by 11.5 per cent to HK$21.5 billion.

Economists had expected growth of only 7.8 per cent in December, a mild increase from the 7.4 per cent in November. The strong sales performance was just shy of the 11.6 per cent growth in January, the best month last year.

Year-on-year growth was 6.8 per cent in 2005.

A government spokesman attributed the year-end sales spurt mainly to rising wages, the general economic recovery, the surge in stock market prices and the arrival of more than 2.4 million visitors, almost 10 per cent up on a year ago.

'Going forward, the favourable macroeconomic environment and the upbeat consumer sentiment should continue to render support to retail business,' the spokesman said.

By volume, total sales last year rose 5.8 per cent, continuing the slide from 6.1 per cent in 2005. Sales growth in 2004 was 9.1 per cent. According to the Census and Statistics Department, the volume of sales for cars increased the most in December, jumping 40.5 per cent. This was followed by electrical goods, up 17.2 per cent, jewellery and watches, a rise of 13.3 per cent, and footwear and clothing accessories, a 12.6 per cent increase.

Department store goods also rose, up 8.7 per cent, while supermarket sales climbed 4.3 per cent. Consumer durable goods were flat, increasing a slight 0.8 per cent.

Li Kui-wai, a professor of economics and finance at City University, said many items bought in December tended to be tourist-related while the strong jump in car sales was probably due to the 'wealth effect' created by the surging stock market.

'This sales growth should continue into 2007 as there will be a lot of spending as a result of the 10th anniversary of the handover and the chief executive elections,' Dr Li said.

Growth this year might not be in double digits given the high base of comparison but Dr Li said he expected it to get close to 10 per cent.

'Barring any surprises, growth in 2007 should be quite high at around 8 per cent or 9 per cent,' Dr Li said.

Jiang Nam, a mainland traveller who was shopping in Causeway Bay yesterday, said Hong Kong was a shopping paradise.

'I come here often. The variety of goods is huge, the quality is very good and there are so many brand-name shops,' Mr Nam said.

His wife, Jiang Chen Linlin, said she also loved to shop in the city. 'I like the shopkeepers' attitude here. They treat their customers real nice and they all have very good knowledge about the goods.'

The couple who have their own manufacturing business in Zhuhai said they came to Hong Kong about twice a year.