October retail sales growth slows as consumers think twice
Retail sales growth in October shrank the most since January last year as consumers reined in their spending amid the economic downturn and uncertain job market, government data shows.
By value, sales totalled about HK$20.8 billion, up by a marginal 0.3 per cent year on year. By volume, sales fell by 4.3 per cent, the Census and Statistics Department said. In September, retail sales rose 7 per cent in value and 1.9 per cent by volume.
In January last year, sales fell 1.5 per cent in value and 4.9 per cent in volume.
A government spokesman said retail sales would probably continue to suffer.
'Retail sales weakened considerably further in October, as the adverse impacts of the global financial tsunami on consumer spending increasingly set in,' the spokesman said. The sluggish performance of inbound tourism in that month also acted as a 'drag', he said.
'Looking ahead, the negative wealth effect arising from the asset market corrections, as well as worsening income and job prospects, will continue to weigh heavily on consumer spending. The business conditions for the retail trade are likely to remain difficult in coming months.'
Sales of more expensive items suffered the most, with falling household wealth forcing many consumers to think twice about any significant spending. By volume, car sales dropped 23.9 per cent, followed by sales of jewellery, watches and clocks - down 10.4 per cent - footwear, which dropped by 8.7 per cent, and department store products, which fell 5.9 per cent.
Increased sales were recorded for electrical goods, up 6 per cent, while furniture and fixture sales rose by 4 per cent.
Caroline Mak Sui-king, chairwoman of the Hong Kong Retail Management Association, said retailers were expected to come under increasing pressure in the second quarter of next year, traditionally a quieter sales period. Landlords also appeared to be holding firm on retail rents, which accounted for a significant portion of overheads, she said.
Ms Mak said feedback from retailers gave no indication that year-end bonuses would be scrapped this year, although much would depend on the performance of Christmas sales.
She said many department stores expected flat or declining sales growth this month, while retailers would resort to aggressive discounting to bring in business.