Hong Kong retailers are heading for turbulence as the year-on-year growth in retail sales unexpectedly weakened to 15 per cent in January from 23.5 per cent in December.
January's sales, estimated at HK$43.2 billion, came in below the forecast for the month from the Hong Kong Retail Management Association, and the decline comes as retailers rental costs and payrolls are on the rise.
The trade body expected sales for the month to be more than 20 per cent up on the same month last year, helped by higher spending in the lead-up to Lunar New Year and the government scheme under which HK$6,000 will be given to each holder of a valid Permanent Identity Card aged 18 or above on March 31.
The disappointing sales figures were not confined to jewellers and watch retailers, who suffered their eighth successive monthly drop in sales growth in January. Sales growth was also down in the furniture, automobile and footwear sectors.
The softening in the property market as well as lay-offs in the banking and financial sectors over the past few months accounted for slower sales of furniture and cars, said Caroline Mak Shui-king, chairman of the Retail Management Association.
'To my surprise, footwear sales did not increase but dropped in the lead-up to CNY, as Chinese are not supposed to buy shoes after then,' Mak said.
In a poll conducted by the retail trade body of 42 retail companies responsible for operating 2,200 shops in the city, 60 per cent of respondents said they expected growth in sales this year, while 28 per cent anticipated a drop in sales.