Challenges ahead as data disappoints

The city's retail sector looks set for challenging times, with sales growth in the traditionally busy summer shopping season lower than expected.

Retail sales in August rose just 8.1 per cent year on year in value terms, the slowest for any month this year and down from 9.3 per cent in July and 13.4 per cent for the first eight months of the year.

Fuel sales, which reflect the level of economic activity in a city, fell 4.6 per cent by value and 2.5 per cent by volume, despite the summer school holidays and an increasing number of mainland tourists.

"The figures for July and August were disappointing, especially when the base of comparison was quite low last year," said Caroline Mak Shui-king, chairwoman of the Hong Kong Retail Management Association. "The decline in fuel sales signalled reduced traffic and logistics activities, which in turn reflected weakened demand for commodities."

While Mak stuck with a retail sales growth forecast of 12 to 13 per cent for the whole year, persistently sluggish local consumption, slowing sales of milk formula following the capping of the number of cans allowed to be carried across the border and fluctuations in the sales of new smartphones may all take a toll on the sector's performance in the next three months.

Car sales declined for the fourth consecutive month, while alcohol and tobacco sales fell 21.3 per cent in the first eight months of the year, although the gap has narrowed more recently. Sales of furniture and fixtures edged down by a further 1.9 per cent in August amid sluggish property transactions.