Hong Kong year-on-year retail sales show 4.1 per cent drop for May
Year-on-year consumer spending dropped by 4.1pc in May amid ongoing effects of poor jewellery sales and discounting by retailers
Hong Kong's retail sales fell 4.1 per cent year on year in May, the third straight month of shrinking consumer spending exclusing the Lunar New Year month of Feburary, as the impact of poor jewellery sales persisted.
Still, the government figures showed the fall in retail sales was less severe than April's 9.8 per cent slump - the sharpest drop in five years.
Jewellery sales remained in freefall, plunging 24.5 per cent from a year earlier in May. The sector accounts for almost a quarter of the city's retail sales.
In the first five months, retail sales fell 0.2 per cent compared with the same period last year.
Although the high base from last year's gold buying spree was one reason for the dismal May figure, Hong Kong Retail Management Association chairwoman Caroline Mak Sui-king said not all of it could be blamed on that.
"May did better than I thought because I was expecting a drop of more than 4 to 5 per cent," she said. "The high base effect is a factor but jewellery sales had already turned soft in the second half of 2012.
"The transaction value grew smaller but because the volume was there, it wasn't that obvious. If you look at 2013, it wasn't actually that great."
Sarah Quinlan, head of market insights for Mastercard, which runs its own spending index, said the company's numbers indicate a drop of 4.8 per cent in May. "If you look back, June 2013 was a peak. [This time] even though you had the Labour Day golden week in May, it wasn't even close enough to bring it up to a positive. People were discounting to get the traffic," she said.
She said the impact of the jewellery downturn was being felt across the market as the sector made up 23 per cent of retail sales.
The outlook for June is mixed, with the majority of HKRMA members seeing slight growth while jewellers are expecting the double-digit drops to continue.
"The only unknown factor is Occupy Central," Mak said. "Of course we're worried … Hong Kong is a free city and everybody has the right to expression, but we hope people are reasonable and understand that they may be affecting people's businesses."
Retailers got a taste of what Occupy Central might look like with the July 1 march, which saw some luxury stores along Chater Road and Queen's Road Central close. "There is a July 1 march every year so I don't think the impact of the march will be too big, but if all of Central is occupied, it will definitely impact," Mak said.
She added that the storm was unlikely to pass any time soon, "especially in July and August, all the different attitudes and actions towards Occupy Central will affect Hong Kong consumers' spending enthusiasm and also mainland shoppers' enthusiasm for Hong Kong".