The grim performance of Hong Kong's retail sales continued in June, producing the worst first-half showing since 2009.
The government's monthly statistics released yesterday showed that sales revenue declined in June for the fifth month in a row, dragged down by a continued plunge in demand for luxury goods.
An economist said he expected the woes in the sector to continue amid President Xi Jinping's anti-graft drive on the mainland.
Total retail sales in June decreased by 6.9 per cent year on year to HK$37.1 billion. That was a larger decline than in May, when sales dropped 3.9 per cent from a year ago.
The value of sales of jewellery, timepieces and valuable gifts decreased 28.2 per cent in June from the same period last year. Sales of commodities in department stores dropped 3.6 per cent from a year ago.
Retail sales experienced their worst month in April when sales of luxury goods dropped almost 40 per cent year on year, a fall attritubet to sluggish spending by mainlanders.
Tim Condon, ING Asia chief economist for Asia, said he expected the collapse of luxury sales to continue in view of Xi's anti-corruption drive and the announcement this week that former security chief Zhou Yongkang was under investigation for corruption.
Condon said the slide would not go on indefinitely, but that the market could not be expected to stabilise before the end of this year.
For the first six months as a whole, retail sales decreased 1.3 per cent - the worst first-half performance since 2009, during the global financial crisis.
The Hong Kong Retail Management Association attributed the "below expectation" sales to unstable weather, sluggish growth in mainland visits and spending, and the World Cup in Brazil distracting people from their shopping.
Bank of East Asia chief economist Paul Tang Sai-on said the drop in department store sales on top of jewellery sales indicated a general weakening in the purchasing power of tourists.
Industry groups and analysts maintain a cautious outlook.
The retail association predicted sales remaining soft in July and single-digit growth for the summer.
Tang expected a decrease or single-digit growth for July and August.