Mainlanders kept a tight hold on their purse strings in May, putting a pinch on the fast growth of Hong Kong's retail sales.
The Census and Statistics Department said yesterday that the total retail value in May was an estimated HK$36 billion, up just 8.8 per cent from a year earlier, and the weakest month-on-month expansion in nearly three years.
'We have not seen such low growth since September 2009, excluding the impact of Chinese new years,' Hong Kong Retail Management Association chairwoman Caroline Mak Sui-king said. 'It's a warning that the local retailing industry has been contracting.'
Government figures showed that in the first five months of this year, total local retail sales rose 13.5 per cent compared with a robust 24.9 per cent a year earlier.
Mak said the key reasons for the slowdown were lower spending by mainland visitors and sluggish demand from Hong Kong consumers.
In May, sales of jewellery, watches, clocks and high-end gifts grew just 3.1 per cent, down from 15.1 per cent growth in April. Growth in sales of optical products, medicine and cosmetics also fell in May from a year earlier.
Sales of clothing, footwear and related products rose just 5 per cent in May, dragging down the January-to-May growth to 11.4 per cent - well below last year's 28 per cent increase.
'These figures are in line with the calculations by our members who said mainland tourists were apparently spending less in their shops,' Mak said.
Some market segments driven by local demand also softened. Furniture and fixtures remained almost flat in May, following sales declines in March and April. Sales of Chinese medicines and herbs contracted 6.6 per cent during the month.
Electrical goods and photographic equipment outperformed other segments, rising 14.4 per cent in May to make for a 37.5 per cent increase since January. That compares with 31.6 per cent growth last year. Cars and vehicle parts jumped 43.9 per cent in May, but off a low base last year. The sector grew 5.9 per cent for the five months to May.
Mak expected consumer demand to remain weak, given the European debt crisis and the slower-than-expected recovery of the US economy.
She expected total sales growth for the second quarter to be between 10 to 12 per cent and the full-year figure would show about 12 per cent to 15 per cent growth.
A government spokesman said that while the job market conditions and inbound tourism would help prop the retail business, global uncertainties could weigh on consumer sentiment in the months ahead.