EXCESSIVE pessimism over the drop in retail sales figures during the past two years is unwarranted, a report by Standard Chartered Bank says. The report, Hong Kong Economic Indicators , attempts to debunk suggestions that the slowdown in consumption is linked to fears about the Chinese takeover next year. It says such a link cannot be ruled out, but that the slowdown is more a cyclical phenomenon driven by a slowdown in income growth. On the retail sales front, it says weak figures in 1994 and 1995 were caused largely by a significant drop in car sales and to a lesser extent consumer durables. Sales of consumer goods and consumption of services have actually continued to grow during that time, it says. The report says the slump in car and consumer durables sales should be seen against very rapid growth between 1991 and 1994. After a buying spree for those commodities during the period, it says, fewer people have been in the market since. It also attributes the slowdown in consumer goods sales to the decrease in income growth. 'Furthermore, what is not evident in retail sales statistics is that the consumption of services has grown rapidly in recent years,' the report says. Spending on telecoms services, overseas travel, housing and utilities, recreation and entertainment and medical and health care, have all grown rapidly.