The Hong Kong retail sector continued its strong rebound in July, but economists warned it may not be sustained given recent consolidations in the stock and property markets. Retail sales grew 7 per cent in value to $20.3 billion and 1 per cent in volume against the corresponding period last year, driven by cars and consumer durables. Sales of clothing, footwear and department store sales were hit hard by rainy weather and a plunge in tourist arrivals after July 1, economists said. 'The figures are in line with expectation, which depicts a gradual recovery of the sector,' Hang Seng Bank manager of economic research Joanne Yim Oi-kwan said. Car sales jumped 17 per cent in value and volume and consumer durables rose 12 per cent in value and 11 per cent in volume, the two key factors behind the retail recovery since the start of the year. Sales of clothing and footwear rose by 4 per cent in value, but fell 5 per cent in volume while department store sales dropped 1 per cent in value and 8 per cent in volume. 'The wet July and falling number of visitors, mainly Japanese and mainland Chinese, played a major role for the lacklustre performance,' Ms Yim said. Compared with June, retail sales increased by 7 per cent in value and volume. Comparing the seven months to July against the corresponding period last year, retail sales rose by 8 per cent in value and 3 per cent in volume. Hongkong Bank economic adviser George Leung Siu-kay said retail growth was likely to taper off as spending would be weakened by volatile stock and property markets. 'I am dubious whether the sector can sustain its high growth rate, which I estimate to grow by a monthly rate of 1 per cent in volume in the last few months,' he said, adding the car sector would be the first to see slowdown in growth due to a larger base late last year.
