Slumping retail sales figures for October have provided more gloom for Hong Kong's economy as falling prices failed to encourage consumers to buy more. Retail sales shed 3.7 per cent year on year in October by volume, which excludes price changes, compared with a 1.6 per cent drop in September. Falling prices meant retail sales by value slumped 6.1 per cent in October to HK$14.5 billion. Consumer prices fell 1.2 per cent in October compared with a year earlier. 'It's a pretty sad picture for retailers,' said Hong Kong General Chamber of Commerce chief economist Ian Perkin. Bank of East Asia chief economist Paul Tang Sai-on said: 'Things are getting worse and will worsen.' Rising unemployment continued to make consumers feel insecure in their jobs and reluctant to spend. 'This is consistent with the rising trend of the unemployment rate,' Mr Tang said. Sales of luxury goods declined the most in volume in October - 17.3 per cent - compared with a year ago. Sales of motor vehicles and parts fell 16.8 per cent, fuels by 13.5 per cent, footwear, allied products and other clothing accessories 11.4 per cent. Spending on luxury goods is usually the first to fall in an economic downturn as consumers cut back on non-essential items. Mr Tang projected the monthly retail sales figures could fall by double-digit percentages in value terms in the first half of next year. 'We will see the worst performance in the cycle in the first half,' he said. The latest data from the United States remains bleak. Worker productivity outside the farming sector rose at a 1.5 per cent annual rate in July, August and September, revised down from an estimate of 2.7 per cent growth. But the number of Americans filing new claims for unemployment cheques dropped slightly last week while the total number getting benefits took the biggest plunge in 18 years. The total number of laid-off workers getting unemployment benefits plunged by 349,000, the biggest one-week drop since January 1, 1983.