Retail sales soar to $15b in February

A $15 billion shopping spree during February boosted retail sales by 22.7 per cent in value and 16.2 per cent in volume compared with the same month last year, the Government announced yesterday.

During the first two months of the year, the volume of sales increased by about 12.4 per cent, or more than twice the average of the previous four years.

Consumer confidence was boosted by stock market gains, soaring property prices and fat end-of-year bonuses.

Sales were also helped by steady growth in tourism and increased profits from trading in China seeping through to retail spending.

But economists did not expect the retail boom to be sustained and predicted lower growth in coming months.

According to the Census and Statistics Department, total retail sales during February were $15.23 billion, boosting total sales in the first two months by 18.4 per cent in value, after allowing for inflation, and 12.4 per cent in volume compared with the first two months of last year.

Top sellers were clothing and footwear, with sales increasing by 32.8 per cent in value and 23.6 per cent in volume.

Jewellery and watch sales rose by 27.3 per cent in value and 14.1 per cent in volume, while sales of consumer durables other than cars and car parts rose by 25 per cent in value and 22.8 per cent in volume.

Shopping in the lunar new year helped increase supermarket sales by 17.7 per cent in value and 11.2 per cent in volume and department store sales by 10.2 per cent in value and 3.9 per cent in volume.

However, car and car-part sales declined by 4.4 per cent in volume, although they did increase in value by 3.6 per cent.

Analysts believed increased licence fees and rising costs of running a car were responsible for the decline.

Commenting on the general increases, Hongkong Bank economic adviser Jim Wong said: ''We are comparing the growth to a low base in 1993, but on the surface we are looking at quite strong growth.'' He said confidence was boosted by high annual bonuses in the service sector and a steady growth in high-spending tourists seeking duty-free bargains.

In the first two months of the year tourism grew by 7.6 per cent compared to 7.1 per cent in December and 6.3 per cent in November.

However, in the first quarter last year growth in tourism was about 12.6 per cent.

Mr Wong said: ''The economy continues to look quite steady even though the stock market is not performing well. We have had a slowdown in the economy and there may be a lag in the impact on spending.'' Mr Wong expected growth to slow to about 10 per cent in March and to average about eight or nine per cent for the year.

S G Warburg Securities (Far East) chief regional economist Enzio von Pfeil said the sales performance discounted claims that the territory's economic outlook was poor.

According to the Political and Economic Risk Consultancy, Hong Kong companies are under threat with an expected squeeze in the second half of this year as a result of rising interest rates and the effect of soaring property prices.

Mr von Pfeil said: ''We are starting to see straws in the wind of economic recovery. It would appear that this is a result of more consumption in the territory. It is nothing special but there is nothing to say that sales are slowing down.

''I think that Chinese exports will continue to barrel along, which will put more cash into pockets in Hong Kong.

''We are not dealing in fireworks, but we are of the view that it is looking alright. Not maximum bullish, but not maximum bearish either,'' he said.

HSBC Asset Management senior economist Connie Leung believed high property prices and falls in the stock market would prompt a moderate decline in consumption later in the year.

Miss Leung said: ''In these figures we are seeing the rise in the stock market last year and some of the gains made by manufacturers in China during the previous two years being repatriated back to Hong Kong and spent.

''Towards the end of this year, the retail figures could possibly ease modestly because property is very expensive and if people are spending most of their disposable income on mortgages they will have less to spend on disposable items.

''In addition, market capitalisations in the stock market have fallen, meaning lower profits,'' she said. This could definitely affect consumers' intentions.''