Retail sales figures down for seventh month in a row

Another gloomy Christmas is looming for Hong Kong's merchants as retail sales fell for the seventh consecutive month in September, with total receipts hitting a 10-year low.

'The latest figures indicate continued weakness in domestic consumer demand amid high unemployment and salary cuts,' said Denise Yam, an economist at Morgan Stanley.

'We do not expect to see a robust rebound in retail sales for months to come.'

The value of retail sales fell 4.6 per cent to $13.7 billion in September from $14.4 billion in the same month last year, the sharpest year-on-year decline since June. By volume, sales fell 3.2 per cent in September from last year.

Retail sales, which have now fallen in 14 of the past 15 months, account for 30 per cent of private consumption, which makes up 60 per cent of the gross domestic product.

The September figures mean sales in the first nine months of the year have dropped 4.6 per cent in value and 3.1 per cent in volume from the same period last year.

Remarkably, sales of cars and car parts rose by 33.3 per cent, mostly due to 'large price cuts and attractive promotion packages by the vendors', the government said.

Fuel sales led the year-on-year decline, falling 18.4 per cent in volume, followed by furniture sales, which dropped 15.5 per cent by volume.

The upmarket segment of jewellery, watches, clocks and luxury gift sales fell 15.4 per cent.

'Local consumer demand was still sluggish,' the government said. 'Sales performance among different retail outlets continued to be mixed.'

Ian Perkin, chief economist at the Hong Kong General Chamber of Commerce, said: 'People are not all that confident with what's happening domestically, whether it's economic or political, or good governance. They're just uncertain about the future.

'Times must be very difficult for retailers. They can't sell unless they price down. You see it in all the shops all the time.'

However, Ben Simpfendorfer, an economist at JP Morgan Chase, believes some local indicators are picking up.

He said the retail numbers were 'considerably weaker than we expected [but] in our mind the fundamentals are there for strong consumption growth'.

'You do see real wage growth and employment growth,' he said, adding a world economic recovery could help retail sales.

As in previous months, a record high number of tourist arrivals, particularly from the mainland, was not enough to turn around declining sales.

Hong Kong had more than 1.3 million visitors in September, up 30 per cent from the same month last year and the highest monthly increase this year.