Hong Kong June retail sales see double digit growth for 5th month

[HONG KONG] Hong Kong's retail sales saw double-digit growth for a fifth straight month in June fuelled by strong consumer sentiment amid a tight labour market and a solid growth in visitors arrivals, in particular from the mainland.

Retail sales rose 12 per cent from a year earlier in value terms to HK$37.8 billion (S$6.6 billion) in June, government data showed on Wednesday, slightly slower than 12.9 per cent in May and its sixteenth month of expansion. In volume terms, retail sales grew 9.8 per cent.

For the first six months of 2018, total retail sales rose 13.4 per cent in value terms and 11.8 per cent in volume terms.

"Looking ahead, favourable job and income conditions and buoyant inbound tourism should continue to provide support to the retail sector in the near term," the Census and Statistics Department said in a statement.

"Yet, we need to closely monitor how the heightened external uncertainties might affect consumption sentiment going forward," it added.

Hong Kong's retail sales are thriving at a time when financial markets are being buffeted by global trade tensions and rising borrowing costs. China's economy has also slowed in the second quarter with weaker-than-expected industrial output in June and an in-line with expectation growth in retail sales.

China cut import tariffs on nearly 1,500 consumer products for most favoured nations, ranging from cosmetics to home appliances from July 1, in a bid to boost imports as part of efforts to open up the economy. 

June tourist arrivals rose 12.8 per cent from a year earlier to 4.74 million, according to the Hong Kong Tourism Board, the biggest monthly gain in percentage term since February. Mainland visitors rose 17.3 per cent, accounting for 76.6 per cent of the total.

For the first six months, total tourist arrivals rose 10.1 per cent, while mainland visitor numbers climbed 13.4 per cent. 

Analysts are positive on Hong Kong's retail outlook amid favourable economic conditions and a buoyant tourism sector. PwC has revised the city's retail sales growth to 8 per cent in 2018, up from 4-6 per cent growth.

Sales of jewellery, watches, clocks and valuable gifts, jumped 27.8 per cent in June, medicines and cosmetics rose 18.3 per cent, and department store sales climbed 15 per cent.

Chow Tai Fook Jewellery Group Ltd, China's largest jeweller by market value, saw its April-June quarter same-store sales in Hong Kong and Macau growing 26 per cent year on year amid strong local consumer spending and reviving mainland visitation.

Macau has also benefited from increasing mainland visitors with gambling revenue growing 10 per cent in July.

Cosmetic chain operator Sa Sa saw its sales growth in April and May in line with expectation, but slowed down in June with consumer sentiment hit by Chinese yuan fluctuations amid uncertainties about Sino-US trade war.

REUTERS