HK retail sales drop in March, ending 15-month growth streak

Hong Kong's retail sales for March fell, ending a 15-month growth streak, as local residents shifted spending across the border and rising costs heaped pressure on businesses.

The value of total sales in March sank 7 percent year-on-year to HK$31.2 billion (3.99 billion), according to data from the Census and Statistics Department released on Friday. The decline marks the first contraction since December 2022, when sales rose 1.2 percent from the previous year.

A government spokesperson said that the value of total retail sales fell in March, partly because of a high base of comparison for visitor spending and the Easter holidays.

Looking ahead, the spokesperson added that a further revival of inbound tourism and rising household income should support the retail sector, and that the special administrative region government's efforts to promote a mega event economy and boost sentiment should also help.

"Yet, the changing consumption patterns of visitors and residents may continue to pose challenges. The government will continue to monitor the situation," the spokesperson said.

In the first quarter of this year, retail sales value saw a 1.3 percent decline compared to the same period in 2023. However, on a seasonally adjusted quarter-to-quarter basis, sales edged up 0.3 percent.

Online sales, which accounted for 7.8 percent of total sales in March, dipped 4.7 percent year-on-year to HK$2.4 billion.

The sales value of medicines and cosmetics climbed 8.9 percent in March from the previous year.

In contrast, the sales value of jewelry, watches, and valuable gifts plummeted 17.7 percent year-on-year in March, while clothing sales declined 17.5 percent and sales of electrical goods and other unclassified durable consumer goods dropped 15.5 percent.

The provisional estimate of the volume of total retail sales fell 8.6 percent year-on-year in March.

Annie Tse Yau On-yee, chairwoman of the Hong Kong Retail Management Association, said the retail performance this April was weaker than in April 2023 due to the full Easter and Ching Ming Festival holidays taking place in April 2023.

Data from Hong Kong's Immigration Department showed that the city's residents made nearly 1.76 million outbound trips during the Easter holiday from March 29 to April 1. In the same period, travelers from the Chinese mainland and other regions made 400,369 inbound trips to Hong Kong.

Tse added that the absence of long holidays for people from the mainland during the same month led to a reduced boost in retail business driven by tourism.

Adverse weather in April and high-interest rates also weighed on Hong Kong's retail business, Tse said.

Tse said that on May 1, which marks the start of the Labor Day Golden Week on the mainland, most retailers in the association surveyed reported a decline in business compared to the first day of Golden Week last year.

"Only a few believe that their business remained steady or saw a single-digit increase year-over-year," she said.

(Source: China Daily)