We attribute the expected slowdown to the deterioration in external economic conditions during the period, which weighed in local sentiment, although levels are still healthy historically. October is traditionally a strong month because of China’s National Day ‘golden week’ holiday, but we could see some minor drag given the high base last year when the global economy was still in recovery mode.

The tight labour market, rising household income and the absence of any major correction in property prices are all positive factors that will likely support retail sales in the medium term. This will be key to Hong Kong’s ability to weather a further slowdown in export growth. A likely widening of growth rates between the ‘by value’ and ‘by volume’ measures underpins the still-evident upward retail price pressure.