Retail sales to be constrained looking ahead.
It has been noted that Hong Kong retail sales growth improved modestly mainly helped by seasonal distortions stemming from an early Lunar New Year (LNY) this year.
According to a research note from Bank of America Merrill Lynch, retail sales volume dropped by 5.2% yoy in January, after declining 6.1% yoy in December (vs. market consensus of -5.1% yoy).
In value terms, January retail sales growth was at -6.5% yoy vs. -8.5% yoy in December (market consensus of -8.2% yoy), marking the 11th consecutive month of contraction.
Looking ahead, the report expects Hong Kong's retail sales to be constrained by the slowdown in inbound tourism and sluggish local consumption amid financial market volatility and Fed rate normalization.
Here's more from Bank of America Merrill Lynch:
The early LNY, which fell on 8 Feb this year compared to 19 Feb last year, may have helped to lift retail sales in January as local consumption tend to rise ahead of the holiday period.
The contraction of retail sales value excluding luxury goods narrowed to 4.1% yoy in Jan from 6.3% in Dec. This was mainly led by acceleration in retail sales growth of food, alcoholic drinks and tobacco (7.2% yoy in Jan vs. 0.9% yoy in Dec) and supermarkets (8.0% yoy in Jan vs. 3.6% yoy in Dec).
Meanwhile, tourist spending remained sluggish, as luxury goods sales continued to see double-digit contraction. Growth of retail sales of jewelry, watches, clocks and valuable giftsimproved slightly to -16.3% yoy in Jan from -17.0% yoy in Dec, helped by a low base 12 month ago. The key drag on luxury sales remains weakening tourist arrivals.
Do you know more about this story? Contact us anonymously through this link.