Overall arrivals contracted by 10%.
For Q1-16 as a whole, retail sales values were down 12.5% y-o-y, compared with a contraction of 6.4% y-o-y in Q4-15.
According to a research note from HSBC Global Research, further, March retail sales values contracted at a slower pace of 9.8% y-o-y, compared with a contraction of 20.6% y-o-y in February and a fall of 13.6% y-o-y over the Jan-Feb period (Bbg: -8.8%, HSBC: -5.5%).
March retail sales volumes also contracted at a slower pace of 8.8% y-o-y, down from a contraction of 19.5% y-o-y in February and a fall of 12.4% y-o-y over the Jan-Feb period (Bbg: -6.9%, HSBC: -4.6%). For Q1-16 as a whole, sales volumes fell by 11.3% y-o-y, compared with a decline of 3.7% y-o-y in Q4-15.
Here’s more from HSBC Global Research:
In terms of broad type of retail outlet, consumer durable goods and jewellery, watches and clocks and valuable gifts, continued to be the worst performers both in value and volume terms.
Sales values of jewellery, watches and clocks and valuable gifts contracted by 20.3% y-o-y in March, while sales volumes were down 17.7% y-o-y.
March consumer durable goods sales values fell by 22.6% y-o-y, while sales volumes were down 17.7% y-o-y.
The March reading for retail sales, the first reading of the year free from distortions from the timing of the Lunar New Year, continues to underscore the weakness in retail sector performance. Year-to-date retail sales fell by 11.3% in volume terms, with sales of luxury items and consumer durable goods still contracting at steep double digit rates.
Certain categories of retail sales however, held up relatively better than the others, especially in the sectors less exposed to tourist spending. For instance, food, drinks and tobacco and supermarket sales values actually grew marginally over March, while sales volumes too contracted by a far lesser extent compared to other retail categories.
That being said, the continued fall in total inbound tourists, especially those from Mainland China, will continue to pose downside risks to retail performance in the near term. Although the contraction in tourist arrivals moderated in March, overall tourist arrivals were down 10.9% YTD y-o-y and total tourist arrivals from China declined by 15.1% YTD y-o-y. The relative strength in the Hong Kong dollar, due to its peg with the USD has also likely reduced the purchasing power of visitors in Hong Kong.
Looking ahead, the retail sector is likely to face persistent headwinds from the weakness in inbound tourism, at least in the near-term. While the government has announced a package of relief measures in its 2016 budget, aimed at reviving tourism and boosting consumption, a meaningful recovery in retail sales is still likely to be a while away.
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