Here's why analysts remain bearish on economic recovery

Even as retail sales spiked to 6.6% growth.

According to Hang Seng Bank's Hong Kong Economic Monitor, with export prospects remaining challenging, a sustained economic recovery would depend largely on domestic demand. Fortunately, consumer spending has been a bright spot. Retail sales value growth accelerated to a rate of 6.6% in October and November, from a growth of 5.8% in 3Q12

Gains were broad based. Sales of jewellery, watches and clocks, and valuable gifts did particularly well by returning a growth of 13.7% after contracting 2.9% in October. Sales at supermarkets (+9.2%), department stores (+10.9%) and of clothing, footwear and allied products (+8.2%) were also decent.

Here's more from Hang Seng Bank:

The improvement in retail data itself suggests an upward revision to growth forecast. However, the growing signs that the slowdown of the economy is reaching domestic labour market make us reluctant to do so. Business has turned more cautious under current economic environment, though there is still room for hiring.

Employment expanded 0.3% on a month-over-month basis between mid-2011 and mid-2012, but the growth rate has slowed substantially to less than 0.1% over the past couple of months. This trend bears watching because variations in labour market conditions do have a discernible impact on consumption patterns, albeit with a lag.