Retail sales measly grow 0.7% in August

Luxury gift sales declined for the first time since July 2009.

Here's from Nomura.

According to Hong Kong Census and Statistics department, the overall retail sales grew by 4.5% y-y in August, which improved marginally from 3.9% in July. Excluding CPI, real retail sales growth slowed down from 2.1% in July to 0.7% in August.

The year-on-year retail sales growth of apparel and department stores accelerated to 4.2% and 8.8% in August, compared with flat and 3.3% in July, respectively, while retail sales of jewellery, watches, clock and valuable gift declined by 3.4% y-y each in August, compared with 1.2% in July. This was the first-time decline in jewellery, watches, clock and valuable gift sales in Hong Kong since July 2009.

Visitors’ arrival in Hong Kong and visitors’ arrival in Hong Kong from Mainland China increased 20.5% and 27.9% y-y in August, accelerating from 13.8% and 21.9% in July, respectively. However, the increased number of tourists didn’t help the retail sales performance, suggesting declining per capita spending from visitors. Our analysis of
industry data and field surveys lead us to believe that more and more wealthy Mainland China visitors from tier-1 and coastal regions visit Hong Kong less frequency than before and shift to other destinations such as Europe and the US. Instead, more Mainland China visitors from inland China with lower purchasing power come to Hong Kong.

The trend of local consumer confidence index declined to 73.36 in 3Q12, compared with 74.91 in 2Q12, suggesting weakening local consumer sentiment.