HONG KONG (Reuters) - Hong Kong’s retail sales fell for the 15th successive month in May, as a drop in mainland tourists and weak local consumption hit spending, triggering concerns about a deeper slump.
“Retail sales declined in most segments. While the chance of seeing a turnaround is unlikely, we have to watch closely the jobless rate - a rise in unemployment may point to a further slowdown in the economy,” said Paul Tang, chief economist at Bank of East Asia.
Tang expects high single-digit percentage declines in retail sales in the next few months.
Retail sales in May slid 8.4 percent from a year earlier to HK$35.7 billion ($4.60 billion) in value terms, deeper than a 7.5 percent slump in April. In volume terms, May sales dropped 9 percent, government data showed on Thursday.
“Retail sales stayed weak in May...This was due partly to the drag from the slowdown in inbound tourism and partly to the more cautious local consumer sentiment amid the sub par economic conditions,” the government said in a statement.
Hong Kong tourist arrivals in May fell 6.4 percent from a year earlier to 4.45 million, after sliding 2.1 percent in April. Mainland visitors, who account for 74.6 percent of the total, fell 8.3 percent to 3.32 million in May. (bit.ly/29242AC)
Hong Kong is struggling with mounting economic challenges and a strong currency, as the Hong Kong dollar is linked to the U.S. dollar. Meanwhile, mainland tourists are avoiding the city amid political tensions with China and growing calls from radical activists for greater autonomy from Beijing.
“The near-term outlook for retail sales is still subject to a large degree of uncertainty, depending on the performance of inbound tourism as well as the extent to which local consumption sentiment will be affected by the increased external headwinds and heightened financial market volatility,” the government said.
Sales of jewelry, watches, clocks and valuable gifts in May fell 18.7 percent in value terms, a 21th consecutive month of decline. Department store sales slid 5.9 percent on year, while wearing apparel fell 5.7 percent.
A string of retailers from jewelry firms to cosmetics have reported weaker sales.
Chow Tai Fook Jewellery (1929.HK) and cosmetics retailer Sa Sa International (0178.HK) have seen their yearly profit drop by half from the previous year, forcing the companies to scale back expansion and shift their focus to local customers.
($1 = 7.7585 Hong Kong dollars)
Editing by Jacqueline Wong