Hong Kong retail sales see highest growth in nearly 3 years as tourism revives

HONG KONG (Reuters) - Hong Kong’s retail sales rose for the ninth month in November in their best growth since February 2015 on strong consumer demand and improved tourism, in particular from mainland China.

FILE PHOTO: Public and private housing blocks are seen in Hong Kong October 6, 2016. REUTERS/Bobby Yip/File Photo

November retail sales grew 7.5 percent from a year earlier to HK$38.7 billion ($4.95 billion) in value terms, government data showed on Wednesday. Retail sales rose 3.9 percent in October.

In volume terms, sales rose 6.9 percent from a year earlier, compared with 3.6 percent growth in October.

“The near-term outlook for retail sales remains positive, as consumer sentiment is buttressed by the favourable employment and income situation, and as inbound tourism continues to recover,” the government said in a statement.

Tourist arrivals rose 7.0 percent in November, the highest percentage growth since March, with mainland visitors up 8.6 percent, according to the Hong Kong Tourism Board. Mainland visitors accounted for 74 percent of the total.

For the first 11 months of 2017, total visitor arrivals rose 3.1 percent.

Hong Kong’s retail sales are continuing to recover after shrinking for the third consecutive year in 2016 and by the most in nearly two decades, hurt by the city’s economic downturn and fewer tourists from China.

With its economy closely tied to its giant northern neighbour, Hong Kong has gained from buoyant trading and manufacturing activities linked to China’s economic activity.

The still-solid momentum puts the former British colony firmly on track to achieve the government’s revised full-year estimate of 3.7 percent growth for 2017 as buoyant stock and property markets help spur consumer spending.

“As the local jobless rate remains low and asset market continues to grow, the wealth effect will continue to lend support to retail consumption,” said Thomas Shik, acting chief economist of Hang Seng Bank.

Shik estimates 2 percent growth in Hong Kong’s retail sales for the whole of 2017 and 4 percent growth in 2018.

Sales of jewellery, watches, clocks and valuable gifts rose 7.9 percent in value terms in November, marking their fifth consecutive month of growth. That compared with a revised 8.5 percent jump in October.

Hong Kong’s retailers and mall operators have been reporting stronger sales on improved consumption and tourism.

Sun Hung Kai Properties 0016.HK said retail sales at its eight major shopping malls in the city on New Year's Eve amounted to HK$76.75 million, up 10 percent from the same period a year ago, with foot traffic growing 12 percent.

For the first 11 months of 2017, Hong Kong’s retail sales increased 1.8 percent in value terms year-on-year and 1.7 percent in volume terms.

Editing by Anne Marie Roantree and Jacqueline Wong