Holiday consumption boosts volume growth by 8.5%, beating estimates

Hong Kong's retail sales volume rebounded in September, up 8.5 percent year-on-year over last year, beating estimates, as holidays stimulated consumption, the Census and Statistics Department said on its website on Thursday.

September's 8.5 percent retail volume growth compares with 12 economists' median estimate of 5.8 percent, according to Bloomberg News. It is the biggest growth registered in the past three months, after the retail volume only expanded by a tepid 3.2 percent and 1.4 percent year-on-year in August and July, respectively.

Total retail sales value rose 9.4 percent to HK$34.1 billion ($4.40 billion) in the city last month, in comparison with the 7.6 percent estimates by the economists.

A faster September retail growth was registered partly helped by festive spending during the Mid-Autumn Festival, which occurred later in September this year compared with mid-September last year, a government spokesman said.

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The Mid-Autumn Festival together with the week-long National Day holiday in early October formed one of the longest holidays on the mainland this year, and which may have stimulated visitors spending earlier this year, the government suggests.

The spokesman further added that while the vibrant inbound tourism should continue to help support the retail business, the increased pressure on the labor market amid more cautious hiring sentiments, together with an uncertain external environment, may have a dampening effect on local consumer sentiment down the road.

Nicolas Kwan, regional head of research from Standard Chartered Bank, also noted a series of uncertainties, including government measures, will stymie local consumers' spending as they will choose to wait-and-see until the economic environment becomes clearer.

"Although inflows of inbound tourists remain, their purchasing power is unable to compare with (those of visitors in) the past, and is unlikely to duplicate the splendid growth momentum years ago," Kwan told China Daily in a telephone interview.

A Hong Kong economic monitor released in October said a shift in visitor arrivals' mix may help explain why Hong Kong's retail sales growth has continued to soften despite continued solid tourist arrivals growth.

"Over the last five years, the share of same-day In-town visitors has surged from 39 percent in 2007 to over 50 percent in the first eight months in 2012," Ryan Lam and Joanne Yim from Hang Seng Bank wrote in the report. They added that same-day in-town visitors spend HK$2,100 per capita, which is only about a quarter of the HK$7,700 for all overnight visitors.

"We do not expect retail sales growth to resume the blistering pace set last year - of almost 30 percent year-on-year - but the cool-down which kicked off at the start of this year may finally be coming to an end as reflected in the relative stabilization of the seasonally adjusted sequential growth data," HSBC's Greater China economist Donna Kwok wrote in a research note.

Financial market volatility continues to cast a shadow over household and investor confidence, but firm job market conditions and uninterrupted wage growth underpins our expectations for sales to expand at a low double-digit growth rate this year, Kwok added.

litao@chinadailyhk.com