Retail sales in Hong Kong across all categories of products continued to decline for the second consecutive month, and though the dip in March was by a nominal 0.2%, the overall decline over the first three months of 2019 (Q1) was higher at 1.2%, according to figures released recently by the Census and Statistics Department of the Hong Kong Special Administrative Region. 

In volume terms, the decline was slightly higher at 0.8% for the month of March and 1.6% for Q1, the department said. Government spokespersons commented that the retail performance “reflected the cautious consumption sentiment amid various external uncertainties”.

The Hong Kong Retail Management Association said that its member companies are cautious about the sales performance in the coming months in the light of the uncertainties brought by the China-US trade conflicts.

The decline in March was driven to a large extent by a 2.6% drop in the sales of watches, jewellery and valuable gifts, along with the 2.3% fall in apparel and a 15.6% drop in electronic goods. During Q1, sales of jewellery, watches and valuable gifts dropped by 2.7%.

The March performance may have been “much narrowed… mainly due to the fact that there was an extra weekend in March 2019, comparing to the previous year”, the HKRMA said, saying that nice weather and good overnight visitor figures also boosted sales performance. In addition, sales in April may have registered zero growth or mild drop, owing to the negative factors such as rainy weather and long Easter holiday which encouraged locals to travel abroad.

On a more positive note, a government spokesperson said that while retail sales business will likely continue to be affected, the largely stable labour market and the sustained growth in inbound tourism should provide some support.

Early reports indicate that the May Golden Week of 2019 has been somewhat positive with about 840,000 mainland Chinese visitors arriving in the first three days, a significant rise over the 600,000 for the whole period last year. Day two of the four-day holiday, brought in 300,000 people from China, the highest number for single-day visits in the past 10 years for the Labour Day break.

Further, though GDP growth in Q1 was just 0.5%, falling below most expectations and recording the slowest growth rate in nearly a decade, it was 1.2% above the previous quarter, Fitch Solutions said that it was still confident of an upturn in private consumption and gross fixed capital formation, and maintaining its forecast of a 2% GDP growth in 2019.