A pedestrian walks outside a shop of a US jewelers Tiffany & Co shop on Russell Street in the popular shopping district of Causeway Bay in Hong Kong on Oct 30, 2019.
(ANTHONY WALLACE / AFP)

HONG KONG – Hong Kong's retail sales in June fell at a slower pace than the previous month, official data released on Tuesday showed, and the government plans more measures, including consumption vouchers, to provide support to the sector.

The value of retail sales in June were HK$27.7 billion ($3.53 billion), down 1.2 percent from a year earlier and less than a revised 1.6 percent drop in May, according to the data.

For the first half of 2022, the total retail sales value decreased by 2.6 percent compared with the same period last year.

Looking ahead, the upcoming disbursement of Phase II consumption vouchers will help support consumption demand.

Spokesman, HKSAR government

The government said retail sales performance improved in the second quarter but the momentum softened in the latter part of the period amid an increased number of local COVID-19 cases and a rise in interest rates.

In volume terms, retail sales in June fell 4.1 percent from a year earlier, compared with a revised 4.8 percent decline in May. For the first six months of the year, the volume decreased 5.6 percent from the year ago period.

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"Looking ahead, the upcoming disbursement of Phase II consumption vouchers will help support consumption demand," a government spokesman said, adding retail sales performance will also depend on how the local epidemic evolves and how tighter financial conditions affect spending power and sentiment.

The city's economy in the second quarter shrank 1.4 percent from the same period a year earlier amid slowing external trade and as COVID-19 weighed on economic activity.  

Sales in June of jewellery, watches, clocks and valuable gifts, which before the pandemic relied heavily on tourists from the mainland, rose 2.3 percent from a year earlier, following a revised 7.7 percent increase in May, the data showed.

However, sales of clothing, footwear and related products in June fell 4.6 percent from a year earlier after a 1.7 percent slide in May.

Tourist arrivals in June soared 563.1 percent from a year earlier to 41,112 up from a 252.7 percent jump in May.

Online retail sales in June increased 0.5 percent year-on-year in value terms, slowing from a revised 2.9 percent increase in May. It was up 24 percent for the first half of 2022.

PwC: Retail sales to reach HK$370 billion 

According to accounting firm PwC’s latest report on Tuesday, Hong Kong’s retail sales are forecast to grow by 5 percent to HK$370 billion ($47.14 billion) for the whole of 2022, based on the assumption of a partial border reopening in the last two months of this year.

According to accounting firm PwC’s latest report on Tuesday, Hong Kong’s retail sales are forecast to grow by 5 percent to HK$370 billion ($47.14 billion) for the whole of 2022, based on the assumption of a partial border reopening in the last two months of this year

“Due to ongoing pandemic and travel restrictions, as well as other macro factors, the retail market in Hong Kong was still not able to bounce back early this year,” said Michael Cheng, PwC’s Asia-Pacific, Chinese mainland and Hong Kong consumer markets leader.

Nevertheless, Cheng noted that the food and beverage sector is gradually improving as some shops and restaurants have reopened since mid-April due to the easing of COVID-19 measures. The distribution of the second phase of consumption vouchers is also expected to further boost F&B spending and to unleash the purchasing power of local residents. 

“While a full-scale border reopening is unlikely to happen in the short-term, it is possible that Hong Kong’s quarantine rules for incoming travelers could be further relaxed. Local consumption will remain the key focus,” Cheng said. 

“The vaccination rate for the second dose in Hong Kong had reached 89.1 percent by mid-July. This may boost consumer sentiment as more people return to social activities.”

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He added that two major sports events in November – the return of the Hong Kong Sevens and the Standard Chartered Hong Kong Marathon 2022 – may bring opportunities to attract overseas participants and tourists, while serving as further drivers to relax border restrictions. 

“Pumped up with enthusiasm for the FIFA World Cup Qatar 2022, we expect that the demand and consumption of sports goods and clothing will increase. 

Despite the drop in sales of jewelery, watches, clocks and high-value gifts early this year, the luxury sector is forecast to have a good rebound in the second half of 2022 in light of consumers’ stronger demand for luxury branded items and gold as a tool to hedge inflation and preserve wealth amid the current economic uncertainty,” Cheng noted. 

aoyulu@chinadailyhk.com

With Agencies' inputs