Hong Kong’s retail sales last month unexpectedly fell, erasing an earlier rebound as the territory struggles to build momentum for a recovery from a brutal COVID-19 outbreak earlier this year.
Sales value last month declined 1.7 percent from a year earlier, the Hong Kong Census and Statistics Department said in a statement yesterday.
That was well below the median estimate of an 8.4 percent rise expected by economists in a Bloomberg survey.
It also trailed the 11.7 percent gain recorded in April, when the territory first began lifting some of its COVID-19 restrictions.
Sales volume fell 4.9 percent from a year earlier, also worse than the 8 percent expansion forecast by economists.
The value of retail sales “declined mildly” last month after “strong growth” in April, the department’s statement quoted a government spokesman as saying.
However, taken together, April and last month still showed a year-on-year increase of 4.7 percent due to an easing of the COVID-19 outbreak and the rollout of a consumption voucher program, the spokesman said — a “notable improvement” from a 7.6 percent fall in the first quarter.
“As long as the local epidemic situation remains under control, retail businesses should continue to revive,” the government spokesman said.
The biggest drag on the sales numbers was an 11.9 percent year-on-year drop in consumer durable goods, including a 31.7 percent decline in vehicle sales.
The retail data cover consumer spending on goods, but not services such as catering, medical care and entertainment. Those services account for more than 50 percent of total consumer spending.
The difference between April’s strong reading and last month’s weak one might reflect “some distortion” from the voucher program, Eric Zhu of Bloomberg Economics said yesterday.
People might have spent more on catering, which is not captured in retail sales, or April’s data might have contained more “big-ticket spending,” he added.
The second-quarter GDP figures would “have a more complete picture,” Zhu said.
Hong Kong is trying to mount a recovery after its wave of infections of the Omicron variant of SARS-CoV-2 pushed the economy into contraction in the first quarter for the first time in more than a year.
There have been some signs of improvement — including April’s retail sales figures and a strong expansion in the private sector last month — but growth is still a challenge.
Strict travel barriers, including hotel quarantine, remain for travelers, and trade with China has been disrupted.
Local COVID-19 cases have also returned to more than 2,000 per day, although the government has not brought back its most severe restrictions.
Annie Tse Yau (謝瑞麟), chair of the Hong Kong Retail Management Association, attributed the drop last month to a relatively strong performance last year, when COVID-19 in the territory had subsided.
“It reflects that the retail sales situation is still not stable,” she said at a news briefing yesterday.
“We can’t really be confident in the coming few months,” as daily infections remain in the thousands and there is no sign of Hong Kong opening its borders in the near future, she said.
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