HONG KONG (Reuters) – Hong Kong’s retail sales fell in November, snapping two straight months of growth, and tightened financial conditions would continue to weigh on consumption, the government said on Wednesday.
November retail sales fell 4.2% from a year earlier in value terms to stand at HK$29.5 billion ($3.77 billion). That compared with HK$31.9 billion in October, when retail sales grew a revised 4% from a year earlier.
Strict COVID-19 restrictions have weighed on Hong Kong’s economy since early 2020, grinding tourism to a halt and battering sales at bars, restaurants and shops.
Apart from the wearing of masks, which remains compulsory, Hong Kong cancelled all its stringent COVID-19 rules from last Thursday, meaning arrivals no longer need to do mandatory PCR tests, while the city’s vaccine pass has also been scrapped.
Hong Kong is also working to resume quarantine-free travel with mainland China by as early as Jan. 8.
“The expected increase in visitor arrivals should benefit retail sales performance,” a government spokesperson said, adding continued improvement in labour market conditions and further relaxation of social distancing measures would help.
The city is facing headwinds from high inflationary pressure and aggressive monetary tightening in advanced economies, while rising interest rates and a pessimistic economic outlook have put pressure on asset prices, dragging down November home prices to more than 5-year low.
For the first eleven months, the total retail sales value eased 1.1% compared with the same period a year earlier.
In volume terms, retail sales in November decreased 5.3% from a year earlier. That compared with a revised 2.5% increase in October. For the first eleven months, the volume was down 3.6% from a year earlier.
Tourist arrivals in November soared 10 times from a year earlier to 113,763. That compared with a 760.9% jump in October.
The city’s seasonally adjusted unemployment rate eased to 3.7% in the September to November period, improving for the seventh consecutive quarter.
In November, sales of jewellery, watches, clocks and valuable gifts, which before the pandemic relied heavily on tourists from the mainland, fell 8.3% from a year earlier, following a 13.6% expansion in October, the data showed.
Sales of clothing, footwear and accessories in November declined 15.2% on the year after a 4.9% drop in October.
Online retail sales in November rose 9.4% year-on-year in value terms, compared with a revised 35.1% growth in October. They jumped 21.9% for the first eleven months of 2022.
($1 = 7.8180 Hong Kong dollars)
(Reporting by Donny Kwok; Editing by Mark Potter)