Hong Kong retail slump deepens

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Hong Kong's travel retailers suffered a difficult month in September, mainly due to a slump in tourist numbers, and analysts say the future looks even more bleak as falling confidence and local unemployment sap spending.

According to government statistics domestic retail sales in September fell 4.4% in value, year on year, to HK$14.4bn ($1.85bn), a bigger drop than had been forecast. After discounting the effects of price declines during the period, sales were down 1.7% in volume terms, reversing a 1.8% gain in August.

Tourist numbers to Hong Kong fell 2.1% in September to 1.05m against last year. Significantly Japanese and other north Asian visitor numbers were down 8.0% and visitors from the Americas were down 15.0%. Visitors from another important tourist market Taiwan, were down 9.9% but this was more than compensated by an increase of 11.7% in visitors from mainland China, who account for over one third of total.

In a statement the government said that sales of high-ticket items and luxury goods such as jewellery and watches were particularly affected, as were clothing and footwear sales. The total volume of Hong Kong's retail sales also dropped by 6% in the third quarter in seasonally adjusted terms, compared with a year ago.