Hong Kong’s retail sales showed signs of improvement in September amid an easing third wave of coronavirus infections, although the year-on-year decline was still significant at 12.9 per cent.
Consumption slumped to HK$26.1 billion (US$3.34 billion), which marked the 20th month in a row of contraction, according to the Census and Statistics Department.
However, the magnitude of the contraction was the smallest since July last year, with a lower base of comparison in September. In the same month last year, the city was grappling with anti-government protests and retail sales were down 18.2 per cent.
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Nevertheless, business body the Hong Kong Retail Management Association warned on Monday that nearly one in every four brands that responded to a recent survey it conducted would resort to lay-offs in December to cut costs after the government’s wage subsidies – part of its pandemic relief measures – ended in November. Twenty-four brands operating 2,400 stores and employing 48,000 staff in Hong Kong responded to the survey.
A government spokesman said the operating environment in the retail sector remained challenging in the near term amid a tourist slump, but relaxing social-distancing measures would help boost shoppers’ appetite.
“Having considered that the base of comparison in the month was not as low as in August, the performance of the retail sector had actually shown some improvement over August as the third wave of the local epidemic abated,” he said.
“With the stabilisation of the [health crisis] and the recent relaxation of social-distancing measures, local [consumer] sentiment is likely to revive further.”
In the first nine months of this year, retail sales shrank 28.7 per cent from the same period in 2019.
The government said there was a gradual improvement in domestic and external demand, which contributed to a preliminary estimate of a 3.4 per cent contraction in the city’s gross domestic product in the third quarter year on year, better than economists had expected.
The contraction followed a 9 per cent decline in the second quarter and a 9.1 per cent decrease in the first three months.
In September, consumers returned to shop for motor vehicles and parts, for which spending jumped 17.1 per cent, and at department stores, where there was 5.5 per cent growth from a year earlier. Supermarkets continued to thrive, with 3.8 per cent growth. Spending on medicines and cosmetics plunged 45.5 per cent and bigger ticket items such as jewellery, watches and clocks were down 25.7 per cent.
Spending has been reined in largely because of a near lockdown in Hong Kong since February. In September, tourist arrivals were down 99.7 per cent to 9,132 from the same month last year. In the first nine months of this year, the total number of tourist arrivals was 92.4 per cent lower at 3.55 million.
Since the middle of September, there have been signs of relief from the third wave of Covid-19 that had raged since early July.
On September 15, the government launched its third round of pandemic relief measures worth HK$13 billion to shore up industries while easing social-distancing rules.
For example, the Ocean Park attraction reopened three days later on September 18 and Hong Kong Disneyland on September 25 after a closure of about two months.
Association chairwoman Annie Tse Yau On-yee said the decline in retail sales in September showed signs of improvement, which continued into October.
“Local consumption was a bit better because of the relaxation of social-distancing rules,” she said. “But our members are pessimistic about the outlook for the peak season in November and December, we do not expect there will be any tourists coming to Hong Kong to spend.”
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