Hong Kong retail sales drop 11.5% in May, marking second straight monthly double-digit fall
- Government spokesman attributes poor performance to changes in consumption patterns of visitors and residents
Hong Kong’s retail sales dropped 11.5 per cent in May from a year ago, marking the second consecutive month with a double-digit decrease, under the continuous influence of rising cross-border spending.
Provisional figures released by the Census and Statistics Department on Tuesday showed sales in May shrank to HK$30.5 billion (US$3.9 billion), after a 14.7 per cent year-on-year decline in April.
A government spokesman attributed the poor performance to changes in the consumption patterns of visitors and residents, as well as the strength of the Hong Kong dollar.
“Looking ahead … the retail sector may still face some challenges in the near term,” the spokesman said.
He said a relatively high base for comparison in the same period last year was also relevant.
“However, the central government’s recently announced measures benefiting Hong Kong, including the further enhanced individual visit scheme and the increase of duty-free allowance for luggage articles for mainland resident visitors, should help stimulate retail businesses,” the spokesman said.
In the first five months of 2024, retail sales contracted 6.1 per cent from the same period last year.
Chief Executive John Lee Ka-chiu earlier estimated that the expansion of the country’s solo travel scheme to cover 59 mainland Chinese cities would bring in an extra 300,000 visitors to Hong Kong and generate up to HK$1.5 billion in additional revenue each year.
Under the scheme, residents from these cities can travel to Hong Kong on an individual basis rather than having to join a tour group.
On Monday, central authorities raised the duty-free threshold from 5,000 yuan (US$688) per trip to 12,000 yuan for mainland residents aged 18 and above, to encourage more visitors to spend in Hong Kong.
They can enjoy a higher limit of 15,000 yuan, or HK$16,100, if they shop at duty-free stores at border crossings.
The just-finished long weekend was the third public holiday after Easter and the Labour Day “golden week” where the number of outbound travellers exceeded 1 million.
Immigration data showed 1.26 million Hongkongers departed the city between June 29 and July 1, up from 548,887 over the two-day holiday in 2023.
Meanwhile, 345,178 individuals arrived in the city, including 268,069 mainland residents. Last year, 233,427 people entered, including 192,431 from the mainland.
The Hong Kong Shopping Festival, which brings together 5,000 merchants, kicked off on Monday and wraps up on August 30, with HK$1.2 billion worth of discounts and other perks on offer.
Those taking part include retailers, restaurants and tourism companies, as well as players in the convention and exhibition, hotels, cross-border transport and banking industries.
Association chairwoman Annie Tse Yau On-yee said the retail figures for May continued the weak trend seen in April. She also said that performance over the recent golden week break was “absolutely not ideal”.
“While there was the Labour Day golden week in May, meaning more mainland tourists in the city, it was dampened by adverse weather, resulting in a less-than-expected performance for the week,” she said.
Tse also pointed to a survey of 4,200 shops on their retail performance in June. She said only 10 per cent of respondents reported a slight single-digit increase in business compared with the same month last year.
The survey also showed that 85 per cent recorded a drop in business, while the remaining 5 per cent said levels had stayed the same.
“Those with a focus on the local market – such as supermarkets, electronic appliances, foodstuff and furniture – recorded a weaker decrease, from single digits to low double digits,” Tse said.
“Sectors with tourists as their clientele, such as cosmetics, health food, personal care, watches, clocks and jewellery, saw a drop from low double digits to more than 30 per cent.”
A decline was seen across most business categories in May, government figures showed.
Motor vehicles and parts were the worst performers at 29.8 per cent, followed by jewellery, watches, clocks and valuable gifts at 21.4 per cent and department store commodities at 21.1 per cent.
Items that saw slight increases included books, newspapers, stationery and miscellaneous gifts at 6.9 per cent, medicines and cosmetics at 2.5 per cent, while electrical goods and some types of durable consumer goods saw a rise of 2.2 per cent.
Tse said she was not optimistic about the summer retail performance, coupled with the effect of the Paris Olympics in July.
“Whether it’s the Olympics or World Cup, if they take place overseas and require fans to watch overnight, it will mean that they are getting less sleep and that translates into less time spent out during the day. It’s usually quieter during those times,” she added.
Additional reporting by Ezra Cheung
