Hong Kong’s retail sales slid in June amid a decrease in domestic spending and the strength of the local currency.
Revenue from jewelry, watches, clocks and valuable gifts fell 23% year on year to HKD 4.28 billion ($547.3 million) for the month, the municipality’s Census and Statistics Department reported Thursday. Sales in all retail categories dropped 10% to HKD 29.87 billion ($3.82 billion). In comparison, May saw year-on-year decreases of 21% for hard luxury and 11% overall.
The downturn is partly due to a weak comparison with the same period a year ago, when the recently reopened border between China and Hong Kong boosted tourism. The municipality derives a large portion of its luxury revenue from visitors, primarily from the mainland.
In addition, spending patterns are shifting. While in the past, the municipality saw strong domestic spending as well as purchases from mainland tourists, many of those Chinese and Hong Kong buyers are now spending abroad, primarily in Europe and Japan. The strength of the Hong Kong dollar in relation to other currencies used by tourists also hurt sales.
“The value of total retail sales continued to decline in June from a year earlier amid the changing consumption patterns of visitors and residents, and the strong Hong Kong dollar,” a government spokesperson said.
In the first half of the year, hard-luxury sales slid 13% to HKD 26.51 billion ($3.39 billion). Sales in all retail categories slipped 7% to HKD 191.45 billion ($24.5 billion).
The government believes some of the challenges will persist in the short term, but other factors could help improve retail sales.
“Looking ahead, the retail sector will still face challenges in the near term,” the spokesperson added. “Nonetheless, the government’s various measures benefiting Hong Kong, as well as the…strenuous efforts to promote a mega economy and support the development of the local retail sector, should benefit the sector. In addition, continued growth of the economy and rising employment earnings should also provide support to the retail sector.”
Image: A mall in the Tsim Sha Tsui shopping district. (Shutterstock)
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