Hong Kong’s retail sales grew at a faster pace in August compared with the previous month, government data showed on Tuesday, although the outlook remains overshadowed by external headwinds such as the impact of China-U.S. trade tensions. August retail sales rose 9.5 percent from a year earlier in value terms to HK$38.2 billion ($4.87 billion), marking their eighteenth month of expansion. That compares with a 7.8 percent rise in July.
In volume terms, retail sales grew 8.1 percent in August, compared with a 5.9 percent rise in July. A government spokesman said favorable job and income conditions, as well as sustained growth in inbound tourism should support the retail sector in the near term. For the first eight months of 2018, total retail sales rose 12.2 percent in value terms and 10.6 percent in volume terms.
Analysts said escalating Sino-U.S. trade tension was hurting sentiment, while a weaker yuan also made the Hong Kong dollar more expensive. Growth in China’s manufacturing sector sputtered in September as external and domestic demand weakened. Economists expect China’s growth to cool further in coming months, with a barrage of August economic data doing little to dispel views that domestic demand is softening.
The country’s retail sales rose a better-than-expected 9 percent in August, driven by jewelry and home appliances. Meanwhile, analysts are optimistic that tourist arrivals to Hong Kong from mainland China will remain strong over the long term.
“We expect better connectivity between HK and the mainland after the commencement of the Guangzhou-Shenzhen-HK high-speed railway and HK-Zhuhai-Macau Bridge … to drive up mainland tourist numbers and see it as a positive for the whole HK retail market,” Nomura said in a research note. August tourist arrivals rose 17.4 percent from a year earlier to 5.896 million, according to the Hong Kong Tourism Board. The count of mainland visitors rose 22 percent, accounting for 81.8 percent of the total.
Sales of jewelery, watches, clocks and valuable gifts, jumped 21.6 percent in August, compared with a revised 17 percent growth in the previous month, government data showed. Growth in medicines and cosmetics rose 16.3 percent from a revised 12.6 percent in July, while department store sales were up 11.7 percent compared with a revised 8.4 percent growth in July.