* January retail sales value up 4.1 pct y/y; volume up 2.2 pct y/y
* January tourist arrivals slide 2.6 pct, first fall since August
* Favourable job, income conditions support retail - govt
By Donny Kwok and Twinnie Siu
HONG KONG, March 2 (Reuters) - Hong Kong’s retail sales grew at its weakest in three months in January, in value terms, due to a decline in tourist arrivals from mainland China and new year holiday distortions.
Retail sales rose a slower 4.1 percent to HK$44.9 billion ($5.74 billion) in January, government data showed on Friday. In volume terms, retail sales grew 2.2 percent.
The Lunar New Year fell in January last year but was in February this year.
Retail sales in 2017 rose 2.2 percent in value terms over 2016, ending a three-year slump in the sector, as consumer confidence remained strong with strength of asset markets offsetting the impact from a decline in Chinese tourists.
“Looking ahead, the favourable job and income conditions and sustained recovery in inbound tourism should continue to render solid support to the retail business in the near term,” the government said.
Analysts expect the recovery to continue this year, helped by nearly full employment, with the jobless rate at the lowest in nearly two decades.
January tourist arrivals slid 2.6 percent from a year earlier to 5.33 million, ending four straight months of growth, according to the Hong Kong Tourism Board. Mainland visitors, which accounted for 77 percent of the total, fell 5.5 percent in their first drop since August last year.
After declining in 2015 and 2016, the total number of visitors increased last year, rising 3.2 percent. Of those, mainland visitors were 3.9 percent higher than in 2016.
PwC expects 4-6 percent growth in the city’s retail sales this year. Hang Seng Bank estimates 4 percent.
The Hong Kong Retail Management Association, which forecast 3-4 percent growth in retail sales this year, said luxury goods, cosmetic and home appliance segments are set to drive growth in the city’s retail market in 2018.
Sales of jewellery, watches, clocks and valuable gifts, rose 10.4 percent in January from a year earlier, marking their seventh consecutive month of growth. That compared with a revised 6.2 percent rise in December.
Hong Kong retailers such as Chow Tai Fook, the world’s No. 2 jeweller after Tiffany’s by market capitalisation, are expanding again in a sign of confidence for a sector critical to the economy.
$1 = 7.8290 Hong Kong dollars Editing by Jacqueline Wong