March 5, 2019 / 9:47 AM / 4 months ago

Hong Kong Jan retail sales growth rises to 5-month high as visitors surge

* Jan retail sales value up 7.1 pct y/y, volume up 6.9 pct y/y

* Jan tourist arrivals up 27.2 pct, vs 17.9 pct rise in Dec

* Govt says surge in visitors help lift retail sales

* Unsteady external environment seen affecting sentiment - govt

By Donny Kwok and Twinnie Siu

HONG KONG, March 5 (Reuters) - Hong Kong’s retail sales in January rose at their fastest pace in five months, government data showed on Tuesday, due to a surge in visitor arrivals and the early arrival of the Lunar New Year holiday this year.

Consumer spending normally attains a seasonal high before the festival, which fell on Feb. 5 this year while in 2018 it was on Feb. 16.

Hong Kong consumers have become increasingly cautious amid protracted U.S.-China trade tensions, while a weak Chinese yuan has also made the city an expensive place to shop.

Retail sales edged up 7.1 percent from a year earlier in value terms, to HK$48.1 billion ($6.13 billion), marking the 23rd consecutive monthly expansion, and the fastest since August 2018. That compares with a 0.1 percent rise in December.

In volume terms, retail sales in January grew 6.9 percent, compared with a revised 0.1 percent rise in December.

“The outlook for retail sales business is still subject to uncertainty,” a government spokesman said.

“While the full employment situation in the local labour market and the sustained expansion in inbound tourism should provide support, consumption sentiment will still be affected by the unsteady external environment,” the spokesman added.

Analysts say Hong Kong’s retailers have started to feel the chill from China’s slowdown, with the U.S.-Sino trade war and yuan depreciation taking a toll on the Chinese economy.

PwC expects Hong Kong’s consumer market will face a challenging 2019, with retail sales forecast to shrink 3 percent as macroeconomic conditions worsen.

The Hong Kong Retail Management Association expects low single-digit growth for 2019.

Hong Kong’s economy is closely linked to China’s, with the city a gateway to the mainland, especially following the launch of major infrastructure projects linking China and Hong Kong.

January tourist arrivals rose 27.2 percent from a year earlier to 6.78 million, according to the Hong Kong Tourism Board. Mainland visitors grew 34.8 percent, accounting for 81.7 percent of the total. (bit.ly/2BYeme1)

Sales of jewellery, watches, clocks and valuable gifts increased 4.7 percent in January, data showed, after a revised 5.2 percent drop in December.

Medicines and cosmetics rose 12.9 percent in January, compared with a revised 6.8 percent growth in December.

Department store sales jumped 15.1 percent in January against a revised 4.7 percent rise in December. ($1 = 7.8495 Hong Kong dollars) (Editing by Jacqueline Wong)

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