Retail sales growth slows, but demand still strong
(China Daily/HK Edition)
Updated: 2004-07-09 15:21

"This signified continued strength in both inbound tourism and local consumer demand, even though the year-on-year growth in the overall volume of retail sales was magnified in part by a relatively low base of comparison in May last year due to the SARS impact," the government said in a statement.

Retailers benefited in May from a surge in tourists from the mainland during national holidays and that trend is set to continue after Beijing further eased restrictions on travel at the start of July.

Spending in May was broad-based with sales of watches, jewellery, clothing, cars and electrical goods all registering sharp gains, the government said.

However, growth in total sales volumes in the year to May lagged economists' forecasts for an 18-per-cent rise, and was slower than in April when retail sales volume was up 19.9 per cent on a year earlier.

In the three months through May, the volume of sales was up 3.1 per cent over the preceding three months but slowed sharply from a 6.4 per cent jump in the previous quarter.

Economists, however, appeared undeterred, saying consumer confidence remained robust.

"It's still quite strong," said Daniel Chan, senior investment strategist at DBS Bank. "Consumption will continue to be steady in the second half because the boom in tourism will continue to support retail sales growth and unemployment continues to ease."

A rebound in consumption since last summer and strong exports have revived the economy, which is bound for 6 per cent growth this year, according to the government.

Consumer spending needs to stay strong to keep growth on track as many analysts expect exports, which have been growing at double-digit rates, to slow in the second half of the year as the mainland's economy is expected to cool from around 10 per cent growth in the first half.

Retail sales rose 19.7 per cent in May in value terms, which are not adjusted for inflation, totalling a provisional HK$16.5 billion (US$2.1 billion).

Economists had expected a rise of 21 per cent, compared with 23 per cent in the year to April.

The health of May sales was flattered by the weakness of retail turnover a year earlier, when the territory was still battling the effects of SARS.

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