A woman wearing a face mask to guard against coronavirus infection reads a magazine in front of a local restaurant in Hong Kong’s Sheung Wan area on Aug 8, 2021. (BERTHA WANG / AFP)

HONG KONG – The growth of retail sales in Hong Kong moderates while the city’s retail sector will remain squeezed in the near term amid the austere pandemic situation and the various restrictive measures in place. 

Hong Kong’s total retail sales value in January, provisionally estimated at HK$33.9 billion ($4.34 billion), climbed 4.1 percent from a year ago while the revised estimate of total retail sales value in the previous month increased 6.1 percent year-on-year, according to Census and Statistics Department (C&SD) data released on Friday. 

Of the total retail sales value in January, online sales accounted for 9 percent. Provisionally estimated at HK$3.1 billion, the value of online sales increased 29.8 percent compared to the same month in 2021. The revised estimate for online retail sales in December 2021 increased 31.7 percent compared to a year earlier. 

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Among various goods categories, the value of sales of fuels registered the highest rate of increase (16.9 percent), followed by other consumer goods not classified elsewhere (12.5 percent), and footwear, allied products and other clothing accessories (11.4 percent). 

If there is a lockdown related to the compulsory COVID-19 testing across the city, we are afraid that retail sales will be further squeezed to zero.

Annie Tse Yau On-yee, Chairman, Hong Kong Retail Management Association 

On the other hand, the value of sales of motor vehicles and parts recorded the highest rate of decrease (20.5 percent), followed by electrical goods and other consumer durable goods not elsewhere classified (8.2 percent), and furniture and fixtures (3.8 percent). 

A government spokesman cautioned that the figure of a 4.1 percent rise in total retail sales value in January from a year earlier has yet to fully reflect the impact of the fifth wave of the local pandemic and the further tightening of anti-epidemic measures in the more recent period.  

“In view of the very austere epidemic situation and the various restrictive measures in place, the retail sector will remain under immense pressure in the near term. It is essential for the community to work in unison to support the government to put the local epidemic under control as swiftly as possible, so as to create conditions for the revival of retail business and other hard-hit economic activities,” the spokesman added in a government statement on Friday. 

Hong Kong Retail Management Association Chairman Annie Tse Yau On-yee anticipates the figure in March will be much worse. 

“According to our members, we expect the sales of electrical appliances, furniture, apparel, department stores, jewellery and watches will plummet between 20 percent to 80 percent. Only the sales of preventive goods related to the pandemic and daily necessities will record year-on-year increases,” Tse warned in a teleconference on Friday. 

“If there is a lockdown related to the compulsory COVID-19 testing across the city, we are afraid that retail sales will be further squeezed to zero. We hope that landlords will waive rents for tenants,” she cautioned. 

Tang Heiwai, an economics professor at HKU Business School and associate director of Hong Kong Institute of Economics and Business Strategy, said: “The tightening of social measures will seriously jeopardize the economic growth forecast at least for the first quarter this year. Resumption of quarantine-free travel with the mainland is unlikely at the moment and this will affect tourism and retail sales.” 

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Meanwhile, retail sales performance also hinges on the city’s job market situation. 

Hong Kong’s private sector in February shrank for the second straight month and at the fastest pace since April 2020, according to the IHS Markit Hong Kong SAR Purchasing Manager’s Index. As a result, Hong Kong’s private sector firms lowered their staffing levels in February. Global financial information provider IHS Markit warns that the decline in employment levels and wages will have a trickle-down effect on workers.